Consumer Panic Buying: Realizing Its Consequences and Repercussions on the Supply Chain

Abstract

Globalization has brought not only advantages but also risks into the supply chains. One lesser studied risk is the effect of consumer behavior in crises. The recent COVID-19 pandemic has shown that the most efficient and optimized supply chains are susceptible to consumer panic buying. There is a severe need to understand the multitude of scenarios that could manifest after a catastrophe due to the change in consumer behavior so that businesses can develop a mitigation plan. The authors have developed an agent-based model that can simulate the various outcomes of a crisis using a consumer panic buying model and a supply chain model. The model quantitatively evaluates the panic purchase intention of a consumer while assessing the impact of panic buying on the supply chain. This paper introduces the implementation of the model, focusing on output analysis of the various situational settings in disaster aftermath. Preliminary study has revealed that implementing quota policy or rationing uniformly is very effective while controlling media reports or panic buying consumers can reduce consumer demand significantly.

The Pandemic Consumer Response: A Stockpiling Perspective and Shopping Channel Preferences

“…These effects have been demonstrated in the Covid-19 pandemic, where stores quickly sold out of basics. Disruptions to the (old-)normal patterns of consumer demand negatively impacted the performance of the supply chains (Dulam, Furuta and Kanno, 2021;Ivanov, 2020). Scarcities led to price increases of sometimes 300% (Pantano et al, 2020), de-sensitizing consumers to price increases (Hamilton et al, 2019), waiting times and long queues to enter stores (Pantano et al, 2020;Shah, Shafir and Mullainathan, 2015).…”

Supply chain management in times of crisis: a systematic review

“…• Agent-based simulation and multi-agent modelling (Kaddouci et al 2009 ; Resende-Filho and Hurley 2012 ; Comba et al 2013 ; Kaddoussi et al 2013 ; Chaturvedi et al 2014 ; Iannone et al 2014 ; Upton and Nuttall 2014 ; Chong et al 2014 ; Colon et al 2021 ; Dulam et al 2021 )…”

“…in a fuel panic) (Upton and Nuttall 2014 ), surge sporadically (e.g. in a pandemic) (Butu et al 2020 ; Yuen et al 2020 ; Kim and Zhao 2021 ; Kovács and Sigala 2021 ; Dulam et al 2021 ; Al Zoubi et al 2021 ), or evolve dynamically (e.g. in a financial crisis) (Udenio et al 2015 ; Ferrer-Pérez et al 2019 ).…”

The Effects of Globalization: Hyper Consumption and Environmental Consumer Behavior during the Covid-19 Pandemic

“…Some scholars accept globalization as homogenization, with a natural effect of unification in the world, geopolitics for global domination (Marinov, 2018), a kind of Americanization (Popov, 2009). Increasing globalization has a multitude of companies taking advantage of global sourcing through procuring inexpensive raw materials or lower labor costs from developing countries, or with technical expertise from advanced nations to increase its profitability (Dulam et al, 2021). The commented consequences of globalization can be defined mainly as polar, transformation of the postmodern society into information-network, increasing the influence of cross-border companies at the expense of national ones, enhancing stability, democracy and peace, higher competitiveness of enterprises thanks to cheaper resources and new technologies imported from abroad, raising living standards and stimulating the purchasing power of consumers (especially lowincome households), unfair commercial practices by businesses and governments, deepening inequalities and social polarization (European Commission).…”