Cloud 9 is offering curbside pickup so that their lazier customers can have a better shopping experience. Monopolistically competitive firms often compete on non-price aspects, so offering curbside pickup may entice new customers to increase their demand. Since they aren’t hiring more workers, the employees are now required to work more, which they don’t see as fair. This increased demand following curbside pickup should result in an increased demand for labor, but the workers only seem to be working more.
Tag: monopolistic competition
Amy and Jonah are trying to help Mateo with a toy drive inside the store, but there’s a charity event happening outside the store. Amy asks the man to leave since he’s serving as a substitute for Mateo’s charity. A crowd gathers and accuses Cloud 9 of selling products for more than the cost and keeping the profit, i.e. being a profit-maximizing firm. Amy points out that all stores sell things for more than they cost and earn profit.
The Extra Smailes
Cloud 9 is instituting a new policy in an effort to compete against online retailers. Associates now are asked to make small talk with the customers and “go the extra smailes.” Since Cloud 9 sells the same products as online retailers, the store is trying to provide a non-price advantage to convince customers to shop locally.
Marcus gets the idea to create a new type of cheese using breast milk. He pitches his idea to his coworkers in the hopes that they’ll invest in his product. He believes that breast milk cheese could enter the cheese market and compete with other, more well established varieties.
Demand During Rebranding
Cloud 9 is rebranding their store product line, moving from Halo Brand to SuperCloud. With the switch, the store has marked the old products down by 80%. Cheyenne wants to buy as much of the old merchandise as she possibly can because of the discount. Glenn tells her she cannot set those items aside during store hours, but she is scared they will be all gone by the time her shift is over. She decides to try and hide the products around the store.
Cheyenne and Bo have decided to move their wedding date forward in an effort to end their constant bickering, and Glenn is there to help. He calls his church to see if there’s an open date in the near future. It turns out his church acts just like other monopolistically competitive firms by offering differentiated services, like the option to select either a white or black choir. They practice price discrimination by rewarding Glenn with referral points to the gift store and offering a nuptials package that entitles Bo and Cheyenne to 50% off a baptism.
Differences in Detergents
Mateo helps a customer find laundry detergent and goes through the process of naming some of the different options available. Product differentiation allows companies to offer similar, substitutable products based on customer preferences. Each focuses on a niche market or defining characteristic but are generally substitutes.
Glenn’s family used to own a local hardware store before Cloud 9 entered the market and put them out of business. Cloud 9 was probably able to take advantage of economies of scale and a large distribution network to offer competing products at lower prices. Monopolistic competition in the long run results in zero profits for firms, but if a small company already has relatively little profit before entry, a decrease in demand could result in that particular firm incurring losses and leaving the market. Because Sturgis and Sons specialized in hardware, some of those workers may be structurally unemployed if their skills are no longer needed in the local market. Later in the episode, Glenn finally shares his frustration with Cloud 9 and how they killed his family’s business because of their devotion to profit maximization.
Garret notices that the store sells two dresses that look identical, but one is marketed as a white dress and the other is a white wedding dress. The wedding dress costs $200, but the other dress only costs $30. The wedding industry is notorious for high markups on products that are labeled for weddings because brides and grooms often have fairly inelastic demand for their products. Because of this inelastic demand, firms are able to price discriminate and charge higher prices.
Glenn is embarrassed about how he handled a gay couple earlier in the episode and he seeks Mateo’s help in trying to differentiate their product offering by providing a section tailored to gay weddings. Even though Mateo points out that it’s the same as s straight wedding, Glenn is convinced they should setup a section specific to gay weddings. Product differentiation is a characteristic of monopolistically competitive firms. By offering a specific section of the store to one group of people, Cloud 9 can set themselves apart from other retailers.