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Liberalizing shop opening hours

A version of this article was published in the EU Reporter, February/March 2007, p. 21 under the title « Talking shop ».

During the ‘90s, Denmark, Greece, the Netherlands, England, Austria and Japan have liberalized their shop opening hours. The debate rages over the same issue nowadays in the city of Geneva, France and Quebec.

During the ‘90s, Denmark, Greece, the Netherlands, England, Austria and Japan have liberalized their shop opening hours. The debate rages over the same issue nowadays in the city of Geneva, France and Quebec.

While Genevese shops wish to open two Sundays during the Christmas period, end of year festivities have reignited the controversy in France about a hundred-year-old labor law banning work on Sundays. In Quebec, the debate bears upon a law which restricts the number of supermarket employees to four after 5 p.m. during weekends and 9 p.m. during the week.

French-speaking countries or jurisdictions thus stand out as exceptions in an area in which deregulation has gained momentum elsewhere in the world. Even if the resistance to change is strong, it is important to recall that wider choice of shopping hours is, first and foremost, beneficial to consumers.

Arguments in favor of regulation of shop opening hours usually emanate from trade unions and industry federations. In this vein, the Commerce and Service Federation, CGC Commerce, decries a society “that urges workers, many of whom are not volunteers or are only so by necessity (being given the lack of job security), to work on a day which should be devoted to cultural or familial activities.”

For his part, Charles Melcer, Chairman of the French Clothing Federation, represents the interests of small and medium retailers, and claims that “if shops open on Sundays, there will be a transfer of market share in favor of shops which can incur the added costs of doubling the wages of their workers, that is, large chains.”

The great virtues of competition are usually acknowledged – after all, is it not for this reason that some firms are condemned for anticompetitive behavior? – because it prompts actors on the market – under the pressure of losing their market shares – to optimize the use of their resources and offer the best value to consumers. These virtues are, however, often downplayed by those who could be hurt by competition and who refuse to adapt themselves. Their endeavor to shield themselves from competition is nothing else than a natural reaction. One must nevertheless bear in mind that firms exist to serve consumers, not the other way round.

It is precisely here that one can locate the main argument in favor of the liberalization of shop opening hours, namely, its interest from consumers’ standpoint. A survey conducted by Ipsos polling agency (on 24 th April, 2006) corroborates this interest as it shows that 74% of the inhabitants of Paris and its suburbs favor Sunday shop openings. Extended opening hours afford more time to individuals in order to make their choices. They allow individuals to avoid peak shopping hours and, hence, enjoy to a greater extent the time they spend doing their shopping. The example of the Netherlands thus suggests that consumers spend more time if they do their shopping in the evening rather than during the day.

This flexibility partly explains why before the liberalization of shop opening hours in a country like Austria, for example, one could observe an increase in cross-border shopping towards countries with more liberal shopping hours.

By keeping stores from choosing their opening hours just like they choose their goodwill in terms of what they expect consumers’ demand to be, public authorities hurt consumers. This lack of flexibility is all the more harmful since demand has strongly evolved in this direction during the ‘90s. Indeed, according to an OECD study[[OECD Economic Studies, No. 32, 2001/1.]], the demand for the extension of opening hours “stems in part from a greater diversity of working hours in the economy in general, as well as a higher female labor participation in the labor market.”

Consumer preferences can point in the direction of an extension of shop opening hours in a given area without this need arising in another area, however. It is interesting to observe, on this issue, that in countries which have relaxed laws in this field, shops have not necessarily been led to open longer hours. In Spain, for example, where relatively few restrictions survive, retail stores open 46 hours per week on average.

In fact, the extension of opening hours on the market depends upon the price consumers are ready to pay (prices can rise owing to higher wage bills) and, thus, upon what wage rate workers demand in order to work additional hours. Firms will work out whether or not the extension of opening hours is worthwhile.

It is only by leaving to actors on the market the possibility of adjusting their supply to demand that one favors flexibility and diversity. In Sweden, one can remark that 15 years after the liberalization, supply as regards shop opening hours has not yet standardized itself. On the contrary, if most of the department stores and supermarkets are open on Sunday (80% of them), only half of corner shops and 48% of furniture stores are open on this day.

One can look forward to a wider diversity of opening hours in the French-speaking countries and jurisdictions mentioned above if public authorities resolve to favor free individual choices and decisions instead of the rigidity of sectional interests.

Cécile Philippe, Institut économique Molinari

Cécile Philippe

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