If your brother or sister earns a living at JCPenney you may have to cut short the Thanksgiving family time spent together. At 8pm, the retailer announced last week, most of its 1,100 stores will open their doors. JCPenney had no choice. Macy’s announced a few days ago that it will be open as well, breaking with a century and a half tradition. Two years ago, Toys R Us started this, and Wal-Mart, Target and others followed suit last year.
Why does JCPenney have no choice? This is a classic case of the Prisoners’ dilemma in game theory. The best outcome of the game occurs when all retailers cooperate (i.e. stay closed on Thanksgiving). But the incentive to defect is extremely strong, in the hope that your shop could be the only one open and boost its sales. As a result, all stores open and no one gains anything compared to opening all together on Black Friday. If you are the only player who “cooperates”, you are the sucker of the game and end up with nothing. That must be how Macy’s and JCPenney felt last year.
The unstoppable logic of the game is clear when one looks at developments over recent years. Shops used to open at 6am on Black Friday, and started pushing forward gradually until they broke through the symbolic midnight limit. Next year, will they open late in the afternoon?
Stopping this madness needs government leadership and regulation, or business leadership in the form of self-regulation by the stores. Political leaders who advocate both free markets and family values cannot have their pumpkin cake and eat it too. They need to take a stand as markets and family values conflict with each other in this case.
The other day I was in a shoe store, tempted by an offer to get two pairs for free if I bought one (yes, 1 + 2!). I kept repeating to myself that I do not need shoes right now. Beyond a consumer addiction to sales deeper forces are at work in the clothing industry. Supply is chasing consumers rather than the other way around. Former fast fashion junkie Elizabeth Kline writes that rapid turn-over of cheap low quality garments is becoming the norm. Freshly baked clothes keep the cash flowing.
The supply boom is constructed on relentless cost cutting in a labor intensive industry. Giving decent working conditions to workers in developing countries is another instance of the prisoners’ dilemma. Increasing pay checks would have to happen simultaneously by all buyers. Otherwise you end up as the lonely sucker who loses out in a tough competition. The equilibrium in this game is for all to keep wages as low as possible. Regulating that is a tougher nut to crack, so let’s start with holiday opening hours and give Thanksgiving back to family time.