Commercial value of panic buying and its marketing implications

Abstract

In the wake of the significant impact of the COVID‐19 pandemic on industries and societies worldwide, the world has transitioned into a new normal marked by increased susceptibility to disruptive, volatile, uncertain, complex, and ambiguous (DVUCA) events. In this new normal, panic buying has proliferated into a pervasive global consumer behavior, rendering far‐reaching implications on economies and societies worldwide and thus necessitating thorough investigation. Existing literature on panic buying is constrained by two noteworthy limitations: firstly, the scarcity of studies that delineate the commercial impact of panic buying, and secondly, the dearth of longitudinal data in panic buying research. Addressing these gaps, this study employs longitudinal multi‐sourced monthly and seasonally adjusted secondary data comprising retail revenue of supermarkets and grocery stores and related COVID‐19 indicators in Australia to establish a case of panic buying and examine its commercial impact. Using 10 generalized least squares and two‐stage least squares regressions, we observe a positive, statistically significant relationship between the intensity of external crises and retail revenue, even when accounting for control and instrumental variables. Specifically, the increasing number of COVID‐19 new cases was found to produce a positive and significant effect on supermarket and grocery store revenue, with each new case contributing AU $0.02 million. Therefore, the present study contributes alternative evidence from the field that not only reaffirms the effect of externalities such as COVID‐19 in stimulating panic buying among consumers, but also highlights, for the first time, the commercial value of panic buying. The marketing implications of these findings in the new normal are also discussed.