Talking to friends and loved ones in the US, it seems everyone has had a moment or two these past several weeks where the surreal nature of our times has set in; a “this is really happening” moment. For many, grocery and convenience stores have been especially affecting.
Dr. Aradhna Krishna, behavioral scientist and Dwight F. Benton Professor of Marketing at Ross, was recently invited on Wisconsin Public Radio to discuss patterns in consumer behavior that ultimately lead to phenomena we’ve seen both in-person and on social media: long lines, empty shelves, and unusually high prices.
“Think about visiting another city. You’re a tourist and you don’t know which restaurant to go to, but you see a line outside one restaurant. There’s clearly a big demand for it, so you join that line,” Krishna said. “The same thing is happening here. If you go into a store, and you see that the diaper shelf, for example, is empty, you might decide you need to buy diapers.”
Social media, Krishna explained, has played a salient role in pandemic consumerism. Photos of sold-out essentials spread like wildfire, especially at the onset of the stay-at-home orders, when panic about this “new normal” was just starting to set in.
With feelings of anxiety and fear on the rise, it’s no surprise people have turned to familiar stores and brands, often leaving smaller, family-owned stores with a fuller inventory than their household-name counterparts.
“People feel protected by the familiar,” said Krishna. “The reason some brands have a higher market share and are better known is because more people are familiar with them. The same thing goes for larger stores.”
“As you can see, both big stores and popular brands are running out. This is also a time when foreign brands might suffer, because people tend to be less familiar with many of these brands.”
An unfortunate side effect of these stock-outs is price gouging, or an increase in cost beyond what’s considered reasonable for a given product. Krishna believes legislation and public vigilance are the best ways to combat unethical price increases.
“Typically, when prices increase, people share the information on social media to flag the site of price gouging for the public. Then, retailers like eBay or Amazon might try to monitor it. But with price gouging laws now in effect in many states, there’s usually a hotline to call to report the price increase,” she said.
“With legislation in place, the public gets more vigilant about price increases, and the manufacturers also don’t want to be associated with the price gouging, so they’ll see to it that their products aren’t sold at those high prices. So now you have four entities—consumers, retailers, manufacturers, and the government—all watching for price gouging.”
In the present situation, Krishna feels an argument in defense of price gouging is rather unsound. Under normal circumstances, people might be able to dismiss a price increase on certain goods or commodities, following the logic that the product will go to the person who needs it most desperately.
“But that’s not the case here. Everybody needs these products,” Krishna said, referring to essentials like diapers and hand sanitizer. “Especially people who can’t afford to pay more—lower-income folks in more congested areas, who are still taking public transportation to work every day—these are the people who might need soaps and sanitizers the most.”
Socioeconomic status also contributes to who is and is not able to stockpile. The price of buying in bulk is an obstacle for lower-income people, whose residences may also be spatially unequipped to accommodate a stockpile. Thankfully, Krishna said there’s a chance the next round of stock-outs may not be as severe as when the pandemic first struck.
“Manufacturers are trying to ramp up their supply, and some have made public statements announcing their efforts to increase production capacity,” she said. “Others, like Purell, have redistributed supply to areas where they feel it’s most needed; they’ll supply hospitals first, then consumers.”