Pre‐Hurricane Consumer Stockpiling and Post‐Hurricane Product Availability: Empirical Evidence from Natural Experiments

Abstract

T he provision of essential supplies is a key service provided by retailers when demand spikes due to consumer stockpiling during environmental emergencies. Moreover, it is important for retailers to quickly recover from these events by replenishing the stock of essential supplies to meet the continuing needs of local residents. The main purpose of this research is to study consumer precautionary stockpiling behavior prior to the onset of hurricane landfalls and determine the impact of this behavior on in-store product availability for various formats of retail store outlets. Specifically, we focus on the bottled water product category, an essential emergency category in hurricane preparedness. This study combines an event analysis methodology with econometric models using archival retail scanner data from 60 US retail chains located in 963 counties and real-time data from four recent US continental hurricanes. We find that supply-side characteristics (retail network and product variety), demand-side characteristics (hurricane experience and household income), and disaster characteristics (hazard proximity and hazard intensity) significantly affect consumer stockpiling propensity as the hurricanes approach. The increased consumer stockpiling has immediate and longer-term impacts on retail operations, namely, in-store product availability. Among various retail formats, drug stores are associated with the highest consumer stockpiling propensity before hurricanes, while dollar stores and discount stores are associated with the lowest in-store product availability following hurricanes. Our study points to the need for retailers and policymakers to carefully monitor factors affecting consumer stockpiling behavior that will allow for better allocation of critical supplies during the hurricane season.

The Impact of COVID-19 and Public Health Emergencies on Consumer Purchase of Scarce Products in China

“…This makes our research different from previous studies in marketing that focused primarily on uniqueness and wealth insecurity (20,45). We found that scarce consumption is also an important means of alleviating death threats from public health emergencies; because this research is more contextual on the basis of explaining scarcity, it is also different from those that explain scarcity based on the theory of reactance and anticipated regret (13)(14)(15).…”

“…Research based on the reactance theory found that health crises are likely to threaten or restrict people from buying products. Such signals will stimulate psychological resistance, which in turn will increase people's attention to products and cause panic buying ( 13 , 14 ); those based on the anticipated regret theory indicates that people may regret not making panic purchases due to perceived scarcity, aiming to avoid this kind of uncomfortable feeling they will increase scarce consumption ( 15 ). Although these studies do show that scarcity and panic buying are inextricably linked, reactance and anticipated regret are broader theories, which means that they may also be applicable to the pursuit of scarce resources in other contexts.…”

The Psychological Causes of Panic Buying Following a Health Crisis

“…Consequently, such signals would stimulate psychological reactance that raises the attention towards and attractiveness of a product. Psychological reactance can trigger a sense of urgency to buy and hoarding behaviour, which connote similar meaning with panic buying [21,22].…”

The Determinants of Panic Buying during COVID-19

“…Thus, they are more likely to panic buy to minimize the frequency of their shopping trips and the risk of contracting COVID-19. This psychological reactance leads to heightened consumer motivation to panic buy the products that are perceived to be scarce [ 109 , 110 ].…”