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2-Cent Rant

Why A Supermarket Run Is Similar (And As Dangerous) As A Bank Run

Coping with the COVID-19 virus is challenging as it is. Let’s not make panicking over another virus something we have to deal with.


I was overseas on holiday when it happened.

Despite having a hectic day in Australia, I came back to our apartment on 7 February Friday with my phone not swamped with work problems (thankfully), but with multiple messages from various WhatsApp chat groups with photos of Singaporeans buying an insane amount of groceries, along with queues we have not seen in Singapore ever since Huawei got elderly Singaporeans to queue for the very limited number of Huawei Y6 Pro 2019 for $54.

My first instinct was to laugh it off. Surely no rational person would find it useful to stock up on groceries just because the DORSCON level got raised to orange. We all still have to send our kids to schools, take the MRT, show up at work and eat out for lunch.

Nevertheless, as the news broke that thousands of Singaporeans have decided to forgo their TGIF plans in favour of rushing down to supermarkets to queue up to get the necessities they thought they needed – which mainly consists of instant noodles, toilet papers and fresh vegetables. Even more people started to join them out of panic that they may be missing out on something that everyone is rushing towards.

So much for the well-intended advice for Singaporeans to avoid crowded places.

Now that things are back to normal, it’s easy for us to laugh at the whole incident and dismissed it as a scenario where Singaporeans were panicking unnecessarily. However, though one-off, we should not see this incident as merely a harmless occasion where Singaporeans were being kiasu.

Read Also: How Much Can You Save Over A Month When You Buy House Brands At Supermarkets?

How Bank Runs Can Lead To Financial Instability For The Entire Economy

To understand the danger of people rushing to buy stuff they don’t need at a supermarket, we can draw a parallel to the threat that can be caused to the entire economy by a bank run.

As explained by Investopedia, a bank run occurs when a large number of customers of a bank withdraw their deposits simultaneously over concerns of the bank’s solvency. As more people withdraw their funds, the probability of default increases, prompting more people to withdraw their deposits. In extreme cases, the bank’s reserves may not be sufficient to cover the withdrawals and the bank may fail.

Very often, a bank run occurs because of panic rather than an actual insolvency of a bank.

For example, a perfectly healthy bank that is able to meet the demands of depositors may find itself in trouble if untrue rumours started spreading about the bank’s solvency. As long as enough people believe the rumours and start withdrawing all their money from the bank, this may prompt more people to behave the same way. The result we will get is the failure of a perfectly healthy bank which may then cause instability in the banking sector and potentially affect other healthy banks as well.

Read Also: This Little Known Company In Singapore May Just Have The Biggest Responsibility In Our Banking Sector. Here’s What They Do

Supermarket Runs Are Dangerous As Well

In Singapore, we are used to seeing our supermarkets well stocked with everything which we need. Seeing it empty is not something that we are used to.

However, panic buying even by a small minority of people on simple items like toilet papers, instant noodles and fresh vegetables can set off a supermarket run. The reason for this is that if just a small population of people were to believe that Singapore is going to run out of food, and start hoarding excessively for themselves beyond what they realistically need, then there may not be enough food for everyone else.

Similar to a bank, supermarkets like NTUC and Sheng Siong have their shelves filled in the same way where they ensure that there will be more than enough items for everyone to buy at any point in time.

But if a group of minority starts wanting to make their home an interim provision shop by stockpiling an insane amount of instant noodles and toilet papers, then the result is that there will not be enough instant noodles and toilet papers for everyone else. This is because NTUC doesn’t stock up its supermarket with the (illogical) assumption that every shopper is going to buy 100 packets of instant noodles and toilet papers each.

Stop Supermarket Runs Before They Become A Real Problem

Stopping an unnecessary supermarket run is critical because failure to do so could quickly lead to a real problem. As Minister Chan Chun Sing highlighted in a leak video, even a small minority of people doing silly things could impact Singapore’s economy.

If the supermarket run persists, households with actual needs such as families with babies who need to buy formula milk and baby food, elderly people who need to buy specific food for their restricted diet or even those who are quarantine at home may find themselves being unable to access the items they need to continue living their lives normally.

Currently, in Singapore, alcohol swabs are in limited supply and Singaporeans with diabetes are having a problem because the usual supplies have been hoarded by people who do not actually need them. This shows how a small group of people panicking can lead to a real problem for other groups of Singaporeans.

Similar to a bank run, once the initial rumours of insufficient groceries (or instant noodles and toilet papers in our case) is quashed, rational thinking generally gets restored quickly. In Singapore case, this was thankfully what happened.

Do Your Part By Not Panicking Unnecessarily

While it’s good to take precautions if we are worried, being irrational doesn’t help you, your family or the rest of Singapore.

So, keep our kiasu-ism for things that will actually make a difference for us, our loved ones and society. This includes seeing a doctor and staying at home if we are unwell, avoiding large crowds that we do not need to be part of, postponing large gatherings that are not required and upkeeping our hygiene standards by washing our hands regularly. All these would be more valuable in protecting ourselves and our loved ones from the Covid-19 virus than rushing down to join a massive queue of Singaporeans at the supermarket.

Read Also: 4 Industries In Singapore That Are Impacted By COVID-19 And What Can We Do About It

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