Hoarding toilet paper may seem like another quirk of irrational consumer behaviour that is driven by emotion. Or another sign that society has gone mad! However, it is normal behaviour that we all do from time-to-time that rational when you understand it. The recent toilet paper hoarding gives us deep insights into what drives consumer behaviour.
“Any society is only three-square meals away from revolution.”
Trotsky (1879-1940) and others have used similar quotes with a varying number of meals and anarchy, when describing how things can go from good to bad quickly. Over the past few weeks, we could easily reword the statement “Any society is only three rolls of toilet paper away from revolution”.
Hoarding behaviour is not new to Australia. Every year in the tropics, local communities facing an approaching cyclone clear their local grocery and hardware stores of supplies. Growing up near the small country town of Sarina in North Queensland, this was an annual tradition carried out at least once during cyclone season. Many of the same items we have seen disappear off the shelves during the current COVID-19 pandemic, including toilet paper, were what people bought when facing the disruption of a cyclone and floods.
What makes the current hoarding behaviour notable is how widespread it is across Australia and other countries.
Q: Why do we hoard? A: It’s basic behavioural economics
Excluding hoarding that relates to mental health issues, to answer this question, ask yourself when you last bought something that you were not sure if you had enough at home, why did you buy? The simple answer is ‘just to make sure you have enough’. A more thoughtful understanding involves how people perceive risk. Behavioural economics shows that we hate loss; we avoid risk.
Level of Action = Perceived Chances of Event * Consequence of not acting
A rule of thumb is that behaviour is driven by both the perceived likelihood of an event by the perceived magnitude of the consequences if we do not act. The consequences for being out of toilet paper are huge. Unlike many other products, there are few substitutes for toilet paper. Apart from health reasons, not having toilet paper taps into the powerful driver of human behaviour: social disapproval. Having to deal with the wrath of your partner if we miss the opportunity to buy is bad, if they are on the toilet when there is no paper, you may need to sleep on the couch for a few nights after you drive around the city looking for toilet paper. Not having toilet paper for people visiting would be embarrassing for you and your guest.
Hoarding is a more visceral form of FOMO (Fear Of Missing Out)
So, this is the answer? It is more interesting than that. Keep reading!
Our hoarding reflects cultural differences
Although toilet paper is what made the news, many other grocery items are being sold out or had a sharp sales increase. Categories hit the hardest were the non-perishable carbohydrates like pasta, noodles, rice, beans and flour. After visiting several stores, you can tell the dominate ethnic culture in an area. In the inner-west suburbs can have very distinct ethnic profiles. In Leichhardt, where families with an Italian background are common, pasta, tinned tomatoes and passata disappeared. In the suburbs with more east Asians, the rice and noodles were the preferred items. While in the areas with a strong British background, shelves of baked beans were cleared out.
Food was not the only category affected. Healthcare products were quickly cleared from the shelves: Pain relievers (also used for fever), tissues, hand sanitizer, liquid soap, wipes and toilet paper. Apart from pain relievers, all the other products were preventative products.
Ok, but that still does not fully explain why toilet paper?
Social media did not start the fire; it just added fuel to the fire
Once toilet paper shelves were cleared, it became a social media and media fetish. Unlike other items, empty toilet paper shelves stand out. An empty aisle makes for a more dramatic photo than a few meters of empty noodle shelving. When the shelf shares other products, like pain relievers, it looks just like no one has bothered the restoke.
The power of visual presence is what makes the New York Flatiron building one of the most photographed and recognised buildings rather than the Empire State Building. Dramatic simplicity is the ideal photograph.
Empty Toilet Paper Shelves
Social media gave the momentum, but it is not what started people to buy toilet paper. People seeing what others were doing cues them to consider the same action. This is what gives social behaviour its momentum.
One more thing before the big reveal!
Being Out of Stock is Easy to Do
You don’t need fear or consumers hoarding large numbers for shelves to quickly clear. Modern logistics demands a fine balance between having enough and not having any stock. The stock that is waiting to be sold is a cost that all business tries to minimise. For over fifty years businesses have moved from warehousing to just-in-time inventory management. This means the most efficient practice is to have only enough stock to meet demand. If marginal warehousing costs are higher than the margin of lost sales, then being out of stock for a short time is preferable. Toilet paper is managed this way, along with all other grocery items.
In the grocery trade, one of the rates of sale is called ‘units per store per week’. Combined with an automated restocking system that uses ‘minimum’ stocking levels as the re-order trigger, and you only need a slight sustained increase in sales to have not stock. Without stores keeping stock, consumers then need to wait for the next truck from the manufacture to arrive. This restocking could take hours or days, depending on the product. All this time provides consumers with plenty of empty shelves to photograph.
Retailers avoid conspicuous out-of-stock by having multiple brands. The large scale out-of-stock occurred across multiple brands. Interestingly, I monitored a couple of categories and noticed the main brands went first. Even when we panic buy, we are brand loyal.
“Even when we panic buy, we are brand loyal”
Finally, why toilet paper?
As the comedian Sammy J pints out, we may never know who the first hoarder was and whether they went first for the scented patterned two-ply. However, we can know ‘why toilet paper’ if we look at where it started before Australia and where it started in Australia.
Before toilet paper hoarding started in Australia, Hong Kong and Japanese consumers started to hoard toilet paper out of fear that supplies from China were affected by factory and city closures. Unlike Australia, both these countries are dependent upon overseas supply and being out-of-stock can weeks to replenish distributor and store stocks. Niki Edwards, School of Public Health and Social Work, Queensland University of Technology, has pointed out that not having a sense of control over your hygiene is a powerful behaviour driver of both perceived risk and consequence.
In Australia, the first areas affected were in Chatswood and other suburbs with a higher Hong Kong Japanese and Korean population. With close family connections to those countries who were most affected at the time, and without the knowledge that Australia makes most of its toilet paper, and without the experience of quick shelf replenishing, more toilet paper was bought.
Ritual cleaning and symbolism of toilet paper
I have a confession. For many years I worked on toilet paper, paper towels and hygiene. Compared to many categories, toilet paper is a high involvement category. The anxiety caused by the out-of-stocks is evidence of this central role it plays in our daily lives. Not since the banana shortages in 2011, have Australians been so concerned about an everyday staple.
Toilet paper is more than just a needed household product. It is a symbolic product used in our daily cleaning rituals and is seen as a physical and metaphorical barrier between the clean us and unclean world. This symbolic role is reflected in the different product preferences between cultures and countries. In Australia, we like our toilet paper double-ply and textured. This design creates an image in our minds of the paper, providing a stronger barrier and the ability to make our selves cleaner. With its white paper, soft blues and lavender packaging, toilet paper semiotics is designed to give a sense of clean pureness. When recycled paper toilet paper was launched, its brown environment symbolism had people asking who used the paper before they did.
Unlike the hoarding behaviour associated with natural disasters, like cyclones, some hoarders were more opportunistic and hoped to sell their hoard at inflated prices. Already the hoarding is slowing and major retailers have warned consumers that they will not refund those who bulk bought to hoard products in the past few weeks.
With more stock entering the market, and less hoarding, I look forward to cheap toilet paper in the coming weeks as manufacturers try to get rid of their excess stock.
If you want to know more about doing consumer behaviour and what drives consumers to buy, contact us insights@erisstrategy.com.au