Since the Covid-19 pandemic began, the status of toilet paper has soared. An item that no one but the environmentally obsessed thought about, has become a bellwether, making the news almost daily.
It is the canary in the coal mine for me. The sudden surge in demand for toilet paper due to hoarding was just the tip of the iceberg affecting the availability of and the demand for toilet paper in the future.
The reality is that there is a toilet paper shortage and there is a toilet paper surplus at the same time. Demand surged due to hoarding, but overall demand did not change. Instead, ongoing consumption has shifted to homes from commercial and industrial buildings. The result is that the well established supply chain for toilet paper is in disarray. Sales to the commercial channels have plummeted, while sales to consumers have sky rocketed, creating both a shortage and a surplus.
The supply chain will adapt, but it will take time. Consumers will need to identify additional sources of supply. Bulk purchases, at the case level, may become the norm. Direct sales from the manufacturer or a large wholesaler to the consumer will most likely increase. The last big change in the toilet paper supply chain was when Costco entered the market and sold private label toilet paper in bulk packaging. Now even Costco is having (t)issues keeping up.
Other supply chains are equally disrupted. The food chain is in utter disrepair. A large percentage of the sales of food are direct to hotels, restaurants, etc. Demand for goods in that segment of the market has fallen to the floor. Toilet paper has issues, but at least it does not have a short shelf life. Fresh food, on the other hand, is very perishable. Farmers have no buyers for their products at a time when grocery stores are clamoring for supply. Though, already we are seeing farm to table mean farm to dining room table, as farmers are reaching out directly to consumers.
Thankfully, we exist in a capitalistic system, one that rewards those who have the courage or the intelligence to change with the times. Capital will be reallocated. Supply chains will change. Jobs will be created. Efficiency will be sought.
We will change faster than the rest of the world. Hopefully, it will be fast enough to get the right goods to the right place at the right price. If we watch toilet paper carefully, we might have a good idea as to how we are progressing.