What Happened to the Hand Sanitizer? Retail Operations in an Uncertain World

Abstract

We use panel data to examine consumer purchasing and retail management of an essential product, hand sanitizer, during eight seasonal flu epidemics and the 2009-2010 swine flu pandemic. Data are gathered on the severity and spread of flu symptoms across the United States and on sales, assortment, and prices of hand sanitizer sold at 30,000 U.S.-based stores across five retail formats. Major insights include the following: (1) The severity and spread of flu activity are good predictors of hand sanitizer purchases; (2) Stocking, pricing, and assortment strategies of hand sanitizer varied significantly among store formats. Consumer sanitizer purchases gravitated to two formats with distinct strategies – warehouse clubs that stocked large pack sizes at low per-unit prices and drug stores that carried wide assortments of sanitizer products; (3) Retailers appeared to learn from their pandemic experiences. During the first pandemic wave, assortments declined, indicating widespread stockouts. During the second wave, retailers were prepared with greater assortments of sanitizer products, including large pack-sizes favored by consumers; and (4) Retailers did not appear to engage in price gouging after the onset of the pandemic emergency, although prices were slightly (but significantly) lower in states with the laws compared to states without the laws. Finally, the paper draws parallels between the swine flu pandemic and the COVID-19 pandemic. Sanitizer sales patterns were similar during the two pandemics, although surges were more pronounced during COVID-19. This similarity in sales patterns provides an indication that lessons learned from previous pandemics may be applied to future pandemics.