Australia leads the world in panic buying
New research released by UNSW on COVID-19 consumer panic shopping has shown that Australian consumers topped the globe in panic buying habits – in speed and scale.
UNSW researchers Dr Tim Neal and Professor Mike Keane used Google search data to measure consumer panic (AKA panic buying) across 54 countries during the first wave of the pandemic, from January to mid-April. Using the data collected, Dr Neal and Professor Keane built a “panic index”. This model helped them understand how panic responds to virus transmission and government announcements.
The results reveal that Australia was one of the most affected panic-buying countries in the world. It caused widespread shortages of essential goods during the month of 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 Dr 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’s hard to explain.
“Notably, even countries that were hard hit by COVID-19 early, like Italy, panicked in mid-March. We panicked at the start of March.”
Keep calm and coordinate
The index also reveals the announcement of restrictions by both domestic and foreign governments caused significant and immediate panic. However, this 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,” says Dr Neal. “But announcements of travel restrictions did not.”
Dr Neal and Professor Keane hope the index will help governments and supermarkets to mitigate panic buying in any future crises. Supermarkets use a “just-in-time” supply chain and panic tends to respond to certain policy announcements very quickly. So the researchers recommend that, in the event of any future pandemic, governments should coordinate their strategy with supermarkets.
“With appropriate warning from government, supermarkets could mitigate panic buying by either trying to signal abundance or signal scarcity,” Dr Neal says.
“To signal abundance, in the days leading up to a major announcement, supermarkets can shift stock of toilet paper and other goods from warehouses and distribution points to supermarket floors. For example, placing a pallet of toilet paper near the entrance. This would avoid the appearance of scarcity when the shelves run out of products.”
Another alternative suggested by the researchers is for supermarkets to signal scarcity by announcing product limits. They could also ration simultaneously with announcements made by governments, to avoid an immediate rush on goods.