Name: Umunnah Makour Matric No: 18/sms03/031 Department: Business Administration Level: 200L Course Code: Bus208 Assignment Last week, we analyzed a snapshot of consumer attitudes and spending from March 1 through March 9. This one-week period indicated increased concern over Coronavirus and a jump in consumers stocking up on key items, leading to product shortages in food staples as well as household and cleaning supplies. In this post, we’ll explore the same questions and discuss how the majority of the country is now indicating their shopping behavior has been impacted by events since March 11. With consumers still flooding stores and retailers scrambling to restock, product scarcity is top of mind for many shoppers who are leaning more toward purchasing these items online. Have consumers changed their purchase behavior in response to Coronavirus? In the week prior to the March 11 inflection point, our initial survey found 33% of consumers indicating they had already changed their purchasing behavior.  This week has seen that number nearly double to 59% as school closures, travel bans, and the need for social distancing have impacted communities nationwide. Celebrity announcements from Tom Hanks, Rita Wilson, and Idris Elba sharing they’ve contracted Coronavirus have also added to the urgency of the situation and influenced the shopping behavior of the majority of Americans. We’re certainly seeing the impact of this excessive behavior across markets. Our data shows that Australians are struggling the most to buy fundamental household and food items.  Two-thirds of Australian consumers say they’re struggling to buy essential household items like toilet rolls, compared to just 8% in China and 7% in Italy.  Also, just over a third of Australians are also having a difficult time purchasing food and drink items (globally just 11% say the same). This is partly because of supply issues from countries Australia relies on for trade, such as China.  There also seems to be an information gap in South Africa. For example, 29% of South Africans have the biggest issue with getting up-to-date information about the situation in their local area and 22% struggle to get up-to-date information about the situation in their country. This highlights just how important accurate, timely, and trustworthy news is at this time. PPE and medical supplies are in high demand. Face masks (45%) and hand sanitizer gel (30%) are the top items globally that consumers are struggling to purchase.  By country, Japan sees the highest struggle to buy face masks at 78%, while the Philippines struggles the most to purchase hand sanitizer gel at 70%. This is a common occurrence across most countries.  Google searches for hand sanitizer have skyrocketed, while many pharmacies and stores have sold out. With the increased demand, Amazon and Walmart sellers have also been criticized for price gouging But some brands have been lending a hand. Louis Vuitton owner, LVMH, started making hand sanitizer to meet demand and SpaceX is also manufacturing its own hand sanitizer and face shields with plans to donate materials to hospitals. Purchases could be delayed for quite some time. It’s clear that purchasing habits could take a long time to return to normal.  Over 40% of consumers say they will buy major purchases only when the outbreak decreases or ends in their country.  But close to 20% say they will wait until the outbreak decreases or is over globally. Chinese consumers are most likely to say they’ll resume purchasing when the outbreak decreases or ends on a national level (52%). In comparison, Singaporean consumers would prefer to wait until this happens globally (35%).  Younger generations are also more inclined to wait until the outbreak improves on a national level. Similarly, the top income group are most open to making their purchases once the national situation begins to improve. THE PSYCHOLOGY BEHIND CORONAVIRUS PANIC BUYING Waves of panic buying triggered by the rapid global spread of the novel coronavirus (COVID-19) are a mass psychological phenomenon worth pondering. Irrespective of cultures and national borders, each stage of the epidemic’s escalation has quickly resulted in the affected population raiding shops. To be sure, some of the stockpiled items are directly associated with disease prevention, such as face masks and hand sanitiser. But there has also been a mad rush for general household staples, despite there being no indication of impending shortage. In Singapore, for example, social media was flooded with images of empty store shelves and people buying large quantities of paper goods, rice and instant noodles after the city-state raised its alert level from yellow to orange, reflecting a heightened virus risk. In Hong Kong, the frenzy became so great that a delivery man was robbed of 600 toilet paper rolls at knifepoint. As of this writing, Indonesia has no confirmed cases of coronavirus, yet spiking demand for basic food items has led some local vendors to double their usual prices. In northern Italy, a flurry of panic buying turned people’s fears of a shortage into self-fulfilling prophecies in some areas, authorities’ pleas for public calm notwithstanding. While some experts recommend buying moderate quantities of extra supplies in case strict coronavirus quarantines are eventually imposed (as they have been in several Chinese cities), unbridled hoarding by consumers makes society less safe rather than more. It shows irrationality instead of wise caution. What’s fuelling the panic? So how can we explain it, given there has been little or no indication that supplies are low? Some reports have attributed the panic buying to a growing distrust of Chinese authorities’ ability to keep people safe or tell them the truth. But, obviously, the global prevalence of panic buying would seem to poke holes in that theory. Alternatively, social scientists have pinned it on a herd instinct that is triggered by fear and spread through social media. However, there is also evidence that this focus on buying practical goods is a behavioural reaction to feelings of stress and uncertainty. Think of it as a form of retail therapy, only instead of splurging on the latest fashion garment or gadget, consumers purchase utilitarian products associated with problem solving, which may enhance their sense of control. In recent research we conducted with Leonard Lee, Professor of Marketing at NUS Business School, we looked at the types of products that appealed to consumers when they felt control deprived. We hypothesised, and found, that consumers would compensate for a loss of perceived control by buying useful products designed to fill a basic need or accomplish a task. Closer analysis suggested this preference was due to the products’ association with problem solving or their ability to help manage a problem. Control deprivation The research includes a series of studies written up in the paper, “Control Deprivation Motivates Acquisition of Utilitarian Products”, published in the Journal of Consumer Research. In it, we found that a group of participants who had been asked to recall a situation where they had felt a low sense of control over their environment bought more practical items (e.g. cooking ingredients and household cleaners) during a supermarket trip, compared to another group who were asked to recall a time when they were well and in control. Follow-up studies showed that consumers whose sense of control was threatened were far more likely to favour functional sneakers over more fashionable footwear or book a therapeutic massage over a relaxing one. Loss of control doesn’t mean being out of control or lacking self-discipline. It refers to the everyday, fundamental experience of being unable to take action to help address a situation or produce a desired outcome in a given environment. It is important to note that loss of control differs from a lack of autonomy, which is when people feel they lack the power to act according to their own will. Unlike consumers feeling out of control, autonomy-seeking consumers tend to prefer products that bolster their individuality, such as status symbols that communicate uniqueness, or items that can be used or displayed in a variety of ways. People in countries – and particularly high-density cities – where fears of a pandemic could start, may be stressed by the potential spread of the virus or the panic that is rising around them and seek to restore their sense of equilibrium by buying practical, utilitarian products. With tens of millions of people now under quarantine in China and COVID-19 rapidly spreading, it is unlikely that purchasing handwipes, instant noodles or even face masks will keep people completely safe. However, just purchasing the goods may help to keep them calm and give them a sense that they still have some control over their lives. An earlier version of this article appeared in Singapore’s Business Times newspaper. Andy J. Yap is an Assistant Professor of Organisational Behaviour at INSEAD. Charlene Y. Chen is an Assistant Professor of Marketing at Nanyang Business School.