Pandagon puzzles at the complementarity between books, wireless access, and chai. Me? At this stage I'm much more likely to patronize a cafe that doesn't have wireless access than one that does: one has to get some real work done, after all...
Posted by DeLong at January 17, 2004 09:22 AM | TrackBackPandagon: The Microeconomics of Borders: In my town, we have a great independent bookstore and a very nice Borders. The latter gets little business as most people, myself included, far prefer to patronize the Independent seller than the corporate chain. Unfortunately, our intrepid Independent, Bookshop Santa Cruz, has no Cafe to speak of. As such, there is no studying to be done there. I don't like to study in the house, so I (and my girlfriend) began going to the Borders, which has a great second story cafe overlooking the whole store.
I'm addicted to Oregon Chai. So two or three nights a week, Borders got a few bucks from either my girlfriend or I for our Chai and coffee studying cocktail. I felt somewhat indebted to Borders for letting me study in their cafe so often, so I began buying magazines there as I saw them. Occasionally, a bargain book would catch my eye and once, an astronomy textbook on their shelves proved to be orders of magnitude better than the one I had, and I bought it. I do most of my book buying on Amazon, but, between the Chai and the books, Borders was making a tidy profit off of me and my girlfriend.
Now, Borders has wireless internet. Sounds great, I can blog from there. So I get a wireless card only to find that T-Mobile wants to charge me $30 a month to use it. With the help of some of this site's readers, I find that my local coffee chain, Coffeetopia, offers free wireless access. So my girlfriend and I try them for a night. The Chai is great, the atmosphere relaxed and the bandwidth flowing. Now, since I'm not in Borders, I patronize Bookshop since I feel no debt to Borders and my preference is to support Independents. So Borders, by trying to charge me more for Wireless, has lost significantly more than $30 a month because my girlfriend and I have stopped going there entirely. In addition, their competitors have begun gaining from me, thus making my switch all the more economically punitive. This is nothing I did consciously, it all just followed from a desire to use my new wireless capabilities.
I like local, owner-operated businesses as well as the next person, and patronize them often. In fact, I am one (law practice). However, in Pandagon's shoes I would patronize Giganto Books with only a modest twinge of guilt. And I also sometimes shop at places like Target and occasionally (dodge that lightning bolt) Walmart.
Posted by: Ken on January 17, 2004 09:30 AMThe problem with the larger chains is that they look at their customer base as a commodity to be exploited, while smaller stores will typically focus on advancing their core business. This applies particularly well to wireless. I have had some limited business experience with Starbucks along these lines, and I can testify that they're very bold in offering their clientel up as an asset to potential partners.
In the long run, I think this will only hurt the chains, as sit-down wireless access becomes an increasingly important reason for visiting a coffee-house. In the short run, I don't think it matters too much; the chains have far too little competition in most markets, and wireless access is currently important only to a small number of users.
Posted by: Matt on January 17, 2004 11:08 AMMatt: I generally agree; however I think some (organizational?) form of human complacency is in part at the root of the phenomenon -- with success (of large chains) comes the idea of entitlement to automatic profit growth. Smaller businesses are usually not in the position to have thought about laying back. With individuals it is similar -- typically people who let's say enter an organization first have to prove themselves, then work hard out of momentum, but invariably will start to take things a bit more easy when they got some standing.
I'm not sure it will "hurt" the chains though. OK, they forgive some business, but it's rather a side activity. On the other hand, you never know; it could have grown significantly. What will hurt them is when they become arrogant, start treating their customers like paying cattle, and people will start taking offense.
With retail shops, after the selection of products that I'm looking for, important factors for me are waiting time at the checkout and distance. (I have already almost given up on the notion of in-store service.) There I have noticed that the large chains often seem to understaff their checkouts. I'm wondering how much of this is driven by the "our customers will come anyway" attitude. Do a few additional (part-time?) cashiers really ruin their calculation? I doubt it. But then an additional hand or free (i.e. paid by the store) wireless may mean a smaller bonus for the store manager, who knows?
The whole 'Gigantor Chain' vs. Small Independent is not really an issue in much of the US.
In Connecticut, for instance, the small bookstores are generally Waldenbooks or B. Dalton - if you're lucky enough to have a bookstore in town at all.
Posted by: Jon H on January 17, 2004 01:13 PMProfessor De Long: is this not a case where commitment against consuming internet in the cafe is available in that you can simply not take the laptop? :-) Commitment certainly does alter consumption patterns, no?
Posted by: Michael on January 17, 2004 05:20 PM