Content uploaded by Charles C. Carter
Author content
All content in this area was uploaded by Charles C. Carter on Feb 28, 2014
Content may be subject to copyright.
Retail Store Location and Market Analysis: A Review of the Research
Abstract
Most research and writing in the area of retail store location and market analysis has been undertaken by marketing researchers and urban geographers. The purposes of this review are to present this eclectic area of study as a unified body of knowledge, to encourage real estate researchers to become more involved in this area, and to indicate where recent research in real estate and urban economics is an outgrowth of study in this area. The field can be viewed as a hierarchy of investigations, including modeling consumer behavior at the micro level, using models of consumer behavior in models of store location, and developing approaches for choosing among markets at the macro level. The hierarchy of investigations should in turn be viewed as the study of economic activity in space. Recent research in the areas of allocation of space in shopping centers and price discrimination in retail leasing is an outgrowth of work in the area of retail store location and market analysis.
... Additionally, considering the rapid increase in the number of retail stores and shopping malls, with nearly identical product and service offerings, slight differences in location can have a substantial effect on sales performance and profitability. Finally, the disadvantages or problems of an initially wrong decision in retail store location are extremely difficult to overcome as the location decision represents a long-term, fixed investment which is immobile and unique [37][38][39]. ...
... Given the importance of the issue, retail location decision has become the subject matter of different disciplines such as marketing, urban sciences, economics, geography, applied mathematics and geomarketing and different retail location theories, models and procedures have been proposed. In this sense, it is possible to say that retail location theory is comprised of four broad theoretical areas that are central place theory, spatial interaction theory, land value theory and the principle of minimum differentiation [38,[40][41][42][43][44][45]. ...
... In the framework of this theory, distance to the supply point and transportation costs are the most important factors. It is predicted that the longer distance from the supply point will reduce the demand for a good or a service since customers will choose the nearest retailer [38,42,[46][47][48]. Land value theory, which is also known as bid rent theory, stems from Alonso's seminal land use model and asserts that since the supply of land is fixed, the location of different activities will depend on competitive bidding for specific sites and, consequently, all urban sites are occupied by the activities that are capable of paying the highest rentals. ...
Multi-criteria decision-making (MCDM) techniques are increasingly being used for the problem of location selection, which directly affects the long-term success of a company. Besides these techniques, with the advantage of handling both spatial and non-spatial data, geographic information systems (GIS) also represent a useful method for selecting the appropriate location for different kinds of facilities and sites. In this respect, this study aims to compare the results of a MCDM technique, fuzzy technique for order preference by similarity to ideal solution (TOPSIS), and GIS for the location selection of shopping malls in Turkey. According to the results of both fuzzy TOPSIS and GIS, the Marmara region was determined as the best alternative for shopping malls in Turkey.
... Furthermore, the level of development of the regional retail industry was generally determined by GDP. The higher the GDP, the greater the number and level of retailers (Vandell & Carter, 1994). ...
The Community-Group-Buying Points (CGBPs) flourished during COVID-19, safeguarding the daily lives of community residents in community lockdowns, and continuing to serve as a popular daily shopping channel in the Post-Epidemic Era with its advantages of low price, convenience and neighborhood trust. These CGBPs are allocated on location preferences however spatial distribution is not equal. Therefore, in this study, we used point of interest (POI) data of 2,433 CGBPs to analyze spatial distribution, operation mode and accessibility of CGBPs in Xi'an city, China as well as proposed the location optimization model. The results showed that the CGBPs were spatially distributed as clusters at α = 0.01 (Moran's I = 0.44). The CGBPs operation mode was divided into preparation, marketing, transportation, and self-pickup. Further CGBPs were mainly operating in the form of joint ventures, and the relying targets presented the characteristic of 'convenience store-based and multi-type coexistence'. Influenced by urban planning, land use, and cultural relics protection regulations, they showed an elliptic distribution pattern with a small oblateness, and the density showed a low-high-low circular distribution pattern from the Palace of Tang Dynasty outwards. Furthermore, the number of communities, population density, GDP, and housing type were important driving factors of the spatial pattern of CGBPs. Finally, to maximize attendance, it was suggested to add 248 new CGBPs, retain 394 existing CGBPs, and replace the remaining CGBPs with farmers' markets, mobile vendors, and supermarkets. The findings of this study would be beneficial to CGB companies in increasing the efficiency of self-pick-up facilities, to city planners in improving urban community-life cycle planning, and to policymakers in formulating relevant policies to balance the interests of stakeholders: CGB enterprises, residents, and vendors.
... Competition in commercial activities has a significant impact not just on the success of individual businesses, but also on urban structure and economy (Jung and Jang 2019;Vandell and Carter 1994). Within the tertiary industry, restaurants are one of the most common services, with an interesting tendency to open and close more frequently than other types of businesses. ...
Commercial activities within a city have competed to attract people, and the interactions between these activities have affected urban dynamics. Among many services, the restaurant business accounts for a significant portion of the urban economy, with spatiotemporal variations in survivability reflecting crucial signs of changes in urban structure. This study aims to identify the patterns of spatiotemporal changes in restaurants locations to deepen our understanding of urban dynamics. Studies have utilized a variety of data sources, including social media and consumer review services, but they cover relatively short periods and focus on currently operating businesses. Public open data, however, offers potential to reveal continuous changes in urban space at micro scales since it covers an entire population with individual historic records, making it complete rather than a sample. In this study, we explore newly released public open data on licenses of restaurants in Seoul, South Korea to identify spatiotemporal dynamics of commercial activities in the city using three exploratory analytics, including hot spot analysis, trends analysis of spatial clusters, and space-time scan statistics. The results show continuous temporal changes in spatial clusters of restaurants. Hot spots remain in three traditional cores of Seoul, although each cluster has shrunk over time. Moreover, suburbs have become more risky, with significant declines and more closures than expected as well as relatively shorter lifespans. This implies a concentration of restaurants in central areas, which can further economic disparities within a city. By portraying spatiotemporal changes in restaurant entrepreneurship with public open data, this study provides essential knowledge about urban dynamics informing individual and public decision making processes, particularly associated with locating new businesses.
... Retail store location can be considered as the most important determinant of the success or failure of a store (Vandell and Carter, 1993). Turhan et al. (2013) identified seven categories of criteria for choosing a store location. ...
The choice of locating a retail store in a given area is among the most important decisions that retailers have to make for the long term success of their business. A good location allows for easy access, attracts customers and increases sales. This paper proposes an ex-ante analysis by measuring retailers’ perceptions with respect to the inauguration of new metro stations. Main findings show that the increase of accessibility brought by new interventions in the transit system increases the attractiveness of the area for retailer’s shops location choice. The evaluation of the attitudes of prospective retailers represents original insights into the dynamics of transit networks and the economic viability of local retailers.
... Good access to the stores, together with visibility for the clients, are ways to break the point of just passing in front of the store or deciding to enter and purchasing something. It is at this point that people flow turns into profit for the retailers (Vandell & Carter, 1994). ...
This document presents a research on the extent to which transit-oriented development (TOD) characteristics play a role in the investment strategies of horeca (hotel, restaurant, and café (Eurostat, 2017)) businesses regarding areas surrounding a transportation hub. The research builds on two strands of literature. The first includes the body of knowledge on locational strategies of businesses. The second is the body of knowledge on the design concept of TOD and its characteristics. The connection of the theory is made to understand which TOD characteristics are relevant for private businesses in making their investments decisions in station areas. The motivation for the study is to assess whether public improvements in station areas, specifically focusing on TOD characteristics of a station area can stimulate horeca businesses to invest in these areas. The research has an explorative character, using the hubs as the focal point between land use and the transportation system. The methodology consists of interviews with the representatives of selected horeca businesses in order to understand their investment strategies and more specifically, their willingness to invest in areas where TOD characteristics are present in a greater extent. This methodology led to a deeper understanding of the potential local economic benefits, enhancing TOD characteristics in a hub area. Some TOD characteristics were found in similar businesses divided into two subdivisions: ‘hotel’ and ‘restaurant and cafe’. For the first one, the lifestyle of the surrounding is playing an essential role in the locational decision-making process. In the second subdivision, the flow of people was highlighted as a crucial feature to perform an attractive factor for investments. Nonetheless, the combination of all presented characteristics incentivizes businesses’ strategies to some extent.
... This is true for local businesses as well. Location is an important driver for the success of a business, that being a restaurant, a cafe, a retail store etc. [27]. Location can impact the success of a business both through convenient access to it, but also through agglomeration of other businesses (even if they are competing in nature). ...
In his seminal work stability in competition, Hotelling developed a model for identifying the spatial equilibrium for two competing firms such that they maximize their market-share. He considered a linear area of fixed length and he showed that in this setting the two competing firms should be located side-by-side in the middle of the line. Hotelling's study has been then adopted and used to analyze and explain other phenomena in a variety of fields. However, the linear city model is purely theoretical, without any empirical validation. The goal of this study is to explore Hotelling's Law in its original space - i.e., that of firm competition - and identify possible adjustments needed to describe its application/validity in a non-linear city. In particular, we collect data from location-based social networks that include information for the number of customers in a venue and we compare them with the expectations from Hotelling's original law. Overall, we identify that at a large geographic scale there is correlation between the market-share and the inter-venue distance, which is consistent with the Hotelling's Law. However, as we zoom into smaller scales there are deviations from the expectations from Hotelling's law, possibly due to higher sensitivity to the necessary assumptions. Our findings enhance the literature on optimal location placement for a venue and can provide additional insights for owners in regards to the linear city model.
... The probability is positively related to the attractiveness of the store and inversely related to the distance between the consumer and the store [27]. Past research on the attractiveness of retail stores has highlighted the importance of store size [27,28], agglomeration effect [24], and physical location [27,29,30]. Food quality and nutrition are also important aspects of store attractiveness influencing consumer patronage [30]. ...
Out-of-home eating plays an increasingly important role in the American diet and weight. This research studied out-of-home food environment and restaurant choices in one rural county of eastern Alabama, United States, and examined the impact on African American children's weight status. A mixed methods approach was used in this study. Questionnaires were collected for 613 African American children at all four public elementary schools in the county. The healthfulness of restaurants was assessed with the Nutrition Environment Measures Survey-Restaurant (NEMS-R). An agent-based model integrated with Huff's model was developed in order to examine family dining patterns with consideration for individual and community socio-demographics; restaurant location, size, and healthfulness; and the spatial dynamics between consumers and food retailers. We found that this model performed well, as evidenced by validation with the 2013-2014 National Health and Nutrition Examination Survey (p, 0.54-0.96), and by comparison with the original Huff model. Frequency of dining at low-quality full-service restaurants (r = 0.084; p < 0.05) was associated with rural children's body mass index (BMI) percentile. These findings may increase public awareness of the importance of family restaurant choices as well as the potential unhealthiness of full-service restaurants.
... Traditionally, the geographic location is very important for a physical retail store, the location with dense population is more beneficial to sales when taking convenience and shopping cost into account [1,2] . Compared with the physical retail stores, consumers make transactions from the physical space to virtual space that is free from constraints of the geographic location. ...
As there are a large number of sellers and products on C2C shopping websites, consumers are faced with the problem about how to choose the right goods whereas sellers are confronted with the problem concerning how to set up online shops and provide commodities. Based on signaling theory and research findings about regional economics, we put forward an analysis model between the difficulty in identifying quality of goods and the quality signal intensity of geographic location, and make an empirical test by the actual data from Taobao.com. What this study finds is that, under the environment of C2C e-commerce in China, the geography location may affect the distribution of these online stores and their sales performance. For local specialty products, the quantity and the average sales of seller stores from the origin locations are more than those from the other locations; for the branded consumer electronics, the quantity and the average sales of seller stores from the first-tier cities are higher than those from other cities.
Waves of urbanization have always played a significant role in reshaping the morphology of cities and altering livelihood patterns. Changes in street intersections and block configurations lead to modifications in how cities function, how people experience space, and how residents earn a living. However, these structural changes—mainly when triggered by rapid development pressure—often exacerbate existing vulnerabilities and generate unresolved spatial tensions between pre-existing neighborhood features and new forms of development. Given the urbanization rate experienced by China in the last three decades, this research explores these spatial tensions in Shanghai with a specific focus on the shifts in type and spatial distribution of commercial units throughout the development of Hongkou district. This project employs two novel datasets: the 1937 map of business licenses and the 2018 crowdsourced Points of Interest (POI) data from “Gaode Maps.” Through a comparative analysis of these datasets, the research engages with the recent attempt of the city of Shanghai to repurpose the outdated commercial typologies built in the early 1990s during the government-led urban renewal. More specifically, this study portrays the morphological transitions of Hongkou district through the lens of commercial activities and sheds light on the relationship between people’s livelihoods, street commerce, and urban form.KeywordsUrban morphologyCommerceSpatial analysisApplied GISHongkou districtShanghai
Indian retail market has witnessed a revolution with the changes in the consumer buying behaviour driven by strong income growth, changing lifestyles and favourable demographic patterns. There is a dearth of a comprehensive empirical study which explores and examines the influence of store attributes on consumer store choice and patronage behaviour in the context of Indian organized retail. Thus, this study made an attempt to identify the store choice criteria (store attributes) of the consumers to select a store and examines the effect of store attributes on retail store patronage behaviour. The thesis also explores the role of consumer demographics in store choice behaviour.
Determinants of retail patronage were identified and compared in a series of analyses of covariance of multinomial logit parameters. These parameters, estimated from random samples drawn from six North American and European markets over a seven-year period, revealed insignificant seasonal changes in a single market, significant changes in a single market over the seven years, and significant differences between markets and across cultures.
The authors suggest that there is more than one type of outshopper, each type motivated by needs emanating from unique socioeconomic, life cycle, and life style perspectives. These concepts are tested with an empirical classification of outshoppers. The relationships revealed have important implications for marketers in the process of (1) developing local retail facilities and appeals to reduce loss of customers to other trade areas and (2) designing retail programs to attract consumers from contiguous trade areas.
Logical consistency of market share models has received considerable attention in the recent marketing literature. The reports suggest that, at least theoretically, attraction-type specifications are more easily justified than the ones commonly used in empirical work. The authors examine whether the theoretical superiority also implies a better predictive performance. The empirical results give a tentatively affirmative answer.
The author explores possible specification biases of conventional retail patronage models stemming from important omitted variables and from the composition of the set of alternative retail centers. The inclusion of characteristics of retail centers and of transportation modes is attempted in a systematic manner. The models are tested on a set of planned suburban shopping centers and traditional, unplanned downtown centers. Strong empirical evidence is reported which suggests that consumers consider a combination of retail center and transportation mode characteristics in their decisions to patronize alternative retail centers.
There are at least three sampling issues that can result in misleading trade area maps if not recognized. This paper discusses these issues, shows their effects on the trade area map of a large shopping center, and suggests procedures for responding to them.
The rise in vertical marketing systems (VMS) has had a profound impact on the nature of retail competition. The increase in intrasystem competition between outlets of the same VMS points to the need for increased sophistication in market area analysis models to aid in strategy development. This article develops a set of models to address critical managerial issues concerning retail locational strategy in an intrabrand competitive setting. Findings demonstrate the need to evaluate outlet-specific determinants of patronage behavior, in addition to those of a generic nature, in analyzing intrabrand competition.
Can retail chain image measures be added to the Huff probabilistic model to improve predictions of retail trade?
To design successful strategies retailers must take into account not only the marketing environment confronting them today but also anticipate possible competitive and demographic changes. This article presents a procedure to help retailers formulate a strategic location plan in a dynamic environment. The procedure involves a model for assessing site desirability, a criterion for selecting among alternative sites, and a heuristic to facilitate the computational procedure. A key element is the use of competitive equilibrium concepts to provide desirable strategies under a variety of future scenarios.
One of the critical problems in the attempt to construct central-place models in terms of the location-allocation problem is to optimize the overall system by combining retailer and consumer behaviours; and this problem is solved by use of a two-level control system. In this system, suboptimization problems are individually solved and consumer behaviour is controlled at the community level, and the location of central facilities is determined at the city level to maximize demand within the city. This model is applied to a city consisting of twelve communities, and the optimum location pattern of central facilities for three orders of functions are determined.