Empty shelves....long queues.....overflowing carts.... it was like the apocalypse was coming.





Coronavirus proved one thing....Panic takes over the best of the minds too. The so called "educated" people, working in top corporations and fetching hefty pay checks; are the ones who are turning their basements and garages into make-shift stores.

I’m sure you all have seen videos and pictures of people fighting over toilet paper rolls (we’ll all agree that toilet paper will not protect us against Covid-19) and people stocking up food like it’s the end of the world and all they have to do is "EAT’. Still, have a look at some of the pictures below....and reflect.





On March 14, President Trump declared the Coronavirus pandemic a National Emergency and this created a sense of urgency. Didn’t know what to expect in terms of lock-down or shut-down or anything else, people rushed to stock their pantries and the the news of empty shelves and long queues sent jitters across.



Those who could make bulk purchases, they ransacked grocery stores. And those who could not, were left at risk of not having what they needed, especially the elderly and vulnerable.



Nearly 1 in 5 households are experiencing a layoff or a reduction in work hours and pay-cuts. Stay at home is contracting economic activity and demand drop for many goods and services is creating ripples. In 2018 itself, according to the U.S. Department of Agriculture, more than 37 million Americans struggled to put food on the table; this crisis is going to worsen the things.



Lower-income groups making less than $50,000 are a quarter of households. People are running out of food but still can’t stock it up as some of them are waiting for their Social Security, disability checks or food stamps to buy necessities for the month. And by the time money lands in the banks, affordable food is gone from the shelves. Stockpiling by those who can afford, is creating an unnecessary gap between demand and supply.



This is the story of developed economy like U.S., where the social security system is strong and organized. And thankfully till now prices for the essentials have not gone up. Whereas, in a country like India or Africa, where the majority of the population works in unorganized sectors and the poverty levels are so high, stockpiling will not only make food disappear but it would increase the prices and ultimately inflation.



There is no doubt that the health crisis is turning into a financial one but panic buying threatens to convert it into a humanitarian crisis.





Panic or Precaution

Individuals respond differently to threats like the given one. Generally, people begin with awareness and tend to believe that they would not be affected. Which however reverses, as the number of cases increase and they hear and read more about the crisis. But they believe that "it won’t happen to me".



A minority of 10 to 30 percent of the population however, begins to overestimate the risk and behave hysterically. These are the people who stock things ranging from food to snacks to granola bars to toilet paper. And they are the reason behind empty shelves. But their panic and overreaction to the crisis prompts others to join the bandwagon.



Majority of the population tends to believe that they are "not stockpiling", and they are "just storing enough for the tough times". However, this "storing enough for the tough times" is way too much than their normal purchases. $1.2 billion of extra food have been squirreled away over past three weeks.



Financial burden of stockpiling

People wanted to buy.....what....not sure....hence they bought whatever they could lay their hands on. Affordable food, cleaning aid, sanitizer, wipes and toilet paper were the first few things to disappear. Those who could afford to stock, converted their basement into make-shift stores, but in the process they did not realize that they have spent much more on grocery than their monthly budget allocations.





According to the marketing research company Nielsen, this consumer behavior is called "pantry preparation". This increases their store visits and cart size. In this process consumer lose track of the price and end up paying for whatever they can lay their hands on rather what they want to pay for.





Credit card debts are the next thing people will have to worry about as overspending on grocery would drain their funds and economic crisis is drying up income sources.



Perishable goods need to be replenished

Stock as much as you can, but common sense tells us that there are few things for which you will need sporadic refills. Milk, bread, meat, veggies, fruits, etc. cannot be stored for a very long time and their consumption is high. Once these items exhaust, you would either step out or would place the order online. Then why panic and stock unnecessary stuff that you can buy along with these essentials.



In panic ‘herd mentality’ takes over logic and common sense. Consumer ends up buying whatever they can find or suggested by friends and relatives rather what they need and then makes multiple trips to the store to refill perishables.



Complacency more than panic, becomes a problem

Initially we all overestimate the risk and comply to the guidelines stated by the officials, as in case of social distancing or shelter in place. This is the time we overreact to the risk. However, with time and precaution, if we don’t fall sick, we’ll underweight the risk and start to go out. This is a proven human psychology. And the first visit would be to the grocery store. Yet another round of un-needed (maybe unnecessary too) spending.



Global retailer’s and government’s plea

Tesco, Aldi, Waitrose in United Kingdom; Metro in Germany; Carrefour in France; Woolworth in Australia; or Costco in United States; all the supermarkets and retailers are forced to ration food and household staples to mitigate panic purchases. Retailers, government and food producers, all are urging people that there is enough food and their supply chain is robust provided people who can afford to stockpile buy what they actually need.

Big retailers are freeing their shelves, hiring large numbers and making space in warehouses for the essential products that consumers really need. They have priority access and exclusive shopping hours for the elderly and vulnerable. Government is telling everyone that grocery stores would remain open even in case of shut-down, and have increased the hours for the trucks to shuttle between warehouse and stores. But people are not able to adjust to the facts and keep making multiple trips to the stores.





When the normal will return

Like all the tough times, this time would pass too. There are few lessons on finance and human behavior I have learned from this health crisis.....





1.Worrying would not change anything

In no sense am I undermining the severity of Covid-19 neither am I suggesting anything against the warnings issued by the health officials. But sitting at home and worrying about things that we don’t have any control on, is not going to help. Remember there are bigger issues like unemployment, food security and shelter for a large percentage of the population.





2. Resilience helps

Covid -19 will be eventually a thing of the past, though it might change the way world operates and a new normal may evolve but it will pass. Stay sensitive to the needs of the people around you. You can survive if you don’t eat your fruits, all carbs diet or vegan products for some of the days and stay healthy with normal food.





3. Human panic makes things worse

We have to control the spread of virus and Covid-19 will eventually be under control. Listen to the government and health officials and TRY to stay calm. Understand that some people are in panic mode and use your common sense rather finding sense in their craziness.





Visiting stores visited by so many, touching shelves touched by many, being in the closed environment of a grocery store with so many around; is a bigger threat than food shortage.











