Every holiday season, stores ramp up their inventories as shoppers add more items to their lists. This year, that includes more than stocking up for holiday shopping. Stores are also preparing to stock up for panic buying that the next wave of COVID-19 may bring.

According to Cornell professor Edward McLaughlin, retailers and food suppliers were caught off guard by pandemic-driven panic buying in March. But they have learned key lessons from that experience and are now sending staple goods to grocery stores even before orders pour in.

Food companies are putting previous demand models aside and simply sending paper products, beans, pasta, and holiday items to stores ahead of the rush. McLaughlin advised stores to stock up on essentials rather than focusing on the usual fancy holiday items.

What to expect this holiday season?

Experts say that when we panic, we feel out of control and tend to buy stuff that we need in our daily lives to regain some control. Heading into fall and winter, it seems stores have prepared ahead of time. Shelf-stable food and medications, cleaning supplies, hand sanitizers, and air purifiers may not be your typical holiday buying choices, but they will be in demand this holiday season.

There is a good chance that shoppers will start piling up on their holiday gifts early this year. Stores have to anticipate these demand waves to avoid delays and possibly inventory issues.

How are retailers preparing?

The Wall Street Journal reported that companies like Associated Food Stores are creating special "pandemic pallets." They ensure that cleaning and sanitizing products are readily available in warehouses ahead of the high demand. Like them, most grocery stores big and small, are beefing up their inventory ahead of the holidays. They are now storing 10% to 15% more stock than before the pandemic to ensure they won't run out of fast-selling items.

Retailers like Iowa-based Hy-Vee are already stockpiling additional sanitizing, cleaning, and paper products when possible, though full variety hasn't returned.

Brands like Campbell's Soup stated that they are only about 50% done with their total inventory recovery since the pandemic hit. Ahead of the winter season, the iconic brand is stocking up on high-demand soup brands as well as popular snacks.

To stay ahead of panic buying, stores need to carry a wide range of groceries with reasonable pricing. They need to determine how much capacity they can generate and push above that. The challenge is to avoid out-of-stocks and carry the maximum number of products with a minimum amount of space for each. At the same time, they must avoid loading up on costly inventory despite holiday season demands.

Old-school predictive modeling

Walmart also acknowledged that it is still playing catch-up from the pandemic's impact on inventory. Stores like Walmart and Kroger have relied on computer models and machine learning to manage their inventory and operation. But the pandemic has thrown that off track.

Demand forecasting, “just-in-time” inventory, and predictive modeling were all designed without the pandemic in mind. The data fed into these systems could not factor in people's unusual buying patterns during the pandemic.

Therefore, retailers are going old school. They are relying on age-old human intuition and gut feelings. They will be looking back at the last six months to anticipate what kind of panic buying can happen the second time around. They will stock up based on their conclusions rather than machine feedback.