Tyler Cowen: “Some stores may use growing and shrinking lines as a substitute for changing prices. The waiting time in line at my [supermarket] is often longest late at night. In essence they are charging you a higher price to shop late at night. The company ‘wins back’ some of this tax by skimping on labor costs. Perhaps this system of ‘flex prices’ is easier than altering the bar codes or price stickers on an hourly basis.”
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Jason on December 6th, 2004 at 1:58 pm
Different stores have different customers and different profit-per-transaction, so the impact of wait time in terms of lost profits is different. Each store settles into the equilibrium that makes sense for it.
During holidays, many stores simply don’t hire enough clerks. Perhaps this is because it takes some real smarts to get the number right in these cases, and it’s not worth the investment to get good managers for grocery stores. On the other hand, the cost of labor spikes during holidays, and traffic (to say nothing of hard deadlines) makes customes less likely to walk away in a huff, so maybe it’s actually sensible for businesses to have longer lines during holidays.