Will a new round of panic buying empty grocery store shelves?

Discussion
Photo: RetailWire
Oct 07, 2020
Tom Ryan

Grocery stores are reportedly stocking up on staples to avoid shortages in expectation of a potential second wave of coronavirus that may run up against the normal holiday rush.

According to a Wall Street Journal report:

  • Southeastern Grocers bought its Thanksgiving turkeys and holiday hams over the summer, months before planning typically begins;
  • Associated Food Stores recently started accumulating “pandemic pallets” of cleaning and sanitizing products in its warehouse to avoid shortfalls in the months ahead;
  • Ahold Delhaize, the parent of the Giant and Food Lion chains, has already stocked its holiday inventory in warehouses and is overall storing 10 to 15 percent more inventory versus pre-pandemic levels to avoid stock-outs on fast sellers.

On its first-quarter conference call on Oct. 2, Sean Connolly, CEO of Conagra, the parent of Birds Eye, Slim Jim and other foods brands, said demand continues to exceed capacity due to retailers’ early build-up of holiday inventories, and demand is “not by any stretch normalized yet.”

Mr. Connolly added, “We’re going into a season where all the outdoor dining is going to go away in a lot of parts of the country and cold and flu season is upon us. So it’s plausible that demand can even lift from here.”

In the U.K., Tesco and Morrisons in late September already began to limit sales of some items to prevent a repeat of the panic buying that led to shortages in March. Supplies were said to be plentiful and shoppers were encouraged to buy as normal.

“We just don’t want to see a return to unnecessary panic buying because that creates a tension in the supply chain that’s not necessary,” said Tesco’s CEO Dave Lewis.

Shelves are not expected to be depleted to the same degree as in March and April due, in part, to ramped-up investments in warehousing, delivery and online capabilities by retailers.

Twenty-one states (Alaska, Connecticut, Delaware, Idaho, Indiana, Kentucky, Maryland, Massachusetts, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, Ohio, Pennsylvania, Rhode Island, Vermont, Wisconsin and Wyoming) reported increases in the number of new COVID-19 cases last week. Only Missouri, South Carolina and Texas saw new cases decline. Public health experts and medical professionals continue to warn that the number of cases is likely to increase as the weather grows colder and Americans spend more time indoors.

DISCUSSION QUESTIONS: Do you see more benefits than risks for grocers that are stocking up on staples to protect against another round of pandemic-driven shortages? Should retailers consider imposing product purchase limits on key products at this point?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Never before has product substitution been as important as it is today. SKU rationalization and focus on the top 20 percent of “essential” items is paramount."
"It only takes one empty shelf for consumers to start panic buying. It doesn’t even have to be a shelf of product they normally buy."
"The only good news is that suppliers and retailers have learned what items are likely to be impacted by panic buying and are already working to prepare for it."

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25 Comments on "Will a new round of panic buying empty grocery store shelves?"


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Neil Saunders
BrainTrust

There is really no need for panic buying as we have more than enough food and household sundries for everyone. The problem arises when people, perhaps understandably, ignore this and buy loads more than they need. Supply chains cannot replenish fast enough, especially for bulky items like toilet paper, which creates gaps on shelves. This in turn fuels panic buying. It’s a vicious circle that retailers try to remedy, but cannot solve completely. That said, I agree that any second wave of panic buying is likely to be more moderate than the first and retailers already have tools in place like limiting quantities and holding stocks in reserve.

Dave Wendland
BrainTrust

Good insight, Neil. Hoping you are right about the second wave of panic buying. Empty shelves help nobody.

Dave Wendland
BrainTrust

Supply chain struggles and product availability are not going away in the near future. In fact being in the Milwaukee, Wisconsin area, I am once again seeing an increasing number of out-of-stocks and consumer stockpiling.

How can grocers (and retailers at large) work with suppliers to ensure availability? Patience, persistence, and flexibility. Never before has product substitution been as important as it is today. SKU rationalization and focus on the top 20 percent of “essential” items is paramount. And limiting consumer purchases will prevail.

Lee Peterson
BrainTrust

Speaking from personal experience, it couldn’t hurt. Traditional grocers are still constantly out of products and sporting that good old empty shelf look for months now. The leader on the “out of stock constantly” list is Whole Foods, with aisle after aisle half full month after month. There must be some kind of Amazon algorithm that doesn’t exactly fit the grocery model. But yeah, second wave or not, I don’t think they’ve caught up yet so — if they’re actually capable of stocking up — they definitely should!

Suresh Chaganti
BrainTrust

The latest panic buying in my area is for kitchen napkins, that lasted for few days. No store can buy enough to meet panic demand. It is not wise either – locked up capital and locked up warehouse space. In any case, when staples are bought in panic, the demand for future months softens.

Retailers have been restricting quantities from time to time since the start of pandemic. Having learned lessons from March/April, they have better control on when to enforce the restrictions.

Richard Hernandez
BrainTrust

There is no need to panic buy – it would seem most people have enough paper towels to fill a land fill. The possibility of this panic is something that has been floated for some time, and retailers have been making plans to combat it. I do not know that they will be left flat-footed this time around.

Michael Terpkosh
BrainTrust

There is definitely a benefit to retailers, and wholesalers, to stock-up on staple items. Many retailers have opened up more shelf space for these items through assortment rationalization over the summer. By telling and showing customers they are ready for the demand, retailers send a positive message to customers. I still see some purchase limits out at retail, but it’s too early to impose more of these restrictions.

Ken Morris
BrainTrust

I believe the time is now to impose limits on purchases. The supply chain has been optimized for traditional demand and hoarding product breaks the chain. Ramping up new factory capacity to meet hoarding demand takes too long and is not a feasible solution. We can’t let the experience we had in the spring repeat itself.

Andrew Blatherwick
BrainTrust
The U.K. has already seen a return to panic buying of toilet paper, flour and other essential items, not at the same level as March but it has started. With the decline in eating out, which will only get worse as we move into winter and restaurants can only seat people inside therefore less capacity, there will obviously be an increase in home eating and therefore a greater demand for food from supermarkets. The big difference this time is that supermarkets are geared up for an increase and have already taken steps to ensure that their supply chain is well stocked and ready to go. Retailers need to spread the capacity of their supply chain and use all available space in stores as storage capacity to help its warehouses and distribution centers get through what potentially could see record levels of demand over the seasonal period. It is so important to plan this whole season carefully and get the right products through to stores at the right time, to build safety stock where possible and… Read more »
Gene Detroyer
BrainTrust

The only mistake retailers made the first time around was not imposing limits on purchasing. That one decision, or lack of decision, had a domino effect throughout the supply chain.

There is no reason now why limits should not be put on what might be considered reasonable purchases even now. Anticipate that we are a “me first society” and hoarders will not care if the next shopper has nothing they need.

storewanderer
Guest
17 days 19 hours ago

Aside from that Kroger owned banner I visited last night with limit 1 on various categories, all other retailers in my area have long removed their purchase limit signage. Walmart still has a purchase limit sign in front of their always empty rubbing alcohol shelf, but the purchase limit signs are gone from the 50% empty 22.5 hours a day cleaning supply aisle and the now full paper aisles.

I think purchase limit signage needs to remain in some form. If it isn’t limit 1, limit 2, there needs to be some limit. Shelf clearing customers can cause big problems quickly. If the retailers at the corporate level want control over this, they have to force their stores to impose purchase limits, post signage, and actually enforce the limits.

Steve Montgomery
BrainTrust

The good news is that staples have long shelf lives. The bad news is that warehousing items that are not turning requires SKU rationalization as there is only so much space. It also decreases the return on inventory investment. There is no doubt the forecasted second wave will again test supply chains.

The only good news is that suppliers and retailers have learned what items are likely to be impacted by panic buying and are already working to prepare for it. I have noticed that there are limits being imposed on purchasing certain items already so perhaps they were never taken off.

Matthew Pavich
Guest

Even if there is a next wave of panic buying, it probably won’t be as severe or as sudden as what happened in March. Retailers should be better prepared to mitigate these challenges with better policies (purchase limits, etc.) and inventory strategies. As previously stated in this discussion, understanding top items with the best analytics possible and having the capabilities to quickly monitor trends will also play an important role. Excess demand should be a good thing for retailers — they just need to take their learnings from earlier this year to build the supply, processes and analytical capabilities to drive strong results moving forward.

Gary Sankary
BrainTrust

We are in a time when demand signals are extremely volatile and consumer behaviors are difficult to predict. Retailers should be exploring ways to be more flexible in their supply chains by shortening lead times and staging inventory closer to demand. They’re also going need to identify metrics in the market that might trigger panic buying. And if that occurs be able to act quickly when the situation calls for it. I’m certain many retailers have used the last few months to understand the causes of the critical shortages that occurred last spring and will try to anticipate spikes in demand more proactively.

Brandon Rael
BrainTrust

National grocery chains, independent grocers, and their wholesale partners have had to adjust their operating models and come up with creative ways of keeping their shelves stocked. Panic shopping and pantry loading were real phenomena back in March when anxiety and uncertainties were at an all-time high.

However thanks to the change in strategies, grocers have now flexed their supply chains, increased the proportion of private label offerings, and have leveraged micro-fulfillment centers and flexible fulfillment options to meet the potential surge in demand.

Fundamentally, consumers shouldn’t have to pantry load if we experience another round of quarantines and shutdowns. There is simply enough product and alternatives for the consumer to choose from.

Scott Norris
Guest

Yet in the past two weeks I’ve had trouble finding/had to do without picking up paper towels and paper napkins at Target. And disposable cleaning towelettes are impossible to get. So I’m still wary every time I shop and will pick up an extra pack or two of critical items if I don’t have a good supply already at home.

Brandon Rael
BrainTrust

Good points Scott. The one exception has been the home, hygiene and sanitation areas, where we have experienced an inconsistent experience from store to store. Paper products were one of the areas impacted the most when the pandemic struck March.

Suddenly, we have seen bamboo sourced paper products, and no name brands surface, when national brands couldn’t keep up with the demands.

Perhaps, from a customer experience perspective, it would make the most sense to join a subscription service for basic paper product needs. This is a prime opportunity for the brands to go DTC.

Rachelle King
BrainTrust

It only takes one empty shelf for consumers to start panic buying. It doesn’t even have to be a shelf of product they normally buy. Just seeing a grocery store with empty aisles sends a message of fear and panic. So grocery retailers are right to stock up and plan early. For better or worse, they will play a key role in curbing pandemic panic buying based on their ability (with vendor partners) to keep the shelves stocked; even if it means limiting purchase on some items.

We don’t have a crystal ball that can predict what is going to happen over the next six months but we do know what happened in March. We hear the expert warnings about wave 2. The frontline has to be prepared; starting with your local grocery store.

Joe Skorupa
BrainTrust

Yes, the simple solution is to impose product purchase limits on key products. What makes it not so simple is that retail supply chain systems have blind spots in their commerce-ready inventory and cannot clearly see when the time is right to impose the purchase limits. Is now the right time? Is the right time after the shelves become empty? The best time is somewhere in between, but without accurate SKU counts at the store level combined with accurate sell-through forecasting it is difficult for the vast majority of retailers to make the call at the optimum time.

storewanderer
Guest
17 days 19 hours ago
Household supplies? At Kroger owned banner and Safeway (and all the regional grocers) in my area, the shelves in the cleaning aisles are still 50%-75% empty. Things like disinfecting wipes, sprays, and many cleaning solutions have been out of stock at these retailers since about March. I am told very small quantities show up on the trucks once or twice a week and are quickly sold. Safeway un-did the plan-o-gram on about half of its cleaning aisle and put a bunch of random junk there nobody wants and is not selling (all that specialty hand sanitizer, some generic baby wipe type wipes, etc.). So no, cleaning supply aisles have not been re-stocked and there is absolutely still a product shortage. I shopped a Kroger owned banner last night and new signage is posted limit 1 item per household from Kleenex, OTC medicine, napkins, paper towels, bath tissue, soap/sanitizer, and cleaning supplies. Limit 1 box of Kleenex? I also went to Safeway where they had absolutely no quantity limit signage posted. The Kroger owned banner was… Read more »
Ricardo Belmar
BrainTrust

It certainly can’t hurt for grocers to take this approach. I don’t expect we’ll see the levels of panic buying that we saw in the spring, even if there is a second wave of the virus coming. People were shocked then and reacted accordingly. This time people will hopefully exercise some control and realize they would only cause the shortages by overbuying, but that’s precisely why it can’t hurt for grocers to plan for that eventuality!

Ralph Jacobson
BrainTrust

Have we learned nothing from the past 8 months? Retailers, CPGs, and Distributors need to, 1) Rationalize SKUs. Period. 2) Adjust shelf allocation: At store level, a product that moves 10 times the movement of the product next to it on the shelf should get at least 10X the shelf allocation. 3) Rent unused warehouse space in strategic locations to stockpile key, non-perishable/long-shelf-life SKUs.

Craig Sundstrom
Guest

The risks would seem to be 1) financial (since there are costs to holding inventory, so it’s largely a question of “how much?” and “how long?”) and 2) having inadequate inventory in other categories. Stores will have to monitor their own situation(s) to evaluate how much these are issues.

I don’t see any value, at this point, anyway, in limits (well maybe not allowing “warehouse club” type buying in conventional stores). I think they would help create the very situation we’re trying to avoid.

Brian Numainville
BrainTrust

In our research earlier this year, shoppers in most categories were increasing what they are keeping on hand. Whether this turns into another round of full-fledged panic buying and hoarding versus simply keeping more on hand, especially in the more shelf-stable categories, remains to be seen. But retailers would be wise to be prepared and product limits, SKU rationalization, shelf rationalization and other careful evaluation makes a great deal of sense given the learnings from the past year and the unknown over the near term.

Kenneth Leung
BrainTrust

To a degree, I think that because consumers are stuck at home and they are looking for something to do, shopping for staples seem to become a standing reason to go out. Yes, people are eating in more and consuming more staples, but the empty shelves is also caused by people overstocking at home on long shelf life items like paper towels. I am seeing it in local targets on specific brands, but there are others available in the same category. Limits now are probably not a bad idea to smooth out the supply chain before the holiday season.

wpDiscuz
Braintrust
"Never before has product substitution been as important as it is today. SKU rationalization and focus on the top 20 percent of “essential” items is paramount."
"It only takes one empty shelf for consumers to start panic buying. It doesn’t even have to be a shelf of product they normally buy."
"The only good news is that suppliers and retailers have learned what items are likely to be impacted by panic buying and are already working to prepare for it."

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