I have a long-standing interest in Black Friday — less because I want to go shopping but more because it poses some interesting questions on how firms compete and how they manage customers. The news this year is that Black Friday is creeping evermore into Thanksgiving proper as retailers keep moving up their opening times. So why are they doing that? Two posts on Businessweek.com put forward theories. The first posits that this is being driven by customer segmentation (The Game Theory Behind Macy’s Thanksgiving Opening, Oct 15).
Traditions are being trampled on by the Corporate Retail Complex! Of course, consumers don’t have to go. Some won’t, and that’s precisely what the strategy folks at Macy’s are betting on.
The purists scandalized by the thought of shopping on the holiday itself aren’t likely to avoid Macy’s altogether. And with the die-hard bargain-hunters swarming the stores on Thursday, Friday shopping will likely be much more pleasant for those who are a little less committed.
It’s only a two-hour wait. An ordinary Thursday afternoon at Apple’s flagship UK store in Regent Street, London and a long line of customers snakes across the first floor. The hip technology brand is used to queues for the launch of its latest must-have product, but these people have come carrying faulty iPhones and malfunctioning laptops, desperate for help from one of Apple’s increasingly hard to reach “Genius” experts.
When it opened in Virginia in 2001, the first Apple store was hailed as a retail revolution, allowing shoppers to play with expensive technology without any sales pressure. The emphasis on service, with blue-shirted Geniuses on hand to answer queries and fix broken products, has become almost as important to the Apple brand as the aesthetic appeal of its products. But the whole experience is under pressure as a relatively small number of shops struggle to cope with rapidly growing customer numbers. …
The Regent Street outlet, for example, employs at least 120 Geniuses. Each sees up to 30 customers a day but it is impossible to book an appointment less than a week in advance. If the problem is urgent you can turn up and queue, but it could be a very long wait. This week, a gaggle of well-trained, polite and friendly staff worked their way along the line trying to answer simple queries and advise people on alternatives to queueing. But it is hard to redirect people when every nearby shop has its Geniuses fully booked for days on end.
The article goes on to note that this is not just an issue in London. It certainly can be an issue here in Chicagoland. While a quick check of my nearest Apple store shows that they currently have a number of appointments open for tomorrow, Friday morning already has no availability. There are even reports of scalpers hawking Genius Bar reservations in China.
So is there an easy fix to this problem? It seems like there are two issues here. First, to what extent should Apple accommodate walk-in customers? Second, is there any easy fix to expanding Genius capacity? These are related. If capacity is expanded then the ease of getting a reservation should take care of the walk-in issue. On the other hand, if capacity cannot be easily expanded, then there is a question of how to allocate it between walk-ins and appointments.
In the basement of the Kellogg School, there is a cafe. It’s a busy cafe, which says more about the available alternatives than about its absolute quality. Because it gets busy and because a good number of its customers are polite enough to walk out of class five minutes early to beat the crowd, I and my colleagues have learned that it is a much better to plan to go down for a sandwich a little before noon than a little after noon. According to CNBC, Goldman Sachs faces similar issues with queuing in its cafeteria and it actively tries to manage the system (The creepy capital efficiency of Goldman’s cafeteria, Oct 17).
The most crowded time of the day to eat lunch is, naturally, during lunch time. For most people, this falls around noon. This creates the phenomenon of the lunchtime rush hour. You know this all too well if you’ve ever tried to stop in your local chopped salad place at, say, 12:30 in the afternoon.
Goldman didn’t like the idea of its people waiting on long lines to get their lunch. People are capital to Goldman. It wants to use its capital efficiently. Standing on line waiting for dumplings or salad or a burger is not an efficient use of Goldman’s capital. …
The cafeteria has a set of timed discounts. If you show up in the cafeteria before 11:30 or after 1:30, you get a 25 percent discount on your food. Goldman incentivizes employees to avoid the rush hour.
Fast food is supposed to be, well, fast. But is speed everything? If you think about how different chains advertise, they are often emphasizing price or some expansion of their offerings. Essentially no one ever says that they will get you on your way in two minutes. Speed is taken as a given but there has to be some interplay between the range of what a firm offers and how fast they can serve customers.
That gets us to QSR Magazine‘s annual survey of drive-thru lane performance (The Drive-Thru Performance Study, Oct 2013). Drive thrus matter since they can account for 60 – 70% of sales and QSR’s survey is something of an industry standard since they have been at it for 15 years. You can find information on their methodology here and a paper co-written by Gady that uses this data here. The most interesting insight from the survey comes from comparing data on service times (i.e., how long does it take from when you get to the order board until you have your bag of food) this year with last year.
As the data shows, service times are getting slower as a whole. The industry average went up about 5% from 172 seconds to 180. What’s driving the increase?
It’s been a while since we have written about long delays to clear immigration control at airports. But as this eye candy from the Wall Street Journal makes clear, it is time to revisit the topic (The Summer of Long Customs Waits, Jun 12).
In a nutshell, lines are getting longer and longer. (Also, don’t fly through Miami. Check out this video.)
How much would you spend to skip a line at a theme park? At Universal Studios Hollywood at least some people are willing to pony up a lot (At Theme Parks, a V.I.P. Ticket to Ride, New York Times, Jun 10).
As stratification becomes more pronounced in all corners of America, from air travel to Broadway shows to health care, theme parks in recent years have been adopting a similarly tiered model, with special access and perks for those willing to pay.
Now Universal Studios Hollywood has pushed the practice to a new level.
It has introduced a $299 V.I.P. ticket, just in time for the summer high season, that comes with valet parking, breakfast in a luxury lounge, special access to Universal’s back lot, unlimited line-skipping and a fancy lunch. …
Universal upgraded its V.I.P. Experience — and raised the price by 50 percent — after realizing that the old one, which did not include lunch, the lounge or other perks, “was selling out more and more frequently,” Ms. Wiley said.
Apparently, the New York Hilton Midtown will no longer be offering room service. So customers will no longer have the option of ordering cookies and milk for $20. That’s got to be a lucrative business, right? Maybe not. Check out this report from Marketplace (How does a $25 room service burger not make money?, Jun 3).
This quote from the report gets to the heart of the problem.
“It’s very rare, if not impossible, for hotels to produce revenue in terms of room service,” says Mehmet Erdem, professor at the Harrah College of Hotel Administration at University of Nevada, Las Vegas.
Hotels typically lose money keeping a full kitchen and wait staff on standby. That’s the key reason hospitality watchers believe hotels are killing room service. In many cases, that means job cuts for hotel workers, 55 at the New York Hilton alone. For its part, Hilton says it’s ending room service because of declining demand.
Long lines at check out can spoil a shopping trip just as a bad dessert can spoil an otherwise fine dinner. Either can, if you will, leave a bad taste in your mouth. So what can a retailer do besides throw (expensive) bodies at the problem?
As the Wall Street Journal tells it, there are quite a few options. A recent article discussed process changes and new technologies different firms are using to try and reduce customer waits (Retailers Wage War Against Long Lines, May 2). The most interesting to my mind was what supermarket chain Kroger is trying.
Supermarket giant Kroger Co. is winning the war against lengthy checkout lines with a powerful weapon: infrared cameras long used by the military and law-enforcement to track people.
These cameras, which detect body heat, sit at the entrances and above cash registers at most of Kroger’s roughly 2,400 stores. Paired with in-house software that determines the number of lanes that need to be open, the technology has reduced the customer’s average wait time to 26 seconds. That compares with an average of four minutes before Kroger began installing the cameras in 2010.
“The technology enabled us to execute at the front of the store without that additional (labor) expense,” said Marnette Perry, senior vice president of retail operations for Kroger.”It’s remarkable that we’ve been able to improve execution as much as we have without a big price tag.” …
The system includes software developed by Kroger’s IT department that predicts for each store how long those customers spend shopping based on the day and time. The system determines the number of lanes that need to be open in 30-minute increments, and displays the information on monitors above the lanes so supervisors can deploy cashiers accordingly.
Automotive News recently had a report on driving a Tesla Model S electric car from Los Angeles to Las Vegas. You can find a video describing the drive here. What I found more interesting was the reporter’s description of stopping to charge up the car (A flaw in Tesla’s plan: It’s Chargie McVanish, Apr 8). In order to spur interest in its vehicles, Tesla is building out a network of solar-powered Supercharger charging stations. Their website says they currently have nine but plan to get to one hundred by 2015. One is in Barstow, perfectly positioned for a drive from LA to Vegas.
So what’s a reasonable wait to charge your Tesla? (more…)
All this week I have been traveling in China with a group of Kellogg faculty. It has been a fascinating trip as we have met with officials from several government agencies, executives from a variety of companies, and colleagues from the Guanghua School of Management. I have never been to China before so I have been trying to take everything in as we have gone around Beijing and Shanghai. This sign caught my eye as we were going through the Beijing airport.
I like the way they have chosen to present the wait time information for clearing security. It got me wondering why American airports don’t try reporting similar information. If nothing else, being clear about the targets would help set expectations for how long passengers should expect to be in queue. Of course, in the US, the people running the airport do not control how TSA agents are scheduled. Nor do they determine how many officers are managing the immigration desks (another piece of data on the sign).