Question

1. (a) Once the coronavirus was declared a pandemic by the World Health Organisation, consumers globally have reacted with panic buying in a bid to forestall potential supply disruptions. Perform a comparative analysis on the nature and extent of panic buying in Australia and Thailand. Discuss any similarities or differences in the behaviour of the consumers in their respective markets and the products that were stock piled.

2. (b) Under conditions of consumer panic buying, satisfying demand with the available products is a complex problem. Discuss the extent to which retailers in both countries have relied on subsititute products to satisfy consumer demand.

3. (c) Although panic buying could be induced by fears of potential supply disruptions due to a negative event occurring, the subsequent behaviour of consumers could actually create an artificial shortage of goods such as toilet paper, hand sanitisers and other essential day to day commodities. Identify and discuss any two events that happened in the last 15 years that caused massive panic buying. You are not restricted to Australia and the Asia Pacific

region.

4. (d) With reference to what you discussed in part (c) above, what was the effect on prices in the short term?

5. (e) Irrational stockpiling can also lead to price gouging, says Steven Taylor, a professor and clinical psychologist at the University of British Columbia, and the author of The Psychology of Pandemics. Critically discuss what role governements could play to control possibilities of price gouging. Make reference to Australia and the other Asia Pacific country you are analysing.

Answer 1

Ans a. As per Woolworth, the largest super market chain in Australia, the business has imposed limitation in purchase of essential items such as pasta, vegetables and sugar. This was done as shoppers rushed to store in demand of these products. Seems like in Australia panic buying has shown up as an overreaction to the on-going pandemic. This is indicative in terms of rise in sales of canned and dry soup that surged close to 180 per cent, sales of toilet paper and tissue paper also doubled besides creating a shortage on flour, rice and pasta.

In Thailand as well there was similar reaction like that of Australia. There was rise in sales of items like noodles, packed rice, tissue paper, tinned fish and drinking water. In no time super market shelves were emptied by buyers for these items.

Ans b. In Thailand to meet growing demand for essential goods one of the super market chain The Mall group doubled the inventory of goods to from 15 days’ supply to 30 days so as to avoid shortage of commodities due to rising demand. Besides, Thai Government established seven war rooms to ensure sufficient and uninterrupted supply of essentials. Three of these are solely dedicated to rice fruits vegetables and processed foods.

In Australia to counter the growing demand due to panic buying rationing system has been re-introduced. Supermarkets have set limits on purchases of essential food products. Besides, change of mind refund was also scrapped so as to prevent over purchasing of essential items. Government of Australia has also announced that country will not run out of food due to pandemic. This is because Australia exports 70 per cent of its agricultural production. Despite temporary shortage of essentials in supermarket due to a sudden demand, Australia does not have food security issue. As such country is self-sufficient in handling essential demand due to pandemic.

Ans c. The fuel protest in UK because of the rising petrol and diesel prices for road vehicle use saw panic buying in 2005 and 2007. Since the protest in 2007 did not get much support widely as such panic buying that happened in limited regions did not cause much disruption. Another event that led to panic buying is Venezuelan economic crisis. In 2014 Venezuela economy entered recession with contracting economy. The Global misery index was topped by Venezuela. This included decline in employment, rise in price or inflation and other economic factors.

Ans d. If we look in to the situation of Venezuela with minimal production and growing demand there was a natural rise in prices for goods and services. As such economy was marred with inflation in the short term.

Ans e. According to Steven Taylor, under pandemic like situation, people seem to act in a way what they perceive to be proportionate to the level of crisis. Since washing hands and taking care of coughing hygiene seems too mundane as such people take dramatic actions to counter dramatic situations. As such spending increases with the intent to protecting themselves. This in turn forces the seller to increase the price. This results in price gouging. This was visible with rice in price of N95 mask than the usual rate due to growing demand among consumers. Since this was propagated that only N95 masks in the most protective gear to prevent infection via nose.

To counter price gouging, Government can put a cap in the value of essential items. Also government can come up with safety measures instructions which are very simple to follow and does not accrue any expenses. Besides hoardings and repetitive advertisement of safety instructions can stop people from unnecessary spending and panicking.

Ans a. As per Woolworth, the largest super market chain in Australia, the business has imposed limitation in purchase of essential items such as pasta, vegetables and sugar. This was done as shoppers rushed to store in demand of these products. Seems like in Australia panic buying has shown up as an overreaction to the on-going pandemic. This is indicative in terms of rise in sales of canned and dry soup that surged close to 180 per cent, sales of toilet paper and tissue paper also doubled besides creating a shortage on flour, rice and pasta.

In Thailand as well there was similar reaction like that of Australia. There was rise in sales of items like noodles, packed rice, tissue paper, tinned fish and drinking water. In no time super market shelves were emptied by buyers for these items.

Ans b. In Thailand to meet growing demand for essential goods one of the super market chain The Mall group doubled the inventory of goods to from 15 days’ supply to 30 days so as to avoid shortage of commodities due to rising demand. Besides, Thai Government established seven war rooms to ensure sufficient and uninterrupted supply of essentials. Three of these are solely dedicated to rice fruits vegetables and processed foods.

In Australia to counter the growing demand due to panic buying rationing system has been re-introduced. Supermarkets have set limits on purchases of essential food products. Besides, change of mind refund was also scrapped so as to prevent over purchasing of essential items. Government of Australia has also announced that country will not run out of food due to pandemic. This is because Australia exports 70 per cent of its agricultural production. Despite temporary shortage of essentials in supermarket due to a sudden demand, Australia does not have food security issue. As such country is self-sufficient in handling essential demand due to pandemic.

Ans c. The fuel protest in UK because of the rising petrol and diesel prices for road vehicle use saw panic buying in 2005 and 2007. Since the protest in 2007 did not get much support widely as such panic buying that happened in limited regions did not cause much disruption. Another event that led to panic buying is Venezuelan economic crisis. In 2014 Venezuela economy entered recession with contracting economy. The Global misery index was topped by Venezuela. This included decline in employment, rise in price or inflation and other economic factors.

Ans d. If we look in to the situation of Venezuela with minimal production and growing demand there was a natural rise in prices for goods and services. As such economy was marred with inflation in the short term.

Ans e. According to Steven Taylor, under pandemic like situation, people seem to act in a way what they perceive to be proportionate to the level of crisis. Since washing hands and taking care of coughing hygiene seems too mundane as such people take dramatic actions to counter dramatic situations. As such spending increases with the intent to protecting themselves. This in turn forces the seller to increase the price. This results in price gouging. This was visible with rice in price of N95 mask than the usual rate due to growing demand among consumers. Since this was propagated that only N95 masks in the most protective gear to prevent infection via nose.

To counter price gouging, Government can put a cap in the value of essential items. Also government can come up with safety measures instructions which are very simple to follow and does not accrue any expenses. Besides hoardings and repetitive advertisement of safety instructions can stop people from unnecessary spending and panicking.