Empty Drugstore Shelves from Hoarding Behavior

Empty Drugstore Shelves from Hoarding Behavior

Photo: Dr. Jean-Paul Rodrigue, March 2020.

Hoarding is a common consumer response when facing uncertainties concerning the future availability of essential goods. During a natural disaster such as a hurricane or flooding, local stores can be emptied of goods such as bottled water, food, batteries, and construction materials. The concern is that distribution infrastructures are going to be disrupted and damaged (or even destroyed), making goods unavailable for an unknown duration. Therefore, hoarding transfers a share of the inventory from retail stores and distribution centers to consumers’ homes where it can be available.

The major difference between a natural disaster and a pandemic is that natural disasters tend to be local or regional events, implying that supplies can be redistributed from markets outside the impacted area. For a pandemic, almost every market is impacted at once by hoarding behavior, even if the distribution system remains intact. The demand shock the distribution system is facing, therefore, overwhelms its distribution capabilities. Producers are challenged to significantly increase their production because manufacturing systems for the supply of many goods are designed to provide a continuous and stable output.

In the above photo, in-store inventory of household goods such as towel paper, tissues and toilet paper has been completely sold out because of a hoarding-derived surge in demand. Since all the stores are impacted at the same time by this demand surge, including all the retail stores selling similar goods, re-supply cannot take place in a timely manner. The outcome of the hoarding is a shortage of essential goods to a large share of the population and an overwhelming surplus for those who hoarded while the inventory was available.

Hoarding is however of short duration. The shortages taking place afterwards tend to be more related to changes in demand patterns, such as less commercial and more consumer demand.