This post was originally published on this site
Kroger Co.’s policy to limit the amount of sanitary items that shoppers can buy may upset some consumers, but experts say there are some good reasons for the grocery retailer to put restrictions in place.
Over recent days, there have been reports of frenzied shoppers heading to stores like Kroger KR, +5.46% and Costco Wholesale Corp. COST, +8.01% for items like toilet paper, paper towels and disinfecting wipes. In some cases, shoppers are binging on these items, walking away with lots while others find empty shelves.
“Kroger’s policy is a good short term response to the current wave of panic we are facing across the U.S. and more retailers are likely to follow suit,” said Katrin Zimmermann, managing director TLGG Consulting.
Read: Kroger limiting the amount of sanitary products consumers can buy
“A fair and equal distribution of goods is key to avoid devastating economic and societal consequences.”
The desire for a few more rolls of toilet paper might sound justified given the coronavirus pandemic. But Zimmerman said there could be consequences if everyone is grabbing massive amounts of the same thing.
“Panic buying potentially drives up prices leading to inflation. It also promotes black markets,” she said. “If people have to spend a lot of money on bare necessities, it also means they have less disposable income to spend. This in turn leads to a collapse of many other businesses, having devastating consequences on the economy as a whole.”
Hilding Anderson, North American head of retail strategy at digital consultancy Publicis Sapient, says limiting the amount of individual items that consumers buy can also help retailers manage supply chains, which are expected to come under pressure because of the outbreak.
“This solves several problems – the issue with those who are buying in bulk and then reselling, as well as those who are stocking up beyond what is likely needed for the next month or two,” he said. “This also allows the manufacturing and supply chain additional time – time to manufacture, time to ship, and time to stock products in the store.”
See: Dollar General is well-positioned to handle coronavirus, analysts say
Anderson acknowledges that there are some who will go from store to store until they’ve satisfactorily stocked up. Nonetheless, it “sends the right message” and helps the customer who’d like to get a couple of items as well.
Analysts and experts anticipate that supply chains will be disrupted as manufacturing and shipping from China gets back to normal. The National Retail Federation anticipates that the impact on imports will be “longer and larger” than expected.
Tory Gundelach, senior vice president of retail insights at Kantar, notes that Kroger isn’t the only retailer setting limits. And stopping customers from getting what they think they need could make some even more nervous.
“To some shoppers, it will signal that there is a shortage and that they should be concerned, prompting them to purchase when perhaps they would not have otherwise,” he said. “On the other hand, these sorts of policies can make shoppers feel that a retailer is being more equitable.”
Don’t miss: Amazon’s cashier-less technology heading to NYC airports but other retailers will pass, experts say
Finding the right balance during these uncommon times is difficult for retailers who are being pressured by demand.
“Predicting exactly what the right action is can be hard, especially in the case of Covid-19 where the situation is evolving so quickly,” said Gundelach.
