What Panic Buying teaches us.

In October this year it was almost impossible to find petrol anywhere in the South East of England. I know this, because I tried. We were told by politicians that there wasn’t a shortage and yet my countless trips around the region painted a very different picture.

Panic buying is not a new phenomena. We’ve seen it with toilet rolls, petrol, medicines and even with runs on banks. How many of these events were due to an actual shortage? Almost none. Perversely the shortages come about as a result of us rushing out to buy those things that we believe are scarce and therefore we collectively make it self fulfilling.

Why then do we panic buy? And before I hear you say ‘I don’t do it’ let me reassure you - we all do it because it’s bound by basic human instinct. Panic buying combines three factors; scarcity, survival and ironic process theory.

Scarcity?

Sales people have known for years the impact of using scarcity in their sales arguments. ‘Last five available’, ‘while stocks last’, ‘if you don’t buy it today it might be gone tomorrow’. It’s an effective tactic because it plays on our fear of missing out. In the early 2000s British Airways decided to reduce its daily Concorde service to New York from two trips to one. Overnight seats on Concorde sold out for months. Nothing changed about the service, speed, experience or price. The only discernible difference was scarcity. Psychologists have discovered that our desire for an object increases with its actual or perceived availability. In essence we want more of the things we that we might not be able to have. What’s interesting here is the word ‘perceived.’ Our behavioural reaction to scarcity is the same whether we believe something is happening or whether we know it is. Therefore panic buying is possible even if there isn’t any shortage. In fact scarcity will be created by the fear that it already exists.

Why then don’t we see people panic buying diamonds? This is a naturally scarce commodity. Morgan, the British auto manufacturer, makes one car a day, compared to thousands produced a day by the likes of BMW or Nissan. When was the last time you saw a queue forming outside a Morgan dealership?

Survival

Some rare items don’t threaten our day to day survival. Which makes some products an ‘us or them’ decision. If I don’t get petrol someone else will. If I don’t get petrol, I can’t get to work and earn money. The moment the item in question affects our very existence the higher it will feature in our consciousness. This suggest that panic buying is logical. In some ways it is. When I did finally find a petrol station that had fuel my indictor light was in the red. I looked at the people around me filling up with amounts that suggested they already had more than half a tank. When it came to my turn to fill up, I has a choice. Put in my regular amount, about £30, or fill the tank up. What did I do? I filled up. Why? Because I considered what everyone else was doing and whether I was prepared for the same quest for petrol in a weeks time. I justified this decision by telling myself I was now ‘out of the system’ and wouldn’t be part of the problem. In fact I was already part of the problem. My actions added to the panic.

We like to think that we are charitable types who want to look after the people around us but when it comes to the essentials that keep us alive we digress to our survival instincts.

Ironic Process Theory

Panic buying is like an avalanche. The more people that do it the more it becomes unstoppable. But what often feeds the avalanche are the words of the very people responsible for stopping you ski. Ironic Process Theory is a psychological concept that asserts ‘conscious attempts to suppress thought make them more likely to surface’. The more we try to avoid thinking about ‘panic buying’ the more we think about ‘panic buying’. This also extends to those who know more than us about the actual level of scarcity. The more Government Officials, Supermarkets or Trade Leaders tell us ‘don’t panic’ and reassure us that there is a enough stock, the more likely we are to do the opposite. This is exacerbated by the level of trust we have in those compelling us to act different. I often wonder if it wouldn’t be better to tell people to panic buy as a way for them to decide not to.

When we put all of this together, along with a realisation that all markets are driven, not by the true value of an object but by the collective confidence of consumers, it’s not hard to see how panic buying can get out of control.

The final question is can, or even should, we use any of these human instincts to encourage buying decisions? In short, yes. Not to produce panic but to motivate people’s commitment. I often use scarcity to speed up decision-making, and in most cases it’s a true reflection of my diary. I also point out the impact of not buying, especially if the customer’s business survival is linked to the solution in some way. It’s also true to say the more you ‘beg’ the customer to act the more likely they are not too.

If you’d like to discover Employee Experience Insights for your business get in touch for an exploratory discussion. tonymoyle@in-sell.co.uk