What Will the Supermarket Look Like After the Blizzard?

My theory is that in times of emergency the supermarkets like the visual cues that the empty shelves give as this encourages further panic buying. I have seen this at Christmas time. Higher end stuff will go first as the shoppers that are more prone to panic buying are also the ones that have less interest in shopping efficiently. Efficient shoppers buy the non-brand names (by definition) and either already have stocks bought at lower prices, and/or are less prone to panic buying, as they weigh up the cost of potential waste versus the cost of going without a staple. This is certainly the difference between me and my wife anyway (she is the efficient shopper not me).

In normal times, supermarkets like full shelves, this gives the impression of plenitude, signalling that prices will be competitive. It also signals quality, akin to the signalling that banks do with
their grandiose buildings.

Therefore whether or not the shelves are stacked tomorrow will depend on the prevailing mood, if the stores sense that it is still “an emergency” then they will leave the shelves still partly empty to encourage further panic buying, if the mood is everything is back to normal, then the re-stocking will happen quickly.

Missing items on shelves as long as roads are messed up. No residual demand effects. Rapid recovery with full stocking shortly after roads clear.

I agree with many of the comments here, and on your previous post, including comments about restocking in the face of suddenly-predicted emergencies and about Wegmans’ overall incentives.

I’m surprised that no one mentioned above or in your previous post that last weekend was also the known weekend of the Super Bowl.

The SuperBowl was an event predictable well in advance. It was a weekend for which supermarkets anticipated, pre-ordered, and stocked up on certain kinds of foods related to this annual home-party, wings/pizza/dip/cheese/bread/sandwich/family-coming-to-town-for-the-weekend event. Those pre-ordered foods filled a lot of shelves and advance orders. Balancing existing shelf display and inventory usage between predictable and unpredictable events is probably one of the hardest tradeoffs that supermarkets make.

That consumers who may already have been planning to shop for these staples for the Super Bowl might have flooded or been nervous about and timed their trips to the stores a day or so early when the storm prediction was added on top of that, should be no surprise.

No doubt Wegmans and other savvy supermarkets left room for other last-minute possibilities when they stocked for the Super Bowl–including their standard tradeoffs for weather-related crises. Contrasting food demand for events known months in advance, versus food demand for events known a few days at most in advance, is a trade-off I think supermarkets like Wegmans do pretty well and learn from for the next time. The blizzard in the Mid-Atlantic area last weekend was a very unusual weather event. It was not something a supermarket could–or should!–plan for on a regular basis.

A contingency plan by supermarkets such as Wegman’s that was probably a plan for handling anything weather-related within 2 standard deviations was apparently enough to accommodate a weather event that was outside the 2 standard deviation range even on Super Bowl weekend. Two–not one–major events came down on the same weekend. Some brands people may have planned to buy for the one expected event ran out in the face of private contingency plans for an additional unexpected event.

Yet, no one ran out of food. Neither will you run out of food tomorrow. That’s the really big news.

What inferences might we draw from this extreme confluence of events, events outside 3 standard deviations in weather combined with the plans by supermarkets to stock for the food demands of the Super Bowl? Broadly sweeping inferences, perhaps none. But narrower inferences, yes, we can draw. You will neither run out of food nor find the shelves so overstocked that the stores are undepletable. Some middle ground will be there for you today and tomorrow. Maybe not every brand you want, but you will have food in every category you want and food galore. Every supermarket, restaurant, and their suppliers have been working overtime since this snowstorm was predicted–and are working still while you have been unable to get out to the supermarket, much less plow your own driveway or shovel your own sidewalk, slept, or may even had power outages–to make sure you have food, water, and supplies if you can get there by foot, car, ski, or sled. Super Bowl, Haitian horrors, blizzard, or whatever may happen.

Fully stocked.

Distributors want to bill as soon as possible. The minute they drop off the goods, the clock is ticking.

Marcus has pretty much nailed it.

I would offer a small variation. Supermarkets generally order product under the assumption that the upstream supplier can supply any quantity they might reasonably ask for at any time. In the event the storm caused sudden buying that exceeds the ability of the upstream supplier to replace immediately, then you might still see bare shelves for some items. Such are the vagaries of just-in-time production and delivery.

The stores will be stocked very close to normal levels.

But the interesting thing is that this will happen without any significant changes in prices, completely contradicting the theory about price gouging that Bryan and other libertarians teach in their class.

Where is the guy in the pick-up truck that their theory makes so much of?

Marcus, don’t you know that Bryan teaches that there is not such thing as a price gouger.

Based on my assumption from the last post (that much of the abnormal (and inefficient) demand was due to shoppers replacing meals normally eaten outside the home), I would think the shelves would be relatively bare. On the other hand, people that shop normally and are able to plan a little bit have been consuming their own safety stocks, reducing short-term demand. On the third hand, the supply chain may have been running more slowly and inefficiently because of the storm.

In the end, I pick (b), that things will balance out, with the exception of storm-demand items (snow shovels, firewood) and things with the shortest shelf life (which might have perished even when the stores weren’t open). I would also think that a two or three day snow storm in winter would not be the biggest shock to the grocery store supply chain.

Having seen the update, it doesn’t surprise me that Costco has over-supply, since I would guess their typical customer is more likely the “buy a pallet, keep a spare in the garage” type than the “get just enough to make it to my next meal” shopper. Some demand is probably transferred as local stores substitute for a (potentially longer) Costco trip.

Also, I think you might get a lot of variance from store to store based on very localized logistics (main streets might be open, but some stores might depend on alley or hill access for supply trucks that would take longer to clear).

Marcus, than you believe that consumers would be better off if the store raised the price to the point where enough people would not buy so that the stores would remain fully stocked.

The customers welfare is maximized by keeping the store fully stocked. Care to explain how that works.