THE RISING COST OF TIME OF FEMALES, THE GROWTH OF NATIONAL BRANDS AND THE SUPPLY OF RETAIL SERVICES

Abstract

A rise in the relative cost of time of women has increased the demand for brand names and reduced the demand for information traditionally supplied by retailers. A theory of the optimal allocation of shopping responsibilities in a two-earner household shows that a rise in the woman's wage increases the demand for brand names by more than an increase in the man's wage. An increase in the relative earnings of women is related to a rise in male shopping, the growth of trademark filings, an increase in manufacturer advertising, and a reduction in retail personal services in several industries. I. INTRODUCTION Although the female work force has expanded greatly since World War II, women's earnings did not begin to rise relative to men's until the mid-seventies. As the relative cost of time of women increased, the demand for products that save time, and shopping time in particular, should also have increased. Consumers can save shopping and search time by purchasing nationally advertised brandname products and by patronizing stores that provide a higher level of service. This paper pursues this theme and explores some consequences of the rising cost of time of women. We present evidence that branding has grown more rapidly than the economy, particularly in consumer good industries, and suggest that the rising cost of time of women is one reason for this growth. Concurrent with this change is the decline in the quality of service in many retailing industries with the diffusion of discount-type retailing and the growing use of part-time workers. The decline in the quality of retail services in a period when women's time is becoming more valuable appears paradoxical. Our way of resolving this paradox is to suggest that the information in a brand's name is a substitute for the product information supplied by a retail store. We suggest the growth of brand-name goods has devalued the certification function traditionally performed by retail stores and decreased shoppers' demand for information supplied by retail stores. In some respects, the retail store is performing a more limited role now than in the past--it has become more of a provider of inventory and less of a supplier of information. We are not the first to suggest a relationship between branding and store services. Steiner [1978] and Bresnahan [1986] have also suggested that information obtained by the consumer directly through manufacturer promotions is a substitute for information obtained at the retail outlet. Steiner suggested the growth of the large discount toy store was due to the growth of manufacturer promotion of games. Bresnahan argued the cost of providing information through traditional retail outlets increased relative to the cost of supplying it through the mass media. He presented some evidence of increasing returns in the use of television and magazines in the beer industry. We place greater emphasis on demand determinants and give supply determinants a lesser role since we do not find the rates for national network TV advertisements have changed much relative to the rates for newspaper advertisements. We believe the rising cost of time of women is an important key to understanding why manufacturers are supplying more information in recent years through the branding of products. Section II presents a theory of the allocation of shopper responsibilities within a two-earner family where a change in the wage rate of one member alters the shopping responsibilities among the members and changes the shopper's demand for brand names and retail store services. In section III we show the rise in the relative earnings of women began in the mid-seventies and coincides with (1) an increase in the growth rate of consumer good trademark filings (a proxy for branding), (2) an increase in the intensity of advertising by manufacturers of consumer goods, (3) an increase in the intensity of advertising by manufacturers relative to retailers, and (4) a decrease in personal services at retail stores. …