Measuring the Effect of Queues on Customer Purchases
Columbia University - Columbia Business School
Universidad de Chile
Columbia University - Columbia Business School - Decision Risk and Operations; University of Chile - Departamento de Ingenieria Industrial
November 6, 2012
Columbia Business School Research Paper No. 12/23
We conduct an empirical study to analyze how waiting in queue in the context of a retail store affects customers’ purchasing behavior. Our methodology combines a novel dataset with periodic information about the queuing system (collected via video recognition technology) with point-of-sales data. We find that waiting in queue has a non-linear impact on purchase incidence and that customers appear to focus mostly on the length of the queue, without adjusting enough for the speed at which the line moves. An implication of this finding is that pooling multiple queues into a single queue may increase the length of the queue observed by customers and thereby lead to lower revenues. We also find that customers' sensitivity to waiting is heterogeneous and negatively correlated with price sensitivity, which has important implications for pricing in a multi-product category subject to congestion effects.
Number of Pages in PDF File: 41
Keywords: queuing, service operations, retail, choice modeling, empirical research, operations/marketing interface
Date posted: May 26, 2011 ; Last revised: December 15, 2012
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