Last updated June 4, 2020 at 10:37 am
New research on COVID-19 consumer panic shopping has shown that Australian consumers top the globe in panic buying habits – in speed and scale.
Why This Matters: While panic buying is a common response, we took it to an extreme.
Australia has taken out first place for panic buying, with consumers out-shopping international counterparts in speed and scale.
The research, conducted by Dr Tim Neal and Professor Mike Keane from UNSW Business School used Google search data to measure consumer panic (or panic buying) across 54 countries during the first months of the COVID-19 pandemic, from January to mid-April 2020.
Using the data collected, Neal and Keane built a ‘panic index’, or model, to help them understand how the transmission of the virus and policy announcements by government affected panic response.
Australia panicked earlier than most other countries
The results reveal that Australia was one of the countries most affected by panic buying, experiencing widespread shortages of essential goods during March.
“The data shows we can explain the timing and severity of panic buying using information on the spread of the virus and government policy announcements,” says Neal.
“But Australia is one of the few countries where this is not true. We panicked earlier than most countries in the sample and it is hard to explain.”
“Notably, even countries that were hard hit by COVID-19 early, like Italy, panicked in mid-March, while we panicked at the start of March.”
The index also reveals that the announcement of internal movement restrictions by both domestic and foreign governments caused significant and immediate panic that dissipated over a week to 10 days. Importantly, governments who announced restrictions earlier in the pandemic generated more panic than governments who announced them later.
“We found evidence that announcements of lockdowns generated significant panic, but announcements of travel restrictions did not,” says Neal.
With warning, supermarkets could mitigate panic buying
Neal and Keane hope the index will help governments and supermarkets mitigate panic buying in future crises. Since supermarkets use a just-in-time supply chain and the level of panic changes in response to certain policy announcements very quickly, they advise it is necessary for governments to coordinate their strategy with supermarkets.
“With appropriate warning from government, supermarkets could mitigate panic buying by either trying to signal abundance or signal scarcity,” says Neal.
“To signal abundance, in the days leading up to a major announcement, the supermarket can shift stock of toilet paper and certain other goods from warehouses and distribution points to supermarket floors (e.g. placing a pallet of toilet paper near the entrance) to avoid the appearance of scarcity when the shelves run out of the products they need.
An alternative is for supermarkets to signal scarcity by announcing product limits / rationing simultaneously with the announcements made by governments, to avoid an immediate rush on the goods.”