Last week, all the butcher shops in Wagga Wagga had bare shelves and empty counter displays. Some shops closed early, and the press blamed panic buying. Lets look at the facts.We need to start with the old adage – an optimist thinks that a glass is half full. A pessimist thinks its half empty, and an engineer thinks that the glass is twice as big as it needs to be.
Supermarket supply chains are engineered solutions to getting products onto the shelves at the minimum cost, and thus with the minimum use of resources in personnel and infrastructure. Their capacity to increase capacity in the short term is limited, and suppliers like to hum along as close to capacity as possible.
Disruption, as we have observed in the current crisis, and in the frame of mind of a panicked populace, creates patterns of consumer demand that are outside the expectations of the supply chain designers. Different categories face different variations from the old normal, and the ability to adapt is also highly varied.
Toilet paper usage is remarkably stable – COVID 19 is not a gastro virus and is not particularly effective in reassembly as a face mask. The panic buying was very real.
The Meat display cabinets in supermarkets were also empty, and butcher shops experienced record sales – some shut early with no product available to sell. Panic buying in the meat industry?
There is a more logical explanation. As social isolation became more effective, the number of meals consumed in the home with meat from retail outlets increased dramatically, and fewer meals were consumed in restaurants, clubs and pubs. The supply chains for these different markets are distinctly different – Food service and Retail.
In the 1960’s almost all meals were prepared at home, and the protein component was from the butcher. Various social impacts have eroded that strength – eating out, smaller portions, lifestyle decisions , ethnic cuisines and supermarket incursions all played a part. What we saw last week flowed from the inability of supermarkets to increase their meat supply to meet the new demand. This was not panic buying.