Pandemic paralysis

Consumers are feeling fearful

Despite an unsettled political, economic and environmental climate, the turn of the decade saw many people feeling optimistic about what the 2020s could offer, but this has been quickly quashed by the impact of COVID-19.

Ellen Peters, director of the Center for Science Communication Research at the University of Oregon, has launched a study to track people’s perceptions of risk and reactions in connection to news on the coronavirus. The study shows that American responses include feelings of worry, fear, sadness and some anger. People tend to “think their way through risk and feel their way through risk,” Peters tells Wunderman Thompson Intelligence. “In the case of the coronavirus, people are scared of what is happening and they use their fear as an indication of how bad a situation is, ignoring probability; this is what we call ‘probability neglect’.”

Stockpiling pandemic provisions

Consumers, driven by fear, are taking extreme measures. Panic buying across the world has left supermarket shelves empty. Earlier this week, UK and US retailers started enforcing temporary caps on certain items, such as hand sanitizers and tinned foods. Consumers are already stockpiling cleaning products, health protection goods (medical masks and thermometers), and food.

A February 2020 Nielsen survey showed that US consumers were rapidly stocking up to fill their “pandemic pantries” with provisions that have a long shelf life. The survey measured sales within a one-week period ending on February 22 and showed that sales of oat milk had increased by 306%, fruit snacks were up by 13%, dried beans and energy beverages were up 10%, and water was up 5%. In addition, AO.com said frozen food sales rose 200% year-on-year last week.

“Panic buying becomes a self-fulfilling prophecy,” Karan Girotra, professor of operations, technology and innovation at Cornell Tech, told Eater. “A lot of people think that stores will run out, and then they do run out. Irrational behavior, rumors, misinformation can create short-term logistical issues.”

The right communication at these times is key. Peters suggests that “evidence-based communication techniques can help people bring the numbers back into the picture,” as well as acknowledging cases of people not affected by the virus in at-risk areas and publicizing survival rates rather than focusing on negative numbers.

Small business precipice and promise

“Small businesses are on the front line of this crisis,” Amanda Ballantyne, executive director of Main Street Alliance, a public policy group for small businesses, told the New York Times. “The impact on consumer demand can really impact the economy, so we think there’s an urgent need to get planning to local businesses.”

As supermarket shelves empty across cities where consumers are grappling with fear, convenience stores are seeing a spillover. But as non-essential purchases drop off, many small businesses whose goods don’t relate directly to COVID-19 are seeking loans.

The Trump administration has announced $50 billion in aid to small businesses as a coronavirus relief effort. San Francisco is also creating a relief fund for small businesses. The Small Business Association (SBA) is offering $2 million in loans to help offset the decrease in purchasing.

Companies are also banding together to shore up communities and local workers. Amazon has established a $5 million fund to offset the sales that Seattle businesses have lost in the wake of the online retail giant’s work-from-home decree for employees in the city, which will be in effect until the end of March. Uber, Lyft, DoorDash, Postmates and Instacart are in talks to create a joint fund for gig workers impacted by the pandemic.

While small businesses are bearing the brunt of economic instability, big business is not immune; airlines are in crisis as the industry faces a potential $113 billion hit.

Business as unusual

COVID-19 has laid the ground for widespread disruption and companies are starting to work nimbly to meet current consumer demands, which include an uptick in medical and cleaning products as well as goods with a long shelf-life. Direct-to-consumer health company Ro started offering a free digital assessment for COVID-19 in early March. Where possible, brands are maximizing on areas in-demand.