>>> I SHOWED UP TODAY, AND IT’S JUST CHAOS.
JUST CHAOS. THERE’S A HUGE LINE TO GET
TOILET PAPER.
TOILET PAPER. >> WHAT’S THE HARDEST THING TO
FIND RIGHT NOW?
>> PROBABLY TP.
>> YOU GOT EVERYBODY AND THEIR
BROTHER BUYING ALL THE TOILET
PAPER.
PAPER. MY 62-YEAR-OLD DAD HAD TO COME
TO MY HOUSE YESTERDAY TO GET TEN
ROLLS OF IT.
>> IT’S NOT JUST THAT STORES RAN
OUT OF TOILET PAPER EARLY ON IN
THIS PANDEMIC, BUT A TOTAL LACK
OF SUPPLY, WHICH SEEMS TO
PERSIST.
PERSIST. THE SHELVES ARE BASICALLY ALWAYS
EMPTY.
EMPTY. NOW, I HAD UNDERSTOOD ALL THIS
AS AN IRRATIONAL HOARDING OF
TOILET PAPER, BUT THIS RECENT
PIECE "WHAT’S EVERYONE GETTING
WRONG ABOUT THE TOILET PAPER
SHORTAGE," IT TURNS OUT IT’S
PERFECTLY RATIONAL AND THERE’S A
GOOD EXPLANATION FOR IT.
JOINING ME NOW IS THE SENIOR
WRITER FOR MEDIUM.
WILL, I HAD SEEN ALL THESE
MEMES, THE SYMPTOMS AREN’T GAST
ROW INTESTINAL, THIS WAS ALL
PANIC BUYING.
PANIC BUYING. WHY IS THAT NOT THE CASE OR THE
REASON WE HAVE THESE SHORTAGES?
>> WELL, CERTAINLY IT STARTED
WITH SOME HOARDING AND PANIC
BUYING WHEN PEOPLE FIRST
REALIZED THEY WERE GOING TO BE
HOME FOR A WHILE.
PEOPLE WENT OUT, BOUGHT TOILET
PAPER TO HAVE ENOUGH TO GET BY.
BUT THE SHORTAGES IN STORES HAVE
PERSISTED LONG PAST WHEN THEY
SHOULD HAVE STOPPED.
IF YOU GO TO THE STORE NOW, THEY
ONLY LET YOU BUY ONE PACKAGE AT
A TIME, YET THEY STILL CAN’T
KEEP IT IN STOCK.
SO I TALKED TO PEOPLE IN THE
TOIL ENET PAPER INDUSTRY.
YES, EVERYBODY IS USING THE
BATHROOM THE SAME AMOUNT PRESUM
BLI UNDER THE TIME OF
CORONAVIRUS AS BEFORE, BUT WE’RE
NOT USING IT AT HOME AROUND THE
CLOCK.
CLOCK. 75% OF AMERICANS OR SO WHO ARE
STAYING AT HOME ALL DAY, THEY
USE TOILET PAPER THAT YOU BUY
FROM THE STORE EVERY TIE THEY GO
TO THE BATHROOM.
IT USED TO BE THEY WERE USING IT
AT SCHOOLS, IN RESTAURANTS,
HOTELS AND AIRPORTS.
NOW ALLET PAPER
SUSPECT GETTING USED.
>> YOU HAVE TWO PLACES PEOPLE
CAN USE THE BATHROOMS, AT HOME,
THEIR COLLEGE DORMS, OFFICES,
AIRPORT BATHROOMS.
AIRPORT BATHROOMS. WHAT YOU DISCOVERED IS THEY ARE
JUST NOT THE SAME MARKET.
THEY ARE TWO MARKETS THAT HAVE
NOTHING TO DO WITH EACH OTHER TO
SERVICE THOSE TWO KINDS OF
TOILET PAINER?
TOILET PAINER? >> YEAH, THAT’S WHAT I FOUND.
THE TOIL ENET PAPER YOU GUY IN T
STORE IS SOFT AND PLUSH.
IT’S 100% VIRGIN FIBER.
THE TOILET PAPER YOU GET AT WORK
OR AIRPORT, IT’S SINGLE PLY,
MADE FROM RECYCLED SHEETS.
IT’S MADE BY DIFFERENT
COMPANIES.
COMPANIES. IT’S MADE ON DIFFERENT ASSEMBLY
LINES IN DIFFERENT MILLS.
SO THE COMPANIES THAT ARE
SUPPLYING ALL THE TOILET PAPER
TO THE WORKPLACES THAT ARE
CLOSED AROUND THE COUNTRY, THEY
AREN’T THE SAME ONES THAT HAVE
THE RELATIONSHIP WITH KROGER OR
SAFEWAY OR RITE AID OR CVS TO
GET THOSE SIX PACKS INTO STORES
AND BACK ON THE SHELVES.
SO WE HAVE PRESUMEABLY GOT A HUG
GLUT OF THAT TOILET PAPER AND A
DEMAND FOR THE TOILET PAPER YOU
BUY AT THE STORE.
>> SO THERE’S A COMPLETELY
DIFFERENT SUPPLY CHAIN.
THEY DON’T HAVE ANYTHING TO DO
WITH EACH OTHER.
THEY HAVE DIFFERENT VENDOR
RELATIONSHIPS, THEY’RE DIFFERENT
COMPANIES IT TURNS OUT.
AND WHEN PEOPLE ARE STAYING
HOME, THERE’S A 40% INCREASE OF
THEIR USE AT HOME, AND SOME
COMMERCIAL GLUT THAT WAS
SUPPOSED TO BE DELIVERED TO
DORMS AND AIRPORTS THAT’S NOT
GOING OUT THE DOOR.
>> THAT’S RIGHT.
YOU WOULD THINK MAYBE THEY COULD
JUST REALLOCATE SOME OF THAT
SUPPLY, MAYBE RETOOL THEIR MILLS
A LITTLE BIT, START CRANKING OUT
MORE OF THE RETAIL STUFF.
BUT TOILET PAPER IS REALLY
BULKY, BUT IT’S NOT WORTH MUCH
MONEY, SO THERE’S LITTLE EXCESS
SUPPLY.
SUPPLY. NOBODY IS GOING TO STORE EXTRA
TOILET PAPER AT WAREHOUSES, AND
THEIR ASSEMBLY LINES WERE
WORKING AT FULL CAPACITY TO MEET
THE PREDICTABLE DEMAND.
SO IF THAT DEMAND MEETS A LITTLE
BIT, THEY DON’T HAVE ROOM TO
CHANGE.
CHANGE. NOW IF THEY TOOL UP FOR THE
RETAIL MARKET AND CRANK OUT NORM
OF THAT, WHEN PEOPLE START GOING
OUT IN THE WORLD AGAIN, THEY’LL
BE IN TROUBLE AGAIN, BECAUSE
THEY WILL HAVE CHANGED THEIR
WHOLE OPERATION AND WILL BE OUT
OF STEP WITH DEMAND.
>> SO THEY DON’T WANT ANY SORT
OF FIXED CAPITAL INVESTMENT FOR
OVER THE LONG-TERM WHAT IS GOING
TO BE HOPEFULLY A TEMPORARY
SITUATION, A.
SITUATION, A. AND B, THIS EXTREMELY BULKY
THING THAT TAKES UP A TON OF
SPACE IS WORTH ESSENTIALLY
NOTHING.
NOTHING. SO THERE’S NOTHING WORSE FOR
EITHER YOUR SPREAD SHEET IF
YOU’RE A BUSINESS THAN HOLDING
ON TO A TON OF WORTHLESS
INVENTORY.
INVENTORY. SO IT’S ALL LIKE A RAZOR THIN
OPERATION THAT CAN’T SCALE UP.
>> YOU’VE GOT IT.
THAT’S EXACTLY RIGHT.
THERE ARE OTHER PRODUCTS THAT
ARE GOING TO HAVE SIMILAR
DYNAMIC
DYNAMIC DYNAMICS.
DYNAMICS. EACH ONE HAS ITS OWN STORY.
BUT FOR INSTANCE, BANANAS.
THE BANANAS THAT GO TO THE
COMMERCIAL MARKET, RESTAURANTS
AND WORKPLACES, THEY’RE PETITE
BANANAS.
BANANAS. BUT THE ONES THAT GO TO THE
GROCERY STORES ARE BIG AND
BEAUTIFUL AND COME IN BIG
BUNCHES OF SICKX, THEY’RE SEPARA
SUPPLY CHAINS.
SUPPLY CHAINS. I WOULD EXPECT TO SEE MORE
SPORADIC SHORTAGES AS THIS TYPE
OF PROBLEM WORKS
PROBLEM WORKS ITS WAY THROUGH
ALL KINDS OF DIFFERENT SECTORS.
>> ALL RIGHT.
GREAT PIECE OF REPORTING.
REALLY A FANTASTIC BIT OF GOOD