Chapter 65 Question 057

Why are many supermarkets (even in small towns) open 24 hours? Ithaca, a town of just 30,000 north of New York, has five all-night grocery stores.When shoppers go shopping at 4 a.m., there are only temporary staff on duty in almost every store.The cost of staying open all night isn't huge, but it's not so small that it's insignificant. Heating, air conditioning, and lighting costs, for example, are obviously higher for a store that is open overnight than for a store that closes at midnight and opens at six in the morning.Stores pay incentive wages to cashiers, stockkeepers and security guards on night shifts.Since these costs are certainly higher than the extra profit created in the early morning sales, why are these stores still open all night?

Factors that influence which grocery store a customer goes to include: price, assortment, store location, and hours of operation.Most customers will choose the store that best meets their requirements, and then go to that store to buy things most of the time.Once you are familiar with the layout of one store, why go to another store to waste time and trouble to find something?So, stores have a strong incentive to be the first choice for as many customers as possible. The prices and types of goods stocked by each store are similar, and once the above factors are slightly different in which store, it may become the decisive factor for some shoppers to choose the store.People probably don't make regular purchases at a store that's out of the way, but in a small town where everyone owns a car, location isn't the most important factor.

Now, let us assume that all supermarkets close at eleven o'clock in the evening and open at seven o'clock the next morning.If a store extends its opening hours until midnight, it can become the store with the longest opening hours.Even those customers who occasionally buy things at twelve o'clock in the evening will choose this store as their regular shopping place. If one day they really need to buy things in the middle of the night, it will be very convenient to find things.Although the supermarket does not attract many customers at twelve o'clock in the evening, because of its long business hours, it can attract more customers to shop here.

Competing supermarkets will certainly not sit back and let their customers be abducted, and they will inevitably extend their opening hours.But at this time, other shops will extend the closing time until one o'clock in the morning to reap the benefits.Assuming the cost of keeping stores open an extra hour is not too great, the only possible outcome is that most stores stay open all night.Apparently, that was the case in Ithaca. Since most supermarkets in Ithaca are open all night, the hours of operation have little to do with which store a new customer chooses.Supermarkets continue to compete on other fronts.For example, one store is famous for its cooked food, while another has a wide selection of imported goods.But no store is going back to the old way of closing at night.

Grocery stores aren't always open all night in Ithaca; and there are some towns of a similar size that don't have all-night grocery stores.So, while the competitive trends described above appear to explain why Ithaca grocery stores stay open all night, they clearly do not explain the timing or geographic spread of the phenomenon.