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Shopping centre location analysis : sales volume estimating Currie, David Gordon 1973

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SHOPPING CENTRE LOCATION ANALYSIS: SALES VOLUME ESTIMATING t>7 David Gordon C u r r i e B.A., U n i v e r s i t y of B r i t i s h Columbia, 1966 A Thesis Submitted i n P a r t i a l F u l f i l m e n t of The Requirements f o r the Degree of Master of Business A d m i n i s t r a t i o n i n the F a c u l t y of Graduate Studies We accept t h i s t h e s i s as conforming to the requ i r e d standard THE UNIVERSITY OF BRITISH COLUMBIA J u l y , 1973 In p r e s e n t i n g t h i s t h e s i s i n p a r t i a l f u l f i l m e n t of the requirements f o r an advanced degree at the U n i v e r s i t y of B r i t i s h Columbia, I agree t h a t the L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r reference and study. I f u r t h e r agree th a t permission f o r extensive copying of t h i s t h e s i s f o r s c h o l a r l y purposes may be granted by the Head of my Department or by h i s r e p r e s e n t a t i v e s . I t i s understood that copying or p u b l i c a t i o n of t h i s t h e s i s f o r f i n a n c i a l gain s h a l l not be allowed without my w r i t t e n permission. Department of The U n i v e r s i t y of B r i t i s h Columbia Vancouver 8, Canada ABSTRACT This t h e s i s i s concerned with t h a t p a r t of r e t a i l l o c a t i o n a n a l y s i s which i n v o l v e s estimating the s a l e s volume p o t e n t i a l f o r a proposed shopping centre. I t examines the p r a c t i s e d methods and a v a i l a b l e models employed In the p r e d i c -t i o n of p o t e n t i a l s a l e s volumes. A survey of the l i t e r a t u r e d e a l i n g with techniques of s a l e s volume e s t i m a t i o n revealed that the theory behind s a l e s volume est i m a t i n g was somewhat d i s j o i n t e d , since the models and methods a v a i l a b l e emphasized d i f f e r e n t approaches and f a c -t o r s , and ignored or inadequately accounted f o r others. Further-more, i t was apparent t h a t p r e d i c t i v e accuracy was f a r from s a t i s f a c t o r y with the p r e s e n t l y a v a i l a b l e t o o l s of a n a l y s i s . I t was f e l t t h a t the problem revolved around the assumptions and f a c t o r s inherent or absent i n each model or method. Since estimating a p o t e n t i a l s a l e s volume f o r a pro-posed centre i n v o l v e d estimating the number of consumers who w i l l p a t r o n i z e t h a t centre, i t becomes obvious t h a t an accurate estimate of expected consumer patronage n e c e s s i t a t e s an under-standing of the f a c t o r s and i n f l u e n c e s which motivate consumers i n t h e i r choice of a p a r t i c u l a r r e t a i l o u t l e t i n which to pur-chase d e s i r e d merchandise. I t was f e l t t h a t by examining these determinants of consumer behaviour, some l i g h t could be shed on those f a c t o r s which are inadequately recognized or represented i n the v a r i o u s methods and models examined i n t h i s t h e s i s . This t h e s i s , then, f i r s t examines the v a l i d i t y and l i m i t a t i o n s of the many arguments, assumptions, concepts, and f a c t o r s considered to be important i n a d i s c u s s i o n of the determinants of consumer patronage behaviour. I t then examines the v a r i o u s models and methods i n order to a) determine how adequately they recognize and i n c o r p o r a t e these arguments, assumptions, concepts, and f a c t o r s i n t h e i r formulae or procedures, and b) evaluate t h e i r a b i l i t y to produce t h e o r e t i c a l l y sound, con-s i s t e n t p r e d i c t i o n s . The models and methods are found to be l a r g e l y incapable of accurate and c o n s i s t e n t p r e d i c t i o n s owing to t h e i r o v e r s i m p l i -f i e d and imprecise c o n s t r u c t i o n . Inadequately represented con-sumer patronage f a c t o r s are presented which, i f they were more e x p l i c i t l y recognized, would tend to Improve the p r e d i c t i v e c a p a b i l i t i e s of the models and methods. These f a c t o r s are shown to be a d d i t i o n a l f a c t o r s of a t t r a c t i o n and r e s i s t a n c e which i n -f l u e n c e the consumer i n h i s choice of a shopping d e s t i n a t i o n . The main con c l u s i o n presented i s t h a t i f these f a c t o r s were more p r e c i s e l y defined and q u a n t i f i e d , and more e x p l i c i t l y recognized i n the formulae, e i t h e r through r e s t r u c t u r i n g the parameters or through expanding the number of v a r i a b l e s i n the formulae, the d e s c r i p t i v e and p r e d i c t i v e c a p a b i l i t i e s of these models and methods might be Improved w i t h a corresponding decrease i n the n e c e s s i t y f o r s u b j e c t i v e Judgment. TABLE OP CONTENTS Chapter I INTRODUCTION Statement of the Problem 1 Purpose of the Study 4 Methodology of the Study 5 Organization of the W r i t t e n Report 6 PART A" CONCEPTS AND FACTORS IN LOCATION ANALYSIS I I BACKGROUND AND PERSPECTIVE E v o l u t i o n of the Shopping Centre Movement . . . . 8 P i l l i n g a Need 9 Role of the Automobile 11 E f f e c t on CBD R e t a i l i n g 12 Shopping Centre C h a r a c t e r i s t i c s 13 Importance of L o c a t i o n 15 Importance of L o c a t i o n f o r Tenanting 17 Incre a s i n g Importance of L o c a t i o n 18 Lo c a t i o n Research - H i s t o r y , S t a t u s , Prospects . . 19 Development of L o c a t i o n Research 20 Lo c a t i o n Research - Present Status 22 Necessity f o r Further Development 27 Summary 29 I I I THE CONCEPT OF TRADE AREA Cen t r a l P l a c e Theory 30 Threshold and Range 33 De f i n i n g "Trade Area" 35 Importance of the Trade Area Concept 36 Problem of Trade Area D e l i n e a t i n g 37 Consumer Behaviour and Trade Area D e l i n e a t i o n 39 Trade Area S u b d i v i s i o n s 40 Centre S i z e Assumptions i n Trade Area D e l i n e a t i o n 41 D i f f e r e n t Trade Areas f o r D i f f e r e n t Merchandise 4 4 ^ Necessity f o r R e f i n i n g the D e l i n e a t i o n Procedure 44 Summary 46 Chapter IV BASIC FACTORS AND RELATIONSHIPS IN THE MEASUREMENT OP TRADE AREA POTENTIAL I n t r o d u c t i o n 47 Market Factors 48 Economic Outlook 48 P o p u l a t i o n 49 Income 53 Employment 55 Purchasing Power (Disposable Income) . . . . 56 Distance 58 Distance as a Travel Cost 58 Distance i n D r i v i n g Time 59 Distance v s . Merchandise Desired . . . . 61 Distance vs. P r i c e of Merchandise . . . 62 Distance v s . Class of Goods 62 Distance vs. Breadth of S e l e c t i o n . . . 63 A c c e s s i b i l i t y , T r a f f i c , and Transportation . 63 D i f f e r e n t Trade Areas f o r D i f f e r e n t Goods . 70 Convenience Goods 71 Shopping Goods 71 S p e c i a l t y Goods 73 Demographic Factors 74 Income Groups 74. Incomes, S o c i a l C l a s s , and Age Groups . 77 Geographic Factors 80 Competition 81 S a t u r a t i o n 82 Under-supply of Modern Stores 84 Future Strategy of Competitors 84 Competition by Class of Goods 85 Assessing Competitors 86 Market Share 89 S i t e Factors 90 Store Size and Centre Size 91 Centre S i z e and Cumulative A t t r a c t i o n . 92 Maximum vs . Optimum Centre S i t e . . . . 93 Size vs. A v a i l a b l e P o t e n t i a l 94 S i z i n g f o r the Future 95 S i z e vs. Required Minimum Sales Per Square Foot 96 Tenant S i z e vs. A f f o r d a b l e Rent . . . . 96 Design and Layout 98 Store Types - Tenant Types 100 Tenants vs. P o t e n t i a l 101 Tenants as A t t r a c t o r s 101 Tenant Mix 102 Merchandise Mix 103 Merchandise Mix and A t t r a c t i v e Power . . 104 P r i c i n g P o l i c i e s 105 Image 105 Pa r k i n g 106 Adequacy of P a r k i n g F a c i l i t i e s 106 Amenities 108 Hours of Business 109 A d v e r t i s i n g I l l Summary of Factors 112 PART B TECHNIQUES IN LOCATION ANALYSIS Chapter V METHODS FOR DETERMINING TRADE AREA POTENTIAL I n t r o d u c t i o n 115 Market Share Method 116 Vacuum C a l c u l a t i o n Method 124 Analog Method 129 Summary 133 VI MODELS FOR DETERMINING TRA.DE AREA POTENTIAL In t r o d u c t i o n 134 E a r l y Models of R e t a i l G r a v i t a t i o n 135 R e i l l y and Converse 135 L i m i t a t i o n s 142 P r o b a b i l i s t i c Models 149 Huff's Model 153 Lakshmanan and Hansen 159 L i m i t a t i o n s of the P r o b a b i l i t y Models . . . . 165 Summary 183 VII CONCLUSIONS Restatement of the Problem 185 Summary and Conclusions 187 BIBLIOGRAPHY CHAPTER I INTRODUCTION Statement of the Problem The growth of the planned shopping centre and i t s i n -fluence on the r e t a i l i n g p a t t e r n i n met r o p o l i t a n areas has been w e l l c h r o n i c l e d . The developers of these centres, as w e l l as those r e t a i l e r s who te n a n t 1 these centres, have long r e a l i z e d the c r i t i c a l importance of l o c a t i o n i n determining not only the success of the centre as a whole, but a l s o the success of each i n d i v i d u a l business w i t h i n the centre. For the developer, l o c a -t i o n looms as the s i n g l e most important f a c t o r to consider both when studying the economic f e a s i b i l i t y of a proposed development, and when planning the a c t u a l character, s i z e , and tenant mix f o r the proposed shopping centre. S p e c i f i c a l l y , l o c a t i o n a l considera-t i o n s are paramount at seve r a l d i f f e r e n t stages of the planning process: f i r s t , i n scanning a broad region and p i n p o i n t i n g p o s s i b l e s i t e s f o r development; second, i n determining the p o t e n t i a l s a les volume of the planned centre; and t h i r d , i n planning the p h y s i c a l f a c i l i t i e s to f i t that market p o t e n t i a l . The developer's prime concern i n contemplating the development of a r e g i o n a l shopping centre i s whether or not i t w i l l be p r o f i t a b l e to him. To be p r o f i t a b l e , l e a s e revenues must exceed development and operating costs by a s u f f i c i e n t margin. Normally, development and operating costs can be reasonably a c c u r a t e l y determined, but lease levenues depend b a s i c a l l y on the types of stores i n the centre, t h e i r number, t h e i r s i z e , and t h e i r a b i l i t y to pay r e n t . This a b i l i t y to pay rent u l t i m a t e l y depends 1 The word "tenant" i s used o c c a s i o n a l l y i n t h i s t h e s i s as a slang verb meant to denote"occupy as a tenant" or "occupy w i t h tenants." 2 on t h e i r a b i l i t y to p r o f i t i n t h i s centre, and that i n t u r n i s h e a v i l y dependent on l o c a t i o n f a c t o r s . I f the centre i s inade-quately or improperly matched to the r e t a i l s a l e s p o t e n t i a l e x i s t e n t f o r i t , the tenants w i l l not succeed (or some may not) and the corresponding i n a b i l i t y to pay rent w i l l a f f e c t the developer's revenues, p o s s i b l y to the extent t h a t he w i l l p r o f i t l i t t l e , or even l o s e , on the p r o j e c t . I t i s t h e r e f o r e b a s i c that the developer be concerned about choosing a l o c a t i o n which has s u f f i c i e n t s a l e s p o t e n t i a l to support the businesses i n h i s centre. However, even once having determined that s u f f i c i e n t s a l e s p o t e n t i a l e x i s t s i n a r e g i o n f o r a r e g i o n a l shopping centre, the developer has r e a l l y solved only a p a r t of the problem. The centre must then be t a i l o r e d as to s i z e , nature, tenant mix, and number of f u n c t i o n s , to s u i t whatever s a l e s p o t e n t i a l e x i s t s and to comply with the c h a r a c t e r i s t i c s of the p o t e n t i a l market area. A l l of these problems are f u n c t i o n s of the l o c a t i o n of the centre, and i n order f o r the developer to be able to assess l o c a t i o n a l problems more a c c u r a t e l y , i t i s e s s e n t i a l that b e t t e r t o o l s of l o c a t i o n a n a l y s i s be developed. In r e c o g n i t i o n of t h i s need, over the years a great body of research and p r a c t i c a l experience has been accumulated on the m u l t i f a c e t e d problem of r e t a i l l o c a t i o n i n an attempt to b u i l d up a body of knowledge which could a i d those concerned with l o c a t i o n problems to a r r i v e at b e t t e r s o l u t i o n s . Geographers, marketers, and p r a c t i t i o n e r s have w r i t t e n e x t e n s i v e l y on the subject but the i n f o r m a t i o n i s s c a t t e r e d throughout a broad s e l e c t i o n of books and p e r i o d i c a l s . In many cases the l i t e r a t u r e focuses on d i f f e r e n t 3 aspects of the problem of r e t a i l l o c a t i o n . In some cases, the emphasis i s on d e s c r i b i n g complete techniques f o r l o c a t i o n a n a l y s i s ; i n others, t h e o r e t i c a l models of fundamental r e l a t i o n -ships are developed; and i n other s , formal research i s conducted on very s p e c i f i c segments of the whole problem i n an e f f o r t to de f i n e more a c c u r a t e l y the c r i t i c a l v a r i a b l e s and t h e i r complex i n t e r r e l a t i o n s h i p s . Various models have been developed which purport to desc r i b e those f a c t o r s which are c r i t i c a l i n the measurement of a centre's drawing power. Yet, other researchers and p r a c t i t i o n e r s recognize t h a t the models are e i t h e r too sim-p l i f i e d or are inadequately and improperly q u a n t i f i e d because they do not give r e c o g n i t i o n to c e r t a i n v a r i a b l e s which research and experience have shown to be important i n the problem. As a r e s u l t , the theory of r e t a i l l o c a t i o n i s somewhat d i s j o i n t e d . Methods of l o c a t i o n a n a l y s i s d i f f e r , some emphasizing c e r t a i n b a s i c f a c t o r s and i g n o r i n g o t h e r s , and some v i c e v e r s a . Consequently, many l o c a t i o n analyses are conducted by s e l e c t i n g s e v e r a l methods, c a r r y i n g out the a n a l y s i s , and then t a k i n g a com-promise from each of the d i f f e r e n t s o l u t i o n s produced. I t i s f e l t t h a t many of the d i f f e r e n t methods are r e a l l y t r y i n g to do the same t h i n g but no one method i s c o r r e c t , f o r each one f a i l s to recognize c e r t a i n v a r i a b l e s which have an important bearing on the problem, and each one s u f f e r s from a n e c e s s i t y to r e s o r t to subjec-t i v e reasoning. However, i t appears t h a t there has been no recent attempt to analyze c r i t i c a l l y a l l the v a r i o u s arguments, concepts, f a c t o r s , and techniques i n r e t a i l l o c a t i o n a n a l y s i s i n an e f f o r t to p u l l them a l l together and produce an improved, more comprehensive t o o l f o r a n a l y z i n g the complex problems faced by the developer, 4 especially those pertaining to ascertaining the sales volume potential existent for a proposed centre. This thesis i s p r i -marily an attempt to examine that part of location analysis which i s concerned with sales volume estimating. It i s written with the developer in mind, something which most writings on r e t a i l location analysis do not do. A. large proportion of the l i t e r a -ture i s written primarily from the retailer's perspective and i s concerned with his problems in location analysis, but typically, the developer faces a more d i f f i c u l t problem. He must conduct location analyses with a view to developing a successful total r e t a i l complex. In this process, his problem i s far more complex than that faced by the individual retailer, for he normally has to anticipate the location requirements of each of his future tenants i f he i s to have any assurance that each one w i l l be successful and thereby contribute to the centre's p r o f i t a b i l i t y . In summary, to cope adequately with the problem of r e t a i l location, the developer requires two things: a thorough detailed picture of the complexities and problems of sales volume estimat-ing in r e t a i l location analysis, and a broad, reliable framework within which to conduct such analysis. This thesis i s basically directed at these two requirements. Purpose of the Study It i s the purpose of this thesis to examine that part of r e t a i l location analysis which deals with the problem of sales volume estimating in the planning of shopping centres in order to attempt to il l u s t r a t e the complex interdependancies of the many variables and present a more complete picture of a l l the factors involved. The broad Intention i s to answer such questions as: what are the f a c t o r s Important i n such a n a l y s i s , how are they r e l a t e d , what methods are p r a c t i s e d , what models are o f f e r e d , and what are t h e i r l i m i t a t i o n s , problems, and Inadequacies. More s p e c i f i c a l l y , the t h e s i s w i l l : 1) d i s c u s s the v a l i d i t y and l i m i t a t i o n s of the many arguments, assumptions, concepts, r e l a t i o n s h i p s , research f i n d i n g s , and f a c t o r s deemed to be important f o r l o c a t i o n a l s a l e s volume analyses; 2) d i s c u s s and analyze the v a r i o u s techniques and e s p e c i a l l y the models employed i n shopping centre volume e s t i m a t i n g i n order t o : a) determine how adequately and to what extent they recognize and incor p o r a t e the above f a c t o r s , and b) evaluate t h e i r a b i l i t y to produce t h e o r e t i c a l l y sound, r e l i a b l e , accurate p r e d i c t i o n s . 3) Then, as the primary o b j e c t i v e of t h i s t h e s i s , the attempt w i l l be made to s p e c i f y which of the above f a c t o r s could be added t o , or more e x p l i c i t l y recognized i n , the models and t h e i r formulae to improve t h e i r d e s c r i p t i v e and pre-d i c t i v e c a p a b i l i t i e s . 4) P o i n t out where f u r t h e r research i s required to r e f i n e the techniques of a n a l y s i s . Methodology of the Study The t h e s i s w i l l be based p r i m a r i l y on a survey of books and p e r i o d i c a l a r t i c l e s d e a l i n g w i t h r e t a i l l o c a t i o n a n a l y s i s and shopping c e n t r e s , supplemented to a c e r t a i n extent by the experiences of a number of people associated w i t h the author i n the r e a l e s t ate development f i e l d . 6 Organization of the Wr i t t e n Report The study i s b a s i c a l l y organized i n t o two s e c t i o n s , one d e s c r i p t i v e and the other a n a l y t i c a l . Chapter I I b r i e f l y reviews the growth and development of the shopping centre movement as a major fo r c e i n r e t a i l i n g p a t t e r n s . The importance of l o c a t i o n i s then h i g h l i g h t e d , followed by a d i s c u s s i o n of both the n e c e s s i t y f o r l o c a t i o n research and the growing i n t e r e s t i n l o c a t i o n research as a means of improving l o c a t i o n a l d e c i s i o n s . Chapter I I I introduces the concept of a centre's t r a d i n g area from which the p o t e n t i a l customers f o r tha t centre are drawn. I t begins w i t h a statement about the b a s i c notions inherent i n Cen t r a l Place theory which are h e l p f u l i n developing a p e r s p e c t i v e w i t h i n which to view market centres and t h e i r area of r e t a i l i n f l u e n c e as w e l l as the causal f a c t o r s l i m i t i n g that i n f l u e n c e . The importance of the trade area concept i s then presented along w i t h a statement regarding the problems i n measuring the p o t e n t i a l which the trade area represents. I t i s noted that trade area d e l i n e a t i o n i n v o l v e s assessing how consumers w i l l r e a c t to the var i o u s f a c t o r s and i n f l u e n c e s which a f f e c t con-sumer m o t i v a t i o n i n the s e l e c t i o n of a p a r t i c u l a r r e t a i l o u t l e t . The n o t i o n i s introduced that consumer patronage behaviour i s governed by the consumer's p e r s p e c t i v e and r e a c t i o n to c e r t a i n b e n e f i t - c o s t f a c t o r s , or a t t r a c t i o n and r e s i s t a n c e f a c t o r s . I t i s these f a c t o r s which govern the extent of a centre's e f f e c t i v e drawing power. Chapter IV i s devoted to the task of enumerating, examining, and understanding the v a r i o u s arguments, assumptions, 7 f a c t o r s and r e l a t i o n s h i p s suggested to he v a l i d i n a d i s c u s s i o n of the f a c t o r s which i n f l u e n c e consumer s p a t i a l behaviour. The i n t e n t i o n i s to d i s c u s s and present what are considered to be the determinants of consumer patronage behaviour so that the techniques of volume est i m a t i n g can be evaluated i n terms of how adequately they i n c o r p o r a t e such f a c t o r s i n t h e i r c o n c e p t u a l i -z a t i o n s . I n Chapter V the methods, and i n Chapter VI the models employed i n measuring consumer patronage and p r e d i c t i n g p o t e n t i a l s a l e s volumes are presented and evaluated i n terms of t h e i r con-ceptual s t r u c t u r e and t h e o r e t i c a l v a l i d i t y . The i n t e n t i o n i s to determine whether they are capable of accurate p r e d i c t i o n s . The problems and l i m i t a t i o n s of each are considered, a f t e r which a t t e n t i o n i s turned to examining the v a r i a b l e s and assumptions inherent i n each. The remainder of the d i s c u s s i o n considers the reasons behind t h e i r observed inadequacies and attempts to sug-gest how such inadequacies might be r e c t i f i e d . The primary f i n d i n g s of the study are then b r i e f l y summarized i n Chapter VII along w i t h suggestions regarding the areas which r e q u i r e f u r t h e r research to improve the d e s c r i p t i v e and p r e d i c t i v e c a p a b i l i t i e s of the a n a l y t i c a l techniques. PART A CONCEPTS AM) FACTORS IN LOCATION ANALYSIS CHAPTER I I BACKGROUND AND PERSPECTIVE The term shopping centre i s meant to denote a planned grouping of r e t a i l f a c i l i t i e s , developed as a u n i t , o f t e n l o c a t e d i n a p e r i p h e r a l or suburban l o c a t i o n as opposed to the C e n t r a l Business D i s t r i c t (CBD). I t normally provides a broad range of i n t e g r a t e d s e r v i c e s and planned parking f a c i l i t i e s . This d e f i n i -t i o n p l a c e s no l i m i t a t i o n on the s i z e of the centre, but s t r e s s e s the importance of coordinated planning i n the development of a s i n g l e r e t a i l agglomeration, when compared wi t h the gradual development of a multitude of independant and unrelated r e t a i l o u t l e t s over a number of years. E v o l u t i o n of the Shopping Centre Movement The planned shopping centre i s a f a i r l y recent phenomenon. Although there were a number of such centres i n existence i n the 1920's, i t i s only w i t h i n the l a s t few decades tha t shopping centres have become a major f o r c e i n urban r e t a i l -i n g p a t t e r n s . The importance and growth of shopping centres i n the United States and Canada since World War I I i s r e f l e c t e d i n the f o l l o w i n g statement: "As of January, 1965, the country had more than 8,000 such c e n t r e s , w i t h 158,000 stores doing #54 B i l l i o n d o l l a r s a year. This represents about l / 5 t h of t o t a l r e t a i l s a l e s . These shopping centres provide n e a r l y 8 m i l l i o n spaces f o r p a r k i n g . 1 W. Applebaum, "Urban R e t a i l i n g , " i n Guide to Store L o c a t i o n  Research: With S p e c i a l Emphasis on Supermarkets, ed. C. Kornblau, Reading Massachusetts, Addison-Wesley P u b l i s h i n g Co., 1968, p. 101. 9 By 1967, the estimate of the number of shopping centres had grown to 10,000. Furthermore, and even more s t r i k i n g , the growth trend i n the number of new centres appeared to be a c c e l e r a t i n g , w i t h one p r o j e c t i o n estimating growth would r e s u l t i n over 25,000 2 shopping centres of a l l kinds and s i z e s by 1977. In view of the r e l a t i v e l y recent emergence of the shopping centre as a r e t a i l i n s t i t u t i o n , and i n view of the a s t o n i s h i n g growth r a t e i n the number of such centres, i t i s l i t t l e wonder that r e t a i l e r s consider the shopping centre move-ment to be the s i n g l e , most important development i n r e t a i l i n g i n t h i s century. F i l l i n g a Need Planned shopping centres evolved to meet the needs generated by changing environmental f a c t o r s such as i n c r e a s i n g urban p o p u l a t i o n d e c e n t r a l i z a t i o n , increased use of the auto-mobile, increased congestion i n the downtown c e n t r a l business d i s t r i c t of c i t i e s , the l a c k of adequate and convenient parking f a c i l i t i e s i n the c e n t r a l business d i s t r i c t , and changed con-sumer buying behaviour.-^ Most shopping centres were b u i l t i n o u t l y i n g l o c a t i o n s to p r o f i t from the o p p o r t u n i t i e s afforded by exploding p o p u l a t i o n growth. F o l l o w i n g World War I I , r e s i d e n t i a l c o n s t r u c t i o n i n the d "Decade of Opportunity Seen f o r the Shopping Centre Industry," Chain Store Age, J u l y , 1967, p. E 34. -/ E. J . K e l l e y , Shopping Centres; L o c a t i n g C o n t r o l l e d Regional  Centres, Saugatuck, Connecticut, The Eno Foundation f o r Highway T r a f f i c C o n t r o l , 1956, p. 2. 10 suburbs a c c e l e r a t e d r a p i d l y as the number of a v a i l a b l e vacant home b u i l d i n g s i t e s diminished r a p i d l y i n the c e n t r a l area of l a r g e r c i t i e s . Because of the g r e a t e r distance separating the c e n t r a l business d i s t r i c t from these consumers, and because of the i n c r e a s i n g use of the automobile and the r e l a t e d i n c r e a s e i n t r a f f i c congestion, i t became i n c r e a s i n g l y d i f f i c u l t f o r these A consumers to reach the downtown shopping core. The shopping centre f l o u r i s h e d i n r e c o g n i t i o n of the f a c t that consumers i n the suburbs would, by choice, p r e f e r more conveniently l o c a t e d , 5 more e a s i l y a c c e s s i b l e f a c i l i t i e s c l o s e r to home. The new shopping centres i n these low d e n s i t y areas were designed to draw from the h i g h l y mobile and widely dispersed p o p u l a t i o n i n these new growth suburban communities. Developers, r e c o g n i z i n g t h a t new s u b d i v i s i o n s were r a p i d l y expanding, and r e c o g n i z i n g t h a t these areas would r e q u i r e new r e t a i l f a c i l i t i e s , planned t h e i r shopping centres as scaled-down v e r s i o n s of the downtown core: t h a t i s , they recognized the need f o r a broad range of s e r v i c e s analogous to those a v a i l a b l e downtown, but on a sma l l e r s c a l e . Aside from the d e s i r e to p r o f i t by developing f a c i l i t i e s i n areas of po p u l a t i o n growth, another f a c t o r i n the d e c i s i o n to l o c a t e i n o u t l y i n g areas i n v o l v e d comparative s i t e c o s t s . Close-i n , p r o p e r l y zoned s i t e s were expensive and scarce, and i t was oft e n necessary to undertake extensive and c o s t l y d e m o l i t i o n i n 4 I b i d . , p. 70. 5 R. Nelson, The S e l e c t i o n of R e t a i l L o c a t i o n s , New York, F. W. Dodge Corp., 1956, p. 10. 11 order to o b t a i n a s i t e of s u f f i c i e n t s i z e . Developers th e r e f o r e concentrated on o u t l y i n g l o c a t i o n s where vacant land was r e l a -t i v e l y l e s s expensive and more abundant. Role of the Automobile The i n c r e a s i n g use of the automobile i n the post war era i s one of the main reasons why shopping centres have become so important. Shopping centres have brought goods and s e r v i c e s to l o c a t i o n s g e o g r a p h i c a l l y convenient to consumers who can shop by automobile. The automobile enabled the consumer to t r a v e l g r e a t e r d i s t a n c e s w i t h l e s s expenditure of time and e f f o r t . ^ I t was no longer e s s e n t i a l to p o s i t i o n r e t a i l f a c i l i t i e s w i t h i n walking distance of every p o p u l a t i o n c o n c e n t r a t i o n , nor was i t e s s e n t i a l that the f a c i l i t i e s be l o c a t e d on t r a i n or bus rout e s . By the e a r l y 1960's the l a r g e m a j o r i t y of f a m i l i e s i n North America owned c a r s , w i t h an i n c r e a s i n g number owning two c a r s . Shopping centres could be reached more e a s i l y ; many of the neighbourhood s t r i p centres and l o c a l shopping areas began to l o s e out to the competition from the l a r g e r r e g i o n a l centres which were able to o f f e r a broader range i n s e r v i c e s , s e l e c t i o n , p r i c e s , and q u a l i t y and hence the opportunity f o r more convenient one-stop shopping; the- consumer could purchase most of h i s r e q u i r e -ments i n one t r i p at one l o c a t i o n and do so i n more modern f a c i l i -t i e s , w i t h b e t t e r p a r k i n g , b e t t e r a c c e s s i b i l i t y , l e s s congestion than downtown, and e s s e n t i a l l y , more convenience. Modern expressways and freeways permitted r a p i d t r a n s p o r t a t i o n across K e l l e y , op. c i t . , p. 50. 12 broad geographical areas, and centres l o c a t e d at the freeway interchanges could a t t r a c t consumers from d i s t a n t p o i n t s owing to the ease of a c c e s s i b i l i t y afforded by the freeway. E f f e c t on CBD R e t a i l i n g R e t a i l i n g i n the downtown r e t a i l area was adversely a f f e c t e d by these changes i n t r a n s p o r t a t i o n p a t t e r n s , r e s i d e n t i a l 7 tren d s , and s h i f t s i n consumer buying h a b i t s . The c e n t r a l business d i s t r i c t l o s t ground s t e a d i l y to the new r e t a i l i n g 8 f a c i l i t i e s i n o u t l y i n g d i s t r i c t s . Inadequate and expensive parking downtown, severe t r a f f i c congestion, r e s t r i c t e d a c c e s s i -b i l i t y , poor p u b l i c t r a n s p o r t a t i o n , antiquated b u i l d i n g s , poor r e t a i l promotion, and slum c o n d i t i o n s around the c e n t r a l area a l l c o n t r i b u t e d to the d e c l i n e of the downtown r e t a i l core. Some of the c e n t r a l business d i s t r i c t s have managed to increase t h e i r absolute s a l e s while l o s i n g r e l a t i v e p o s i t i o n . Others 9 have s u f f e r e d even absolute s a l e s d e c l i n e s . While the c e n t r a l business d i s t r i c t i n the l a r g e m e t r o p o l i t a n area i s not doomed to e x t i n c t i o n , the prospects are not encouraging. Downtown r e -t a i l e r s have been forced to d r a s t i c a l l y a l t e r t h e i r product mix, st o r e hours, parking f a c i l i t i e s , promotional e f f o r t s , and so on, i n the attempt to hold on to a s i z a b l e share of the market. Yet many major r e t a i l i n t e r e s t s , such as department s t o r e s , even though they continued to aehieve s a t i s f a c t o r y s a l e s Applebaum, "Urban R e t a i l i n g , " i n Kornblau, op. c l t . , p. 104. I b i d . I b i d . volumes downtown, recognized the o p p o r t u n i t i e s opening up i n the suburbs. They found i t p r o f i t a b l e , and o f t e n necessary to r e a l i g n themselves i n these suburban communities, i n the attempt to a t t r a c t those new consumers by o f f e r i n g modern, e f f i c i e n t , convenient, planned groupings of r e t a i l establishments. Shopping Centre C h a r a c t e r i s t i c s The modern r e g i o n a l shopping centre e x h i b i t s a number of c h a r a c t e r i s t i c f e a t u r e s : an appearance of o v e r a l l u n i t y ; planned landscaping; c i v i c and c u l t u r a l f a c i l i t i e s ; an extended drawing power; scaled-down d u p l i c a t i o n of the shopping f a c i l i t i e s of downtown r e t a i l areas, w i t h a minimum of overlapping, employ-ing the i d e a of one-stop shopping; the best f a c i l i t i e s i n the m e t r o p o l i t a n area f o r p a r k i n g ; planned a l l e v i a t i o n of t r a f f i c congestion problems; and the widest v a r i e t y and s e l e c t i o n of merchandise and s e r v i c e s outside the downtown r e t a i l area. T y p i c a l l y the land and b u i l d i n g s are owned by the developer and the f a c i l i t i e s are leased to d i f f e r e n t r e t a i l e r s . The developer i s able to c o n t r o l a r c h i t e c t u r a l design f e a t u r e s , p a r k i n g , and tenant types. An assortment of d i f f e r e n t o u t l e t s o f f e r i n g a balanced r e p r e s e n t a t i o n of goods and s e r v i c e s i s f e a t u r e d . The shopping centre i s planned i n advance to be an i n t e g r a t e d harmonious u n i t . The very l a r g e centres have one or more department s t o r e s , a number of v a r i e t y s t o r e s , a number of apparel s t o r e s , other s p e c i a l t y s t o r e s , and a complete range of personal s e r -v i c e s and convenience g o o d s . 1 0 I b i d . , p. 101. 14 Shopping centre developers t r y to a t t r a c t the best tenants i n terms of p r o f i t a b i l i t y , merchandising s k i l l s , and c r e d i t r a t i n g . In l a r g e centres, department s t o r e s , which are the recog-n i z e d l e a d e r s i n merchandising e x p e r t i s e , are a p r e r e q u i s i t e as tenants. The department sto r e and the supermarket, w i t h t h e i r 11 powerful a d v e r t i s i n g programs, draw customers to the centre. Consequently these stores demand the most advantageous l o c a t i o n s w i t h i n the centre and more favourable r e n t a l terms. The smaller s t o r e s b e n e f i t from the t r a f f i c generated by the l a r g e r stores but pay higher r e n t a l charges, i n most cases, department stores are given concessions i n the r e n t a l charge to e n t i c e them i n t o the centre, p r o v i d i n g the centre w i t h i t s major r e t a i l magnet. The modern shopping centre i s not u n l i k e the ancient market places through h i s t o r y , i n the sense that such market pl a c e s not only served as l o c a l p o i n t s f o r economic tra d e , but a l s o served as centres f o r c i v i c , p o l i t i c a l , and entertainment 12 a c t i v i t i e s . In t h i s same sense, the modern shopping centre can serve not only as a centre f o r merchandising, but as a community centre f o r s o c i a l , c u l t u r a l , and r e c r e a t i o n a l a c t i v i t i e s , a l l of which enhance i t s power to a t t r a c t patronage. C i v i c c l u b s , t h e a t r e s , e x h i b i t i o n h a l l s , r e s t a u r a n t s , and c h i l d r e n ' s a c t i v i t i e s a l l serve as amenities to customers on a shopping t r i p , thereby i n c r e a s i n g the a t t r a c t i v e power of the centre by making i t a more a t t r a c t i v e , enjoyable place to v i s i t . This s o c i a l aspect I b i d . , p. 102. Nelson, op. c l t . , p. 4. 15 along with the more f a m i l i a r economic one can r e s u l t i n the shopping centre becoming the meeting place f o r the r e g i o n . In summary, shopping centres are becoming ever more important i n the urban r e t a i l i n g p a t t e r n . As mentioned, the growth ra t e f o r new shopping centre development i s h i g h , and present i n d i c a t i o n s p o i n t to a c o n t i n u a t i o n of the trend. So l o n g as new r e s i d e n t i a l areas are b u i l t and occupied, and so l o n g as e x i s t i n g r e t a i l f a c i l i t i e s become obsolete or inadequate, new f a c i l i t i e s w i l l be developed to s e r v i c e new areas and replace 13 o l d f a c i l i t i e s . But the days of easy success i n shopping centre development are over. More s t r i n g e n t governmental r e -quirements w i l l have to be met before the necessary approvals w i l l be granted. I n c r e a s i n g competition f o r new shopping centre s i t e s w i l l n e c e s s i t a t e b e t t e r p r e l i m i n a r y research and planning to ensure t h a t proposed shopping centres become s u c c e s s f u l operations. Importance of L o c a t i o n G e n e r a l l y speaking, shopping centres have proved to be h i g h l y s u c c e s s f u l e n t i t i e s . But to assume that each new proposed shopping centre w i l l achieve success i s to ignore the f a c t that t h e i r success depends upon whether or not they s a t i s f y an e s s e n t i a l p r e r e q u i s i t e : does a need e x i s t f o r that centre i n the urban r e t a i l s p a t i a l s t r u c t u r e ? i n other words, success i s dependent upon whether a genuine need e x i s t s f o r a d d i t i o n a l r e t a i l f a c i l i t i e s i n the v i c i n i t y of the proposed l o c a t i o n f o r the new centre. Applebaum, "Urban R e t a i l i n g , " i n Kornblau, op. c i t . , p. 102. 16 The developer needs to search out the l o c a t i o n w i t h the best s a l e s volume p o t e n t i a l f o r the c l a s s of shopping centre he intends to b u i l d . Today's mass r e t a i l i n g demands a l a r g e investment i n s t o r e f a c i l i t i e s and r e q u i r e s both the developer and the r e t a i l e r to commit themselves to a l o c a t i o n f o r a l o n g p e r i o d of time. Mistakes i n centre s i t e l o c a t i o n , and mistakes i n s i g n i n g up as a tenant i n p o o r l y l o c a t e d centres can have ser i o u s consequences f o r developers and r e t a i l e r s . L o c a t i o n i s o f t e n the o v e r - r i d i n g f a c t o r governing success. Even a poor merchant may be able to overcome h i s l a c k of merchandising c a p a b i l i t y through the v e h i c l e of a good l o c a t i o n . While a good l o c a t i o n does not ensure a p r o f i t a b l e o p e r a t i o n , i t i s an indispensable s t a r t i n g p o i n t i n the l i f e of a shopping centre, and i f over a p e r i o d of time a l o c a t i o n be-comes an u n s u i t a b l e one, only an expensive and strenuously sus-t a i n e d merchandising e f f o r t w i l l n u l l i f y the p o s i t i o n a l d i s -14 advantage and b u i l d a s a t i s f a c t o r y r e t u r n f o r the centre. Of course, even w i t h a good l o c a t i o n , p r o f i t s w i l l not be maximized unless l o c a t i o n a n a l y s i s i s undertaken to a s c e r t a i n how the r e t a i l e r can best t a i l o r h i s merchandising p o l i c i e s to conform to the c h a r a c t e r i s t i c s of the trade area being served. The developer must f o l l o w c e r t a i n procedures of s i t e s e l e c t i o n and business volume e s t i m a t i o n i f he i s to assure the success of h i s centre. He may choose one s i t e i n s t e a d of another, or the estimates may help him i n determining the character and type of b u i l d i n g to c o n s t r u c t . B. J . Kane, A Systematic Guide to Supermarket L o c a t i o n A n a l y s i s , New York, P a i r c h i l d P u b l i c a t i o n s , 1966, p. v. 17 Importance of L o c a t i o n i n the Choice of Tenant Types In order to ensure that a shopping centre w i l l be a p r o f i t a b l e development, the developer must be aware of the l o c a t i o n p o t e n t i a l which e x i s t s f o r each of h i s tenants. In the end, he i s faced w i t h the n e c e s s i t y of r e n t i n g the property or store space to a tenant. The l a n d l o r d wishes, of course, to s e l e c t a r e t a i l e r who w i l l be s u c c e s s f u l . Whether, f o r example, he chooses a shoe store or a c h i l d r e n ' s wear shop depends, t h e r e f o r e , upon the business volume which these two p o s s i b l e tenants might have and the percentage of gross s a l e payments he can o b t a i n s i n c e many l e a s e s r e q u i r e a tenant to pay a percentage 15 of s a l e s as r e n t . The higher the business volume of the tenant, the more rent he w i l l pay, and the b e t t e r the p r o f i t a b i l i t y of the shopping centre as a whole. Obviously, to make the best choice i n tenant types r e q u i r e s comprehensive l o c a t i o n a n a l y s i s to a s c e r t a i n which tenants have the g r e a t e s t p o t e n t i a l volume i n the trade area. I f such l o c a t i o n research i s not conducted, the p r o b a b i l i t y Increases of having marginal tenancies, or o u t r i g h t f a i l u r e s , which reduce h i s r e t u r n s u b s t a n t i a l l y . Furthermore, a l e s s than optimum choice of tenancy types can l i m i t the patronage drawn to the other establishments at the l o c a t i o n , thereby c r e a t i n g l e s s than a maximum business volume f o r the centre as a whole. I f the developer i s to have assurance that l e a s e revenues w i l l be maintained, he must have p r i o r assurance that s u f f i c i e n t s a l e s volume p o t e n t i a l e x i s t s to enable the tenant to achieve s a t i s f a c t o r y s a l e s l e v e l s and a f f o r d the r e n t a l charge. I f the Kelson, op. c i t . , p. 143. 18 l o c a t i o n d e c i s i o n i s l e f t s t r i c t l y to the tenant, and i f the tenant m i s c a l c u l a t e s the l o c a t i o n p o t e n t i a l f o r h i s type of s t o r e , he may f a i l and the corresponding i n a b i l i t y to pay rent w i l l a f f e c t the developer's revenues p o s s i b l y to the extent that he w i l l s u f f e r l o s s e s on h i s investment. I t i s ther e f o r e b a s i c that the developer be concerned about f i r s t choosing a centre l o c a t i o n w i t h s u f f i c i e n t s a l e s p o t e n t i a l f o r the businesses i n h i s centre, and then second, e s t a b l i s h i n g some g u i d e l i n e s as to the number, s i z e , and types of stor e s which w i l l o p t i m a l l y f i t the market p o t e n t i a l e x i s t e n t f o r the centre. Increasing Importance of L o c a t i o n The shopping centre i n d u s t r y has reached a l e v e l of m a t u r i t y . Some areas are "over-stored;" i n many cases c o n s t r u c t i o n of new centres out-paces p o p u l a t i o n growth; a considerable number of centres f a l l short of a n t i c i p a t e d s a l e s ; and both new and e x i s t i n g centres are confronted w i t h more and sharper competition. The days of wide-open opportunity f o r shopping centre development are gone. This does not n e c e s s a r i l y mean tha t the r a t e of new development w i l l slow down. The contin u i n g growth and s h i f t s i n p o p u l a t i o n , i n c r e a s i n g consumer purchasing power, and obsolescence of o l d e r centres w i l l continue to create o p p o r t u n i t i e s f o r shop-ping centre development. I t does mean, however, that the s e l e c -t i o n and e v a l u a t i o n of l o c a t i o n s has become much more d i f f i c u l t and c r i t i c a l . I n c r e a s i n g l y , i n order to avoid s e r i o u s mistakes and improve the p r o b a b i l i t y of success, i t w i l l become necessary to f u r t h e r r e f i n e the techniques of l o c a t i o n assessment, and a P P l y b e t t e r l o c a t i o n research procedures to such management * Term used by Ipplebaum meaning "too many s t o r e s . " 19 d e c i s i o n s as: where to l o c a t e new centres; whether to enlarge or r e h a b i l i t a t e e x i s t i n g centres; and what type of centre should he b u i l t i n a p a r t i c u l a r l o c a t i o n . In the past, r e t a i l e r s and developers have oft e n s e l e c t e d l o c a t i o n s on an o p p o r t u n i s t i c and haphazard b a s i s , which sometimes r e s u l t s i n u n p r o f i t a b l e ventures. However, some developers and r e t a i l e r s are s t r i v i n g to develop b e t t e r l o c a t i o n assessment techniques. While they do not expect p e r f e c t s c i e n t i f i c accuracy, they do hope t h a t , w i t h the help of research, s e r i o u s mistakes may be avoided and the p r o b a b i l i t y of success correspondingly improved. L o c a t i o n Research - H i s t o r y , S t a t u s , and Prospects The magnitude of the investment i n a r e g i o n a l shopping centre r e q u i r e s a great deal of study about many market and f i n a n c i a l f a c t o r s . The s i t e chosen, i t s a c c e s s i b i l i t y to the p o t e n t i a l trade area, the store tenant mix, and the c o l l e c t i v e management of the e n t i r e complex determine not only the success of the t o t a l venture but al s o to a very l a r g e extent the success which each i n d i v i d u a l store enjoys. Centres which are not s u c c e s s f u l u s u a l l y d i s p l a y one or more of the f o l l o w i n g shortcomings: 1) poor s i t e l o c a t i o n as a r e s u l t of poor l o c a t i o n a n a l y s i s ; 2) poor design - e i t h e r the s i z e of the centre i s improperly r e l a t e d to the volume p o t e n t i a l e x i s t e n t i n the trade area, or the sto r e s i n the centre are improperly p o s i t i o n e d r e -s u l t i n g i n poor l i n k a g e s and t r a f f i c between s t o r e s , or the a r c h i t e c t u r a l f e a t u r e s are inconvenient and u n a t t r a c t i v e ; 20 3) poor l e a s i n g and tenant s e l e c t i o n - e i t h e r the tenants are inadequately balanced, or they are not p r o p e r l y s e l e c t e d to match the trade area, or there i s an excessive d u p l i c a t i o n 16 of f u n c t i o n ; 4) tenants cannot a f f o r d to pay a higher rent because t h e i r volume i s too low, meaning that the centre does not r e a l i z e an adequate income from these tenants, and consequently s u f f e r s from a r e d u c t i o n i n p r o f i t s . Proper economic study i n advance may have avoided these problems of poor s i t e s e l e c t i o n , poor design, and poor l e a s i n g and tenant s e l e c t i o n . U s u a l l y the cost of the i n i t i a l l o c a t i o n a n a l y s i s i s i n f i n t e s i m a l i n comparison w i t h the b e n e f i t s or savings that can 17 be derived from i t over the l i f e of the investment. The need to estimate r e t a i l s a l e s p o t e n t i a l s , so that r e t a i l f a c i l i t i e s can be scaled p r o p o r t i o n a t e l y to these sales p o t e n t i a l s , i s u n i v e r s a l . This i s e s p e c i a l l y true i f the objec-t i v e i s to provide adequate r e t a i l f a c i l i t i e s to the consumer without the economic waste produced by o v e r - b u i l d i n g i n the market or mismatching the f a c i l i t i e s to that market. Development of L o c a t i o n Research Systematic l o c a t i o n research s t a r t e d s e v e r a l decades 18 ago. At f i r s t , i n t e r e s t was very l i m i t e d and knowledge was sparce, but i n recent years, r e t a i l e r s , wholesalers, and shopping 1 6 I b i d . * P. 324. 1 7 Ibid-. P. 142. 18 Applebaum, "Store Location Research - A r t or Science?" i n Kornblau, op. c i t . , p. 3. 21 centre developers have shown In c r e a s i n g i n t e r e s t i n l o c a t i o n research. Indeed, they have r e a l i z e d that i n order to s u r v i v e , or at l e a s t to p r o f i t , they must pay considerable a t t e n t i o n to l o c a t i o n a l c o n s i d e r a t i o n s . L o c a t i o n e v a l u a t i o n i s complex; there i s no simple magic formula, nor i s there any s u b s t i t u t e f o r informed judg-ment. But at the same time, informed judgment on matters of l o c a t i o n r e q u i r e s f a c t u a l i n f o r m a t i o n and a thorough grounding i n l o c a t i o n a l c r i t e r i a - i n b r i e f , i t r e q u i r e s l o c a t i o n research. In the e a r l i e r c e n t r e s , the developers did not use knowingly any of the body of l o c a t i o n theory a v a i l a b l e . Neither d i d most of them use the e a r l y models described i n Chapter VI of t h i s t h e s i s , nor d i d they n e c e s s a r i l y f e e l that such procedures would produce a b e t t e r d e c i s i o n . Many of them undoubtably f e l t t h a t l o c a t i o n research was an i n f a n t science, and t h a t t h e i r own r e t a i l i n g experience and i n t u i t i o n would serve as a b e t t e r judgment t o o l than l o c a t i o n research as i t stood at that time. Indeed, they seemed to share an opinion that s e l e c t i n g a s u i t a b l e t r a c t f o r development depended more on experience than on the use of t h e o r i e s or formulaes. E s s e n t i a l l y these e a r l y p r a c t i t i o n e r s employed t o o l s which were t h e o r e t i c a l In foundation although they were not c o n s c i o u s l y aware of i t . The e a r l i e s t attempts to employ "research" i n e v a l u a t i n g s i t e s date back to about the beginning of the century. These attempts, made on behalf of r e t a i l chain s t o r e s , t r i e d to deter-mine the r e l a t i v e value of a p a r t i c u l a r s i t e compared to other K e l l e y , op. c l t . , p. 13. 22 20 s i t e s i n the same business area. They centred on the volume, composition, and q u a l i t y of p e d e s t r i a n t r a f f i c , and the l i k e l i -hood of converting most of t h i s t r a f f i c i n t o store customers. The next advance i n l o c a t i o n research was i n i t i a t e d about 1930 by grocery chain s t o r e s , and focused on s t u d i e s of store trade areas and on the market share which a store secured from i t s trade area. In the e f f o r t to understand these phenomena a v a i l a b l e conceptual m a t e r i a l s were drawn from various d i s c i p l i n e i n c l u d i n g marketing geography, behavioural s c i e n c e , s t a t i s t i c s 21 and economics. The t h i r d advance i n l o c a t i o n research coincided w i t h the s p e c t a c u l a r development of planned shopping centres a f t e r World War I I . The i n v e s t o r s i n these expensive r e a l estate pro-j e c t s recognized the need f o r the research to support and sup-plement business i n t u i t i o n . In a d d i t i o n , the l a r g e r f i n a n c i a l i n s t i t u t i o n s demanded more f a c t u a l i n f o r m a t i o n on which to base d e c i s i o n s regarding the soundness of t h e i r investment. F i n a l l y , many pr o s p e c t i v e tenants recognized that l o c a t i o n s t u d i e s were e s s e n t i a l i n p r o j e c t i n g the p o t e n t i a l f o r them i n a given centre. L o c a t i o n Research - Present Status The t h i r d stage i n l o c a t i o n research has produced by f a r the g r e a t e s t advances i n t h e o r i z i n g , model b u i l d i n g , and manipu-l a t i n g s t a t i s t i c a l data i n a r r i v i n g at p r o j e c t e d s a l e s p o t e n t i a l s Applebaum, "Store L o c a t i o n Research - A r t or Science?" i n Kornblau, op. c i t . , p. 3. 21 ^ I b i d . 2 2 I b i d . , p. 4. 23 23 f o r a t o t a l complex of r e t a i l o u t l e t s i n a shopping centre. These advances have been welcomed by development f i r m s who con-duct research e i t h e r through t h e i r own s t a f f s or w i t h the help of c o n s u l t i n g f i r m s who s p e c i a l i z e i n l o c a t i o n research. B a s i c a l l y , commercial f i r m s expect two things of l o c a -t i o n research: 1) they want e v a l u a t i o n of s p e c i f i c s i t e s to determine p o t e n t i a l s a l e s and the p r o b a b i l i t y of success at these s i t e s , and they want estimates that are w i t h i n a reasonable range of e r r o r . 2) What i s more d i f f i c u l t , they want to s e l e c t , from among the many a l t e r n a t i v e l o c a t i o n p o s s i b i l i t i e s i n a m e t r o p o l i -tan area or a l a r g e r geographic r e g i o n , those l o c a t i o n s which w i l l produce an optimum share of the market p o t e n t i a l , a minimum hazard of f u t u r e s a l e s e r o s i o n , and a maximum r e t u r n on t o t a l investment 24 over the long run. L o c a t i o n research i n v o l v e s p r e d i c t i o n . To c o n s i s t e n t l y p r e d i c t w i t h a reasonable degree of accuracy, there must be a s c i e n t i f i c b a s i s . Therefore, accuracy of p r e d i c t i o n w i l l depend on the body of s c i e n t i f i c knowledge a v a i l a b l e on the subject and the way i n which that s c i e n t i f i c knowledge i s organized i n t o a methodological framework capable of being applied c o n s i s t e n t l y . In smaller companies, the e v a l u a t i o n of a l o c a t i o n i s o f t e n handled by one man, whereas i n l a r g e r companies i t tends to be a group r e s p o n s i b i l i t y . The very l a r g e companies use out-side consultants to supplement the research done w i t h i n the f i r m . I b i d . 2 4 I b i d . 24 25 In a study conducted i n 1963, W i l l i a m Applebaum found t h a t the r e t a i l l o c a t i o n e f f o r t made by l a r g e r e t a i l e r s , compared w i t h the magnitude of the investment and r i s k i n new r e t a i l developments, was very modest and ofte n only a p a r t time job. Few f i r m s employed s o p h i s t i c a t e d comprehensive s t u d i e s . Most f i r m s considered only c e r t a i n f a c t o r s such as pop u l a t i o n ( c h a r a c t e r i s t i c s and income), competition, automobile t r a f f i c , economic aspects of the area, r e t a i l s a l e s , and the occurrence of e x i s t i n g shopping centres. Few fi r m s studied consumer pre-ferences and shopping p a t t e r n s . Few fi r m s comprehensively studied a whole area to determine where the most promising s i t e s were l o c a t e d , p r e f e r r i n g i n s t e a d to evaluate s i n g l e s i t e s without r e -gard f o r whether or not t h i s s i t e was su p e r i o r to other a v a i l a b l e a l t e r n a t i v e s i t e s . Although most f i r m s made sales p r o j e c t i o n s beyond opening date, few p r o j e c t i o n s were f o r more than one year a f t e r opening. Only a m i n o r i t y of the fi r m s questioned made a follow-up study to determine the reasons f o r d i s c r e p a n c i e s between a c t u a l s a l e s and estimated, p r e d i c t e d s a l e s . Many of the companies have only l i m i t e d knowledge of the published i n f o r m a t i o n on l o c a -t i o n research techniques. However, there i s a great and growing i n t e r e s t i n r e t a i l l o c a t i o n research and widespread r e c o g n i t i o n of the need f o r more d e f i n i t i v e techniques and b e t t e r informed a n a l y s t s . Q u a l i f i e d s t a f f s have emerged, outside consultants are a v a i l a b l e , and b e t t e r techniques are developing i n answer to the need. d ? Applebaum, "Survey of Store L o c a t i o n Research by R e t a i l Chains," i n Kornblau, op. c i t . , pp. 7-8. 25 L o c a t i o n research i s many things to many people. In the u n i v e r s i t i e s and the j o u r n a l s , i t i s a seriou s p r o f e s s i o n a l con-cern w i t h p r i n c i p l e s , d e f i n i t i o n s , analyses, models and methods. With a l i m i t e d number of research c o n s u l t a n t s , an eq u a l l y s e r i o u s , thorough, p r o f e s s i o n a l approach i s the r u l e , although there are some who charge considerable fees f o r unsubstantiated guesswork presented under the name of "research." The wide range i n q u a l i t y grades i n l o c a t i o n research i s a l s o evident i n the c o n t r i b u t i o n s made by schol a r s of economies, geography, marketing geography, s o c i o l o g y , and pl a n n i n g . Some c o n t r i b u t i o n s are r i g o r o u s l y con-ceived and te s t e d and are s o p h i s t i c a t e d a d d i t i o n s to knowledge. 26 Others d i s p l a y l i t t l e substance. G e n e r a l l y , the c a l i b r e of most current l o c a t i o n research r e p o r t s w r i t t e n f o r i n d u s t r y by consultants or f i r m s do not r e -f l e c t the l e v e l of knowledge i n the l i t e r a t u r e . A. great deal 27 more i s known than i s evidenced. There i s a heavy r e l i a n c e on the format f o l l o w e d , and i n many cases, r e p o r t s from the same f i r m s e v e r a l years apart may d i f f e r only as to the s p e c i f i c d e t a i l s . The approach i s the same, time a f t e r time, much l i k e mechanically f i l l i n g i n a c h e c k l i s t . This i n f l e x i b i l i t y produces such stereo-typed r e p o r t s that they do not adequately examine a l l of the v a r i a b l e s important to the a n a l y s i s of a s p e c i f i c l o c a t i o n , and t h i s i n turn a f f e c t s t h e i r r e l i a b i l i t y and u s e f u l n e s s . For example: there i s often no reference to the economic climate under which s a l e s estimates are p r o j e c t e d ; no reference i s made Applebaum, "An E v a l u a t i o n of Store L o c a t i o n Research S t u d i e s , " i n Kornblau, op. c i t . , p. 10. I b i d . , p. 11. 26 to the present and f u t u r e outlook f o r the r e g i o n a l economy; the competitive s t r u c t u r e i s Inadequately evaluated; the methods used i n p r o j e c t i n g p o p u l a t i o n or income are not explained, meaning that the data must be accepted on f a i t h and cannot be evaluated; sources of data are e i t h e r improperly i d e n t i f i e d or omitted, and i n f a c t i t i s Impossible to determine i n many i n -stances whether the foundings are based on " f a c t s " or are merely unsubstantiated guesses; d e f i n i t i o n s are not r i g i d ; there i s oft e n a s i g n i f i c a n t l a c k of in f o r m a t i o n on consumer shopping behaviour p a t t e r n s i n the given area; and many r e p o r t s appear biased i n that they only i n c l u d e arguments which support the d e s i r a b i l i t y of a s i t e , and ignore the unfavourable aspects, which, i f mentioned, might tend to i n f l u e n c e the decision-makers 28 n e g a t i v e l y towards that s i t e . Furthermore, separately con-ducted, p r a c t i c a l research s t u d i e s c a r r i e d out on the same l o c a t i o n problem can provide wide v a r i a t i o n s and d i s c r e p a n c i e s i n t h e i r f i n d i n g s . This i s evident i n the f o l l o w i n g statement: "They questioned the r e l i a b i l i t y of the d i f f e r e n t s a l e s p o t e n t i a l s estimated f o r the shopping centre as a whole and f o r the department store i n p a r t i c u l a r . The executives were puzzled by the v a r i a t i o n s i n the p o p u l a t i o n , income, and expenditure data and p r o j e c t i o n s i n the s e v e r a l r e p o r t s . They wondered whether they should get a prominent p r o f e s s o r of marketing to " t r y to e x t r a c t from the report some c l e a r - c u t guide-l i n e s f o r the Draper Companies." The p r e s i d e n t f e l t that " f o r the Delmonte p r o j e c t we sure could use o b j e c t i v e g u i d e l i n e s , i n a d d i t i o n to our own observations, experience, and judgment. I t i s a b i g p r o j e c t and there remain many un-knowns. In the long run success w i l l depend W. Applebaum, Store L o c a t i o n Strategy Cases, Reading, Massachusetts, Add!son-Wesley P u b l i s h i n g Co., 1968, p. 70. 27 on the volume of sa l e s t h a t the shopping centre can generate. This s t i l l remains a f u z z y area."2° In summary, the s t a t e of the a r t i s not p a r t i c u l a r l y s a t i s f a c t o r y - hut the demand f o r s o p h i s t i c a t e d research i s i n -c r e a s i n g , and h o p e f u l l y , as the p r a c t i t i o n e r s improve t h e i r l e v e l of e x p e r t i s e , and as f u r t h e r advances are achieved i n the techniques of l o c a t i o n a n a l y s i s , the q u a l i t y of p r a c t i c a l research s t u d i e s w i l l improve along w i t h the r i s i n g demand f o r them. Necessity f o r Further Development The question a r i s e s , can l o c a t i o n research he a science? Science attempts to describe phenomena and p r e d i c t outcomes. Not u n t i l l o c a t i o n research i s capable of a c c u r a t e l y and con-s i s t e n t l y p r e d i c t i n g outcomes can i t be c a l l e d a scie n c e . How s u c c e s s f u l i s present l o c a t i o n research i n i t s a b i l i t y to p r e d i c t a c c u r a t e l y ? Few f i r m s t h a t conduct l o c a t i o n research provide adequate budgets f o r follow-up research to check the degree of accuracy of the o r i g i n a l s a l e s estimates against a c t u a l r e a l i z e d s a l e s . Furthermore, the unpredi c t a b l e changes In competition and the changes i n merchandising p o l i c i e s can cloud the e v a l u a t i o n of r e s u l t s . However, the f a c t that r e t a i l f i r m s and shopping centre developers want more l o c a t i o n research, and are w i l l i n g to pay f o r i t , suggests t h a t they b e l i e v e t h i s 30 research has value f o r them. Applebaum, "An E v a l u a t i o n of Store L o c a t i o n Research S t u d i e s , " i n Kornblau, op. c l t . , p. 11. 30 Applebaum, "Store L o c a t i o n Research - A r t or Science?" i n Kornblau, op. c i t . , p. 5. 28 Improvements In l o c a t i o n research are req u i r e d i n many 31 areas: 1) i n e f f e c t i v e l y assessing the impact of competition. E f f o r t s have concentrated on measuring competition q u a n t i t a t i v e l y , e i t h e r by the number of s t o r e s , or the number of square f e e t , or the amount of store frontage. But vfoat i s the e f f e c t of v a r i e t y and q u a l i t y of products s o l d , p r i c e s t r u c t u r e , merchandising s t r a t e g i e s , age and c o n d i t i o n of the f a c i l i t i e s , and personnel s e r v i c e s - a l l the q u a l i t a t i v e aspects which c o n t r i b u t e to image and consumer acceptance? 2) i n knowledge of consumer expendi-32 tures and shopping h a b i t s . More must be known about consumer expenditures f o r d i f f e r e n t types of goods and s e r v i c e s , by s o c i o -economic groups and by geographic areas, and the reasons f o r any pat t e r n s or d i f f e r e n c e s i n p a t t e r n . There must be a b e t t e r under-standing of how and why people shop. 3) i n developing b e t t e r c r i t e r i a f o r judging the optimum q u a n t i t y of r e t a i l f a c i l i t i e s r e q u i r e d by a given area, and as a c o r o l l a r y , what s i z e of centre, how many sto r e s i n th a t centre, of what s i z e and what type. 4) i n assessing the e f f e c t s on the centre's p r o f i t a b i l i t y of such f a c t o r s as store s i z e s , s a l e s per square f o o t , s a l e s poten-t i a l s - i n f a c t , every f a c t o r which a f f e c t s t h a t centre's p r o f i -t a b i l i t y . The aim should be to provide r e f i n e d a n a l y t i c a l t o o l s and formulas which are capable of producing accurate absolute numbers f o r decision-making given proper q u a n t i f i e d i n p u t s . As w i l l be seen l a t e r , present l o c a t i o n research methods are f a r from p r o v i d i n g such accurate, q u a n t i t a t i v e formulas, so that assessing the e f f e c t s of var i o u s f a c t o r s on p r o f i t a b i l i t y s t i l l I b i d . , pp. 4-5. I b i d . 29 r e q u i r e s a good deal of guesswork and s u b j e c t i v e judgment. 5) i n determining how to make b e t t e r use of computers i n l o c a -33 t i o n a n a l y s i s . Their a b i l i t y to store and r e t r i e v e data, and to provide f a s t e r , more economical processing of s t a t i s t i c a l i n f o r m a t i o n can provide i n v a l u a b l e a i d s and refinements to any computations, provided that i n p u t s are c o r r e c t , meaningful, and p r a c t i c a l . Summary Planned shopping centres are i n c r e a s i n g i n importance and have evolved to meet the needs generated by changing environ-mental f a c t o r s i n a modern s o c i e t y . But the success of such pro-j e c t s i s no l o n g e r assured. The demand f o r improved techniques of l o c a t i o n assessment i s growing i n r e c o g n i t i o n of the f a c t that sound l o c a t i o n a l d e c i s i o n s are becoming ever more important to the success of such r e t a i l establishments, and p r e s e n t l y a v a i l a b l e techniques of l o c a t i o n assessment leave room f o r improvement. The economic f e a s i b i l i t y of a new p r o j e c t depends p r i m a r i l y upon whether that p r o j e c t w i l l achieve a s u f f i c i e n t volume of s a l e s a f t e r opening. The primary task of l o c a t i o n a n a l y s i s i s to provide an accurate estimate of the s a l e s volume which a proposed r e t a i l f a c i l i t y can expect to achieve. This i n v o l v e s e s t i m a t i n g the number of consumers who w i l l be drawn to the centre, and the d i s c u s s i o n of t h i s subject commences i n the next Chapter. 33 J I b i d . CHAPTER I I I THE CONCEPT OP TRADE AREA l o c a t i o n a l d e c i s i o n s are p r i m a r i l y concerned w i t h two t h i n g s : e v a l u a t i n g the s a l e s p o t e n t i a l of a given l o c a t i o n , and determining the best mix i n f a c i l i t i e s and merchandise which w i l l maximize s a l e s . This i n v o l v e s studying the p o t e n t i a l customers f o r the new centre. T r a d i t i o n a l l y , i t has been common to assume th a t p o t e n t i a l customers are drawn from a s p e c i f i c geographical r e g i o n surrounding the centre. Such a r e g i o n i s known as the trade area. The f o l l o w i n g d i s c u s s i o n i l l u s t r a t e s t h i s p o i n t . C e n t r a l Place Theory Urban geographers have developed a body of theory known as C e n t r a l P l a c e Theory 1 to account f o r the r e g u l a r i t y i n the marketing f u n c t i o n s performed by " c e n t r a l p l a c e s . " The f o l -lowing d i s c u s s i o n b r i e f l y o u t l i n e s the observations and concepts on which C e n t r a l Place Theory i s founded. I t has long been recognized t h a t a monotonous p a t t e r n of r e g u l a r i t y e x i s t s i n the geographic d i s p e r s i o n of settlements i n any t y p i c a l country. These settlements provided shopping, business and s o c i a l f u n c t i o n s to the townspeople and surrounding p o p u l a t i o n . As such, each settlement was i n a c t u a l i t y a market centre which developed to supply a v a r i e t y of s e r v i c e s to the See f o r example B. J . L. Berry and A. Pred, C e n t r a l P l a c e  S t u d i e s : A B i b l i o g r a p h y of Theory and A p p l i c a t i o n s , P h l l a d e l p h i a, Pennsylvania, Regional Science Research I n s t i t u t e , 1965; a l s o , B. J . I . Berry, Geography of Market Centres and R e t a i l D i s t r i b u t i o n , Englewood C l i f f s , New Jersey, P r e n t i c e - H a l l , Inc., 1967. 31 p o p u l a t i o n of a p a r t i c u l a r area. They evolved as convenient l o c a t i o n s f o r grouping together v a r i o u s s e r v i c e s to meet the needs of the p o p u l a t i o n . Around any l a r g e c i t y , i n ever-widening c i r c l e s , are a number of towns, d i m i n i s h i n g i n s i z e as the distance from the c i t y i n c r e a s e s . However, each smaller settlement, or town, i s i t s e l f surrounded by s t i l l s m a ller s a t e l l i t e c l u s t e r s of a c t i v i t y . These " c e n t r a l p l a c e s " a l l supply c e n t r a l i z e d market s e r v i c e s to t h e i r surrounding p o p u l a t i o n s , but on a l e s s e r scale as t h e i r s i z e decreases. This i s the v i s i b l e evidence of what t h e o r i s t s c a l l a c e n t r a l place h i e r a r c h y : successive c l a s s e s of i n t e r -2 dependent market cen t r e s . C e n t r a l places form a system that i n c l u d e s i n t e r a c t i n g , inter-dependent p a r t s . The l a r g e r centres d u p l i c a t e the r e t a i l i n g f u n c t i o n s of the smaller centres but a l s o provide a d d i t i o n a l f u n c t i o n s i n more establishments. Each market centre has a w e l l defined area from which i t draws i t s customers. Larger centres draw from a l a r g e r area, and smaller centres from smaller areas. Small centres cannot perform a l l of the f u n c t i o n s found i n the l a r g e r centre because the market area they command i s too small to support some of the f u n c t i o n s p r o f i t a b l y . For a c t i v i t i e s r e q u i r i n g very small market areas, such as food o u t l e t s , v i l l a g e s are able to stand alone and compete w i t h l a r g e r surrounding p l a c e s over short d i s t a n c e s . However, f o r s t o r e s r e q u i r i n g l a r g e r minimum market areas ( f o r example, dry c l e a n e r s ) , l a r g e r centres dominate the v i l l a g e s because they o f f e r a f u n c t i o n which i s not B.J. Berry, "Central Place Theory," i n Kornblau, op. c i t . , p. 14. 32 found i n v i l l a g e s , and i n t h i s way encourage customers to t r a v e l f u r t h e r than to the nearest v i l l a g e . S i m i l a r l y , those stores r e q u i r i n g very l a r g e market areas (department s t o r e s ) are found only i n the l a r g e s t centres, and consumers l i v i n g near the v i l l a g e s and towns are forced to t r a v e l beyond them to the c i t i e s . I t i s t h i s succession of c l a s s e s of centres a l l arranged i n a h i e r a r c h i c a l geographical p a t t e r n t h a t forms a b a s i c p a r t of C e n t r a l P l a c e Theory. Because successive steps i n the h i e r a r c h y contain l a r g e r centres p r o v i d i n g more f u n c t i o n s f o r l a r g e r market areas, the number of d i f f e r e n t kinds of business types i s used as an i n d i c a -t i o n of a centre's s t a t u s i n the h i e r a r c h y . In r u r a l areas d i s t a n c e has a major impact on the choice of market centre because the t r a v e l time and cost are so g r e a t . Competing centres draw customers from the area between the centres i n p r o p o r t i o n to the a t t r a c t i v e power of the centre. At a p o i n t somewhere between the centres c a l l e d the "breaking p o i n t , " con-sumers on e i t h e r side tend to p a t r o n i z e the centre on t h e i r side of t h i s h y p o t h e t i c a l p o i n t . D i f f e r e n c e s i n the a t t r a c t i v e n e s s of centres merely p u l l the breaking p o i n t one way or the other. However, i n m e t r o p o l i t a n areas there i s no such t h i n g as an absolute breaking p o i n t since consumers are able to choose from a number of centres a l l w i t h i n the maximum dis t a n c e s they are w i l l i n g to t r a v e l . In urban areas, i t was f e l t that r e t a i l f a c i l i t i e s f o l l o w e d a h i e r a r c h y of market centres (convenience c l u s t e r s , I b i d . , p. 17. 33 neighbourhood, community, and r e g i o n a l centres) comparable to the h i e r a r c h y of centres i n r u r a l areas. However, market centres i n urban areas served l a r g e r p opulations than those i n r u r a l areas. Since the p o p u l a t i o n served was l a r g e r , the geographical trade area r e q u i r e d to support t h a t centre d i d not need to be as l a r g e as i n the r u r a l s i t u a t i o n . Furthermore, trade areas i n urban areas tended to overlap to a greater extent than i n r u r a l areas. Threshold and Range Ce n t r a l P l a c e Theory begins by examining two elements r e l e v a n t to r u r a l r e g i o n s : 1) the t h r e s h o l d of a given k i n d of business; that I s , the smallest market area t h a t w i l l support the smallest economically f e a s i b l e e s t a b l i s h -ment of the c l a s s ; and 2) the range of a centre, or the maximum dis t a n c e consumers are w i l l i n g to t r a v e l to i t . The t h r e s h o l d f o r each k i n d of business i s e s t a b l i s h e d , and then f o r each k i n d of business the number of s t o r e s of t h r e s h o l d s i z e t h a t can be supported by the market i n a given area i s determined. According to l o g i c a l and t h e o r e t i c a l con-s i d e r a t i o n s of competition, these s t o r e s would be evenly spaced throughout the area w i t h each st o r e surrounded by a compact minimal market area which does not overlap w i t h the market areas f o r other c e n t r e s . T h e o r e t i c a l l y , then, each of these s t o r e s captures a segment of the t o t a l market, and serves i t e x c l u s i v e l y . In the h y p o t h e t i c a l case of a p e r f e c t l y uniform p o p u l a t i o n d i s t r i -b u t i o n , t h e o r e t i c a l l y these s t o r e s would be r e g u l a r l y spaced throughout the market, and market areas would be a set of r e g u l a r 4 I b i d . , p. 18. 34 hexagons w i t h each store i n the centre of the hexagon. In t h i s manner the t o t a l market would be o p t i m a l l y served. However, as the a c t u a l p o p u l a t i o n d i s t r i b u t i o n v a r i e s from t h i s p e r f e c t l y uniform p a t t e r n , the s p a t i a l arrangement of stores and market areas v a r i e s from such a t h e o r e t i c a l arrangement. Obviously, the consumer would r a t h e r v i s i t a s i n g l e c e n t r a l place f o r a v a r i e t y of needs than t r a v e l to a separate l o c a t i o n f o r each d i f f e r e n t commodity he r e q u i r e s . I t i s assumed that some l a r g e r centre (the c i t y ) performs a l l the f u n c t i o n s r e -quired by consumers. Loca t i o n s of centres around the metropolis are then s h i f t e d w i t h i n the l i m i t s imposed by the t h r e s h o l d - s i z e d trade areas (the minimum) and the outer "range" or maximum d i s -tance beyond which consumers w i l l not t r a v e l . In other words, centres around the c i t y occur at l o c a t i o n s where the necessary t h r e s h o l d - s i z e d trade area e x i s t s w i t h i n a l i m i t e d d i stance from the centre ( l i m i t e d by the range of the goods o f f e r e d ) . This s h u f f l i n g minimizes the number of centres required to serve con-sumer needs and leads to a h i e r a r c h y of places by s i z e , connected i n an interdependent system. Through i t s concepts of threshold and range, C e n t r a l P l a c e Theory h i g h l i g h t s the importance of the trade area i n r e t a i l l o c a t i o n a n a l y s i s , and p o i n t s out the fundamental problems faced by any developer or r e t a i l e r contemplating a new l o c a t i o n ; does a s u f f i c i e n t (a threshold) trade area e x i s t f o r the pro-posed centre w i t h i n the distance l i m i t s imposed by the ranges of the goods o f f e r e d at the centre? W i t h i n the range of t h i s c e n t r e , or the maximum distance consumers are w i l l i n g to t r a v e l to i t , i s there a s u f f i c i e n t trade area to support t h i s centre? 35 This d i s c u s s i o n of Ce n t r a l P l a c e Theory has been i n -t e n t i o n a l l y b r i e f and s u p e r f i c i a l i n r e c o g n i t i o n of the observa-t i o n that the theory i s p r i m a r i l y of value as a d e s c r i p t i v e t o o l r a t h e r than an a n a l y t i c a l one, and as such i t i s of l i m i t e d importance i n a study of a n a l y t i c a l techniques of sa l e s volume e s t i m a t i n g . However, i t does help to introduce the concept of trade area and the importance of trade area i n r e t a i l s a l e s volume e s t i m a t i n g . D e f i n i n g "Trade Area" The d e f i n i t i o n of the concept "trade area" v a r i e s according to the way the concept i s ap p l i e d i n d i f f e r e n t s i t u a -t i o n s . I t can be defined as "that area from which a store gets 5 i t s business - where the customers come from." The trade area i s o f t e n described as a g e o g r a p h i c a l l y d e l i n e a t e d region con-t a i n i n g the probable customers f o r the goods found i n the shopping centre. I t I s o f t e n defined as the area of i n f l u e n c e from which a shopping centre could expect to de r i v e 80 - 90% of i t s t o t a l s a l e s volume, t h i s area o f t e n being d i v i d e d i n t o primary, secondary, and o c c a s i o n a l l y t e r t i a r y zones depending on the method of a n a l y s i s . S t a t i n g the exact d e f i n i t i o n of a t r a d i n g area (or any of i t s sub-d i v i s i o n s ) i s d i f f i c u l t . There are probably as many d e f i n i t i o n s as there are stores and l o c a t i o n a n a l y s t s . To some, the primary t r a d i n g area f o r example i s simply "where the store gets most of D W. Applebaum and Saul B. Cohen, "Guideposts to Store L o c a t i o n Strategy," i n Kornblau, op. c l t . , p. 33. ^ W. Applebaum, "Advanced Methods f o r Measuring Store Trade Areas and Market P e n e t r a t i o n , " i n Kornblau, op. c l t . , p. 215. 36 I t s business." To others, i t i s p r e c i s e l y , "where the store gets 7 75$ of i t s business," and so on. Nevertheless, the p o i n t to remember i s that the trade area contains the p o t e n t i a l customers from which the r e t a i l o u t l e t a t t r a c t s expenditures. The outer l i m i t of t h i s trade area i s considered to be t h a t p o i n t at which the r e t a i l o u t l e t ceases to a t t r a c t customers. Importance of the Trade Area Concept There i s only one way i n which the f i n a l d e c i s i o n on the choice of l o c a t i o n should be made. That i s through the c a r e f u l p r e p a r a t i o n of business volume estimates on a l t e r n a t i v e s i t e s . Prom the p o i n t of view of the shopping centre developer, the d e c i s i o n to open a new centre must be based, i n the end, upon a comparison of the amount of business volume th a t can be done at each l o c a t i o n and the occupancy cost of l o c a t i o n , together with g the p r o j e c t i o n of both business volume and costs i n t o the f u t u r e . Obviously l o c a t i o n i s not the only f a c t o r determining the success of the operation or even the business volume. There are al s o merchandising a b i l i t y , r e p u t a t i o n , character of s e r v i c e , personnel, competitive cost of commodities and a great many others. However, i n e s timating business volume, the prime area of concern and the major challenge i n l o c a t i o n research, i s i n q u a n t i t a t i v e l y e v a l u a t i n g the p o t e n t i a l of a centre's trade area, from which i t w i l l draw i t s business volume. Kane, op. c i t . , p. 27. Nelson, op. c i t . , p. 141. 37 A. thorough knowledge of the character and extent of t h i s trade area i s e s s e n t i a l . The developer of a proposed r e t a i l f a c i l i t y must have t h i s i n f o r m a t i o n i n order to evaluate r e a l i s t i -c a l l y the l i k e l y success of the venture. Not only does the knowledge of the r e t a i l trade area provide a b a s i s f o r e s t i m a t i n g p o t e n t i a l s a l e s , but I t a l s o makes i t p o s s i b l e to determine investment requirements f o r l a n d , b u i l d i n g s and f i x t u r e s , as w e l l as the types of tenants and kinds of merchandise o f f e r i n g s , promotional a c t i v i t i e s and so on. T r a d i t i o n a l l y , determining the volume of business which can be done at a given l o c a t i o n i n v o l v e s counting the p o t e n t i a l customers i n the t r a d i n g area and f i n d i n g out i n d e t a i l how much money they have to spend and are w i l l i n g to spend f o r the type of goods provided by the sto r e s i n the centre under study. This step provides an answer to the question of how much business i s a v a i l a b l e , i n t o t a l , i n t h i s t r a d i n g area. The remainder of the a n a l y s i s of the s i t e has p r i n c i p a l l y to do wi t h determining how much of the t o t a l business can be captured by an o u t l e t there.^ But measuring how much business i s a v a i l a b l e r e q u i r e s f i r s t t hat the trade area be d e l i n e a t e d , a subject which presents consider-able d i f f i c u l t i e s , as discussed below. Problem of Trade Area D e l i n e a t i o n Trade areas are de l i n e a t e d by many d i f f e r e n t methods. These i n c l u d e topographical f e a t u r e s which enforce a trade area boundary, competition, d r i v i n g time, and a great many other I b i d . , p. 148. 38 f a c t o r s a l l of which are discussed i n the next chapter. In f a c t , i n l o c a t i o n a n a l y s i s , the problem of trade area d e l i n e a t i o n i s so complex, that the whole economic J u s t i f i c a t i o n f o r the shopping centre i s dependent upon securing a s a t i s f a c t o r y business volume f o r t h a t centre, and t h i s business volume i s derived from that centre's trade area. In order t o estimate the s a l e s volume, i t i s t h e r e f o r e necessary to know the s i z e of t h a t trade area both i n terms of i t s p h y s i c a l s i z e , and i n terms of i t s d o l l a r volume s i z e . Since the f a c t o r s which shape the trade area are m u l t i t u d i -nous, i t becomes a major challenge of l o c a t i o n a n a l y s i s not only to o u t l i n e that trade area but to estimate I t s p o t e n t i a l volume f o r the centre i n question. By f a r the most d i f f i c u l t problem i n l o c a t i o n a n a l y s i s i n v o l v e s a s c e r t a i n i n g the l i m i t s of a centre's area of i n f l u e n c e . T r a d i t i o n a l l y , t h i s trade area has been d e l i m i t e d g e o g r a p h i c a l l y to encompass a c e r t a i n area sur-rounding a centre. The p o i n t of contention a r i s e s over the question of how to decide where the area of i n f l u e n c e (trade area) terminates. So much has been w r i t t e n on t r a d i n g areas since the t u r n of the century t h a t one can t r a c e out the h i s t o r i c a l development of t r a d i t i o n a l methods of a n a l y s i s . The f i r s t attempts sought to e x p l a i n the demand f o r r e t a i l merchandise i n an area i n terms of economic f a c t o r s such as p o p u l a t i o n and i t s d i s t r i b u t i o n , p o p u l a t i o n c h a r a c t e r i s t i c s , income, l o c a t i o n of e x i s t i n g e s t a b l i s h -ments and the l i k e s . Some authors u s i n g t h i s approach discussed the economic base of a community f o r r e t a i l i n g i n loose and i n -formal f a s h i o n , while others more q u a n t i t a t i v e l y i n c l i n e d sought to develop q u i t e s o p h i s t i c a t e d laws or formulas which when solved supp l i e d i n d i c e s of r e t a i l p o t e n t i a l . The second b a s i c approach 39 s t a r t s with the consumer and through survey data attempts to evaluate r e t a i l p o t e n t i a l i n terms of h i s shopping h a b i t s . This type of a n a l y s i s focuses on such t h i n g s as how f a r the t y p i c a l or average consumer i s w i l l i n g to t r a v e l f o r c e r t a i n types of merchandise, and g e n e r a l l y attempts to d i s c o v e r u n d e r l y i n g r e g u l a r i t i e s i n the manner i n which he organizes h i s t r a v e l p a t t e r n s . Consumer Behaviour and Trade Area D e l i n e a t i o n Trade area d e l i n e a t i o n i s a problem of assessing how consumers w i l l r e a c t to the v a r i o u s f a c t o r s a f f e c t i n g consumer m o t i v a t i o n i n the s e l e c t i o n of a r e t a i l f a c i l i t y i n which to purchase the va r i o u s types of goods they r e q u i r e . The consumer i n t u i t i v e l y computes the advantages and disadvantages of v a r i o u s shopping l o c a t i o n s i n terms of a b e n e f i t - c o s t t r a d e - o f f : what s a t i s f a c t i o n can be achieved at what cost i n money, time, and energy. The costs of a c q u i r i n g goods are of two k i n d s : 1) the d i r e c t monetary out l a y f o r the a r t i c l e or s e r v i c e , and 2) the expenditure of money, time, and p h y s i c a l or nervous energy i n g e t t i n g to or from the place where the a r t i c l e or s e r v i c e can 10 be obtained. The r e s i s t a n c e to movement i n space has been 11 g e n e r a l i z e d i n the term f r i c t i o n of space." F r i c t i o n of space i s b a s i c a l l y a cost element i n the b e n e f i t - c o s t a n a l y s i s . The importance of " f r i c t i o n of space" i s evident i n the C.T. Jonassen, The Shopping Centre Versus Downtown, Columbus, Ohio, Ohio State U n i v e r s i t y , Bureau of Business Research, College of Commerce and Business A d m i n i s t r a t i o n , 1955, p. 6. 1 1 K e l l e y , op. c l t . , p. 51. 40 observation that most shopping centres draw business w i t h an i n t e n s i t y that decreases g e n e r a l l y as distance from the centre 12 i n c r e a s e s . A map that shows the d i s t r i b u t i o n of a shopping centre's customers most o f t e n r e v e a l s a d e f i n i t e c l u s t e r e d con-c e n t r a t i o n c l o s e to the centre, g e n e r a l l y w i t h i n a number of m i l e s of i t . As distance from the centre i n c r e a s e s , the f r e -13 quency of customers diminishes r a p i d l y , a r e s u l t of the f a c t t h a t the i n c r e a s i n g costs i n v o l v e d i n t r a v e l l i n g g r e a t e r d i s -tances increase the consumer's r e s i s t a n c e to p a t r o n i z i n g t h a t centre. I t i s t h e r e f o r e the consumer's shopping behaviour which governs the p o t e n t i a l l i k e l i h o o d of h i s patronage at the shopping centre. H i s shopping behaviour i s governed by h i s p e r s p e c t i v e toward c e r t a i n c o s t - b e n e f i t f a c t o r s . To estimate the p o t e n t i a l patronage f o r a proposed shopping centre, an< understanding of those f a c t o r s a f f e c t i n g behaviour i s necessary. I t i s a l s o necessary to understand how the consumer r e a c t s to such f a c t o r s . Only then can an analyst hope to determine the p o t e n t i a l patronage and i n a d d i t i o n , the p o t e n t i a l s a l e s volume which i s l i k e l y to accrue to that centre. Trade Area S u b d i v i s i o n s L o c a t i o n a n a l y s t s f r e q u e n t l y f i n d i t u s e f u l to subdivide the trade area i n t o primary, secondary, and t e r t i a r y (or f r i n g e ) 12 Kane, op. c i t . , p. 26. 1 3 I b i d . , p. 27. 41 14 areas. Such s u b d i v i s i o n s are t y p i c a l l y r e l a t e d to automobile t r a v e l time, or time-distance, and are p a r t i c u l a r l y u s e f u l i n studying proposed l a r g e planned shopping centre s i t e s . Very few published q u a n t i t a t i v e data are a v a i l a b l e to support the v a l i d i t y and usefulness of t r a v e l time i n t e r v a l s to d e l i n e a t e 15 s u b d i v i s i o n s of trade areas. I n d e f i n i n g the primary trade area, a n a l y s t s a r b i t r a r i l y set a r a t i o of store s a l e s from t h a t area to t o t a l store s a l e s . The f i g u r e used i s g e n e r a l l y 50 - 70%. I f the a n a l y s t uses the f i g u r e of 60% of t o t a l s a l e s , the primary trade area would be defined as t h a t area c l o s e s t to the s t o r e , has the highest r a t i o of customers to p o p u l a t i o n , and b r i n g s the store 60% of i t s t o t a l 16 s a l e s . S i m i l a r l y , the secondary trade area can be defined as the area a d j o i n i n g the primary trade area, w i t h the next highest r a t i o of customers to p o p u l a t i o n , from which the store gets a s t a t e d amount i n percent of i t s s a l e s . The t e r t i a r y (or f r i n g e ) trade area would represent the remaining p o r t i o n s of the s t o r e ' s 17 t r a d e . Centre S i z e Assumptions i n Trade Area D e l i n e a t i o n The process of preparing a d e t a i l e d e v a l u a t i o n of a proposed shopping centre n e c e s s i t a t e s the appointment of sub-j e c t i v e judgment at two stages. The f i r s t of these i n v o l v e s the 1 4 I b i d . , pp. 27 - 29. W. Applebaum, "Advanced Methods f o r Measuring Store Trade Areas and Market P e n e t r a t i o n , " i n Kornblau, op. c l t . , p. 215. 1 6 I b i d . 1 7 I b i d . 42 d e l i m i t i n g of the area of e f f e c t i v e a t t r a c t i o n ( t h a t i s , the t r a d i n g area of the centre under a n a l y s i s ) which n e c e s s i t a t e s an h y p o t h e s i z a t i o n as to the f a c i l i t i e s which the centre w i l l con-18 t a i n as the b a s i s f o r f u r t h e r study. T h e o r e t i c a l l y the types of shopping centre which might be b u i l t on a s i t e are i n f i n i t e . In common p r a c t i c e , the a n a l y s t s t u d i e s the s i t e and the l a t e s t p o p u l a t i o n census and b u i l d i n g permit f i g u r e s , d r i v e s through the t r a d i n g area, l o o k s at competitive stores and shopping ce n t r e s , and then e s t a b l i s h e s a conceptual image of what seems to him to be the most l i k e l y shopping centre that could success-19 f u l l y be b u i l t upon the s i t e . He begins w i t h a h y p o t h e t i c a l centre which he guesses might be s u c c e s s f u l ; and the r e s t of h i s research i s pointed towards proving or d i s p r o v i n g t h i s hypothesis. In other words, he s e l e c t s a c e r t a i n s i z e range f o r the centre as a s t a r t i n g p o i n t f o r h i s a n a l y s i s . The object of the research i s then to more c l e a r l y d efine the optimum s i z e to match the o p t i -mum p o t e n t i a l a v a i l a b l e to i t . The a n a l y s i s w i l l prove or d i s -prove whether the p o t e n t i a l i s i n the range assumed, or el s e i t i s much s m a l l e r o r l a r g e r . But the p o i n t to be made here i s th a t without some p r i o r i d e a of how l a r g e a centre might be and what s o r t of tenants i t might c o n t a i n , i t would be d i f f i c u l t to begin t o d e l i m i t the trade area f o r that centre, because i t i s neces-sary to know the s i z e i n order to have some s o r t of guage of the a t t r a c t i v e power of the centre which i s d i r e c t l y r e l a t e d to the s i z e of the trade area. For example, i f a neighbourhood centre Nelson, op. c i t . , p. 183. I b i d . , p. 186. 43 was the only s i z e contemplated, the trade area f o r such a centre i s much smaller than that f o r a r e g i o n a l centre because i t s a t t r a c t i v e power i s much l e s s than a r e g i o n a l c e n t r e ' s . However, even a f t e r s t a r t i n g w i t h the assumption that the s i t e w i l l l i k e l y c o n t a in a r e g i o n a l shopping centre, beginning assumptions as to the range of p o s s i b l e s i z e s may have to be a l t e r e d i n the l i g h t of trade area a n a l y s i s . The procedure f o r making the hypothesis i s to assume the most l i k e l y s i t u a t i o n or s i t u a t i o n s w i t h respect to the major st o r e u n i t s and the s i z e of the s i t e , and then, w i t h i n the l i m i t a t i o n s of those assumptions, to hypothesize the 20 s i z e of the centre. I f subsequent a n a l y s i s proves the hypothe-s i z e d s i z e should be a l t e r e d , then a new s i z e i s hypothesized, and the a n a l y s i s repeated. Such a procedure e s s e n t i a l l y i n v o l v e s s u c c e s s i v e l y approximating the s i z e u n t i l the optimum i s discovered. In a sense, i t Involves a degree of c i r c u l a r reasoning since an assumption must be made as to centre s i z e before an estimate of the p o t e n t i a l can be made a f t e r which t h a t estimate may cause the s i z e assumption to be a l t e r e d ; whereas i t would be more d e s i r a b l e to a s c e r t a i n a p o t e n t i a l and then t r a n s l a t e t h i s i n t o a s u f f i c i e n t centre s i z e to adequately serve t h i s p o t e n t i a l . However, t h i s subject w i l l be discussed more thoroughly l a t e r i n the t h e s i s . The main p o i n t to remember i s that d e l i n e a t i n g the trade area r e q u i r e s that an assumption be made regarding the s i z e of the proposed r e t a i l f a c i l i t y . I b i d . , p. 188. 44 D i f f e r e n t Trade Areas f o r D i f f e r e n t Merchandise The problem of d e l i n e a t i n g the trade area f o r the shopping centre as a whole i s compounded by the f a c t t h a t the trade area f o r each type of st o r e i n the centre d i f f e r s aecord-21 i n g to the type of merchandise o f f e r e d : consumers are w i l l i n g to t r a v e l g r e a t e r distances to acquire c e r t a i n goods than they are f o r o t h e r s . The supermarket, drug s t o r e s , c l e a n e r s , beauty and barber shops w i l l draw customers (on t h e i r own) c h i e f l y from the immediate neighbourhood. The major department store w i l l draw customers from a much gr e a t e r d i s t a n c e . The boundaries of these trade areas are d i f f i c u l t to define by a r i g i d formula i n m i l e s or time-distance. The di s t a n c e of a t t r a c t i o n w i l l vary according to f a c t o r s of a t t r a c t i o n and r e s i s t a n c e , and the con-sumer's a t t i t u d e toward these f a c t o r s . Necessity f o r R e f i n i n g the D e l i n e a t i o n Procedure In most p r a c t i c a l l o c a t i o n analyses, the trade area was g e n e r a l l y d e l i n e a t e d s u b j e c t i v e l y , on a t e n t a t i v e b a s i s , so that a n a l y s i s of that area could begin i n d e t a i l . There d i d not appear to be any j u s t i f i a b l e , s c i e n t i f i c a l l y accurate method f o r d e l i n e a t -i n g . In most cases the analyst a r b i t r a r i l y set some l i m i t which meant drawing some s o r t of l i n e around the centre an assumed d i s -tance from i t . I f subsequent a n a l y s i s showed the l i n e to be too c l o s e , the ana l y s t j u s t moved i t f a r t h e r away. In the attempt to r e f i n e t h i s procedure, v a r i o u s methods were proposed and employed which supposedly provided some I b i d . , p. 212. 45 improvement i n accuracy. Among these ( a l l of which w i l l be examined i n d e t a i l i n P a r t B) the most f r e q u e n t l y used i n c l u d e d : 1. R e i l l y ' s formula 2. Drawing d r i v i n g time i s o p l e t h s on a map 3. Analyzing shopping h a b i t s and preferences i n centres of comparable st a t u s and con-d i t i o n s 4. Analyzing r e t a i l expenditure i n comparable l o c a t i o n s 5. Drawing co n c e n t r i c r i n g s or p r o b a b i l i t y contours on a map 6. Applying t h e o r e t i c a l formulas In a l l of these, assumptions were made regarding con-sumer behaviour, or the way consumers act as a consequence of t h e i r p e rception of (and a t t i t u d e towards) v a r i o u s a t t r a c t i o n -r e s i s t a n c e f a c t o r s . Only through understanding these f a c t o r s and the way they a f f e c t consumer behaviour and a t t i t u d e s , can any meaningful estimate of the extent of the trade area be made. B r i e f l y , some of those f a c t o r s a f f e c t i n g the s i z e and shape of the trade area i n c l u d e : the convenience of the l o c a t i o n ; the s i z e of the centre; the types of merchandise sold i n the cen-t r e ; the manner i n which they are s o l d ; the shopping h a b i t s of the customers; the l o c a t i o n of e x i s t i n g competition; the p o p u l a t i o n d e n s i t y ; the existence of unpopulated zones; n a t u r a l and man-made b a r r i e r s ; the p r o x i m i t y to the c e n t r a l business d i s t r i c t ; the ease of access to the l o c a t i o n ; t r a f f i c p a t t e r n s ; and the nature Of the l o c a t i o n . A more comprehensive d i s c u s s i o n of these f a c t o r s f o l l o w s i n the next chapter. 46 Summary This chapter has b r i e f l y examined the importance of the trade area concept and discussed the problems inherent i n measuring i t , both i n terms of i t s p h y s i c a l s i z e and i t s monetary s i z e . I t was observed that the extent of a r e t a i l centre's area of i n f l u e n c e (trade area) i s l a r g e l y determined by how consumers r e a c t to va r i o u s f a c t o r s of a t t r a c t i o n and r e s i s t a n c e . To more ac c u r a t e l y assess the p o t e n t i a l e x i s t e n t f o r a proposed r e t a i l o u t l e t , i t i s t h e r e f o r e necessary to understand both the f a c t o r s t h a t a f f e c t consumer behaviour and how consumers t y p i c a l l y r e a ct to them, a subject to which the next chapter i s devoted. CHAPTER IV BASIC FACTORS AND RELATIONSHIPS IN THE MEASUREMENT OP TRADE AREA POTENTIAL I n t r o d u c t i o n Before t u r n i n g to the p r a c t i c a l methods and t h e o r e t i c a l models which have been developed to a i d i n the assessment of l o c a t i o n p o t e n t i a l , i t i s necessary f i r s t to examine and under-stand those f a c t o r s a f f e c t i n g l o c a t i o n p o t e n t i a l , I n c l u d i n g those which a f f e c t consumer behaviour i n the s e l e c t i o n of a shopping l o c a t i o n , since such f a c t o r s should be recognized and included i n any model or method which purports to be able to a c c u r a t e l y and c o n s i s t e n t l y p r e d i c t both the expected consumer patronage and the corresponding sales volume p o t e n t i a l at a p a r t i c u l a r l o c a t i o n . Having once examined the importance of such f a c t o r s , i t remains to be determined i n Chapber VI whether they are i n -cluded as v a r i a b l e s i n the conceptual s t r u c t u r e of the models, and i n Chapter V whether they are e x p l i c i t l y i n c l u d e d i n the a n a l y t i c a l procedure of the v a r i o u s methods. When a n a l y z i n g the v a r i o u s models and methods, i t should be remembered th a t they are based on the premise t h a t consumer s p a t i a l behaviour i s p r i m a r i l y determined by the operation of the f o r c e s of a t t r a c t i o n and r e s i s t a n c e as r e l a t e d to competing r e t a i l centres: A l l r e t a i l t r a n s a c t i o n s are the r e s u l t of I n d i v i d u a l choices based upon preferences of one type or another. Such choices r e -garding where to shop are the r e s u l t of 48 I n d i v i d u a l r e a c t i o n s to the f a c t o r s of a t t r a c t i o n and r e s i s t a n c e as r e l a t e d to a v a i l a b l e shopping f a c i l i t i e s . 1 Market F a c t o r s Economic Outlook Since most l o c a t i o n analyses attempt to provide a sales volume estimate f o r a date s e v e r a l years i n the f u t u r e , the economic outlook f o r the r e g i o n can have an important bearing on the p o t e n t i a l s a l e s at that date f o r a p a r t i c u l a r l o c a t i o n . The economic h i s t o r y of the area must be studied to ensure that growth has occurred, w i l l continue to occur, and t h a t economic 2 h e a l t h i s improving r a t h e r than d e c l i n i n g . Normally, t h i s economic a n a l y s i s should cover the whole region of which the par-t i c u l a r trade area under a n a l y s i s i s a p a r t . The trade area i t s e l f should be analyzed to ensure t h a t i t i s not a d e c l i n i n g area. Since the economic l i f e of a shopping centre i s l i k e l y to be twenty or more years, the owners need to have an informed understanding regarding the economic c o n d i t i o n s that are l i k e l y to a f f e c t t h e i r centre over i t s l i f e t i m e . Economic data such as the value of manufacturing output, the l i f e - c y c l e of i n d u s t r y , f a m i l y income l e v e l s , l a nd values (and t r e n d s ) , c o n s t r u c t i o n a c t i v i t i e s , development of u t i l i t i e s , employment s t a t i s t i c s and trends, p o p u l a t i o n growth trends, and r e t a i l volume trends a l l provide important clues to the h e a l t h and stage i n the l i f e - c y c l e of any area as w e l l as i n d i c a t i o n s f o r present and f u t u r e I b i d . , pp. 184 - 5. Kane, op. c i t . , p. 17. 49 purchasing power trends. The r e l a t i o n s h i p here i s evident: the h e a l t h i e r the economy, the more business a v a i l a b l e to shopping 3 centres i n the area, both today and i n the f u t u r e . Obviously, a good s i t e r e q u i r e s at l e a s t maintenance of s a t i s f a c t o r y economic h e a l t h i n an area f o r some time, and p r e f e r a b l y an improving c l i m a t e which w i l l improve the centre's economic prospects. P o p u l a t i o n H i s t o r i c a l l y speaking, the l i t e r a t u r e has repeatedly emphasized t h a t the volume of r e t a i l s a l e s , and the r e t a i l f l o o r space i n an area are d i r e c t l y r e l a t e d to the s i z e of the popula-t i o n i n that area. They emphasize t h a t more than any other f a c -t o r , p o p u l a t i o n i s the s i n g l e most important r e t a i l s a l e s p r e d i c t o r . The number, d i s t r i b u t i o n , composition, d e n s i t y , growth p a t t e r n , income, expenditures, and buying h a b i t s of the p o p u l a t i o n 4 a l l must be considered when esti m a t i n g t o t a l market p o t e n t i a l . This i n f o r m a t i o n i s e s s e n t i a l i n computing purchasing power and s a l e s estimates. The proposed centre ( a l l other things being equal) should be l o c a t e d at a s i t e which l i e s at the centre of the g r e a t e s t c o n c e n t r a t i o n of consumer expenditures w i t h i n the trade area. I t i s extremely u s e f u l to p l o t much of t h i s data on maps i n order to f a c i l i t a t e the a n a l y s i s . There i s no more accurate and c o n s i s t e n t l y I b i d . , p. 22. Saul B. Cohen and ¥. Applebaum, "Major Considerations i n E v a l u a t i n g a Store S i t e , " i n Kornblau, op. c l t . , p. 86. 50 u s e f u l t o o l than the dot map of p o p u l a t i o n d i s t r i b u t i o n . This map i s a k i n d of photograph of p o p u l a t i o n , and can be made to show not only the p r e c i s e l o c a t i o n of e x i s t i n g p o p u l a t i o n , but a l s o the a e r i a l changes i n p o p u l a t i o n t h a t have occurred or are l i k e l y to occur during a stated p e r i o d of time. P o p u l a t i o n d i s t r i b u t i o n , l i k e an economy, i s not a s t a t i c 5 phenomenon. The f o r c e s of b i r t h , death, p r o s p e r i t y , poverty, and the economic l i f e - c y c l e of the area combine to e i t h e r s w e l l or deplete p o p u l a t i o n i n an area. Where, how l o n g , and to what extent p o p u l a t i o n changes have been o c c u r r i n g are of paramount concern to l o c a t i o n a n a l y s t s . Why they are o c c u r r i n g should be p a r t i a l l y or f u l l y i n v e s t i g a t e d i n a f u l l study of the area economy. New r e s i d e n t i a l b u i l d i n g trends must be analyzed to determine where new c o n s t r u c t i o n i s l i k e l y to occur, or where new t r a c t s of land f o r homesites are a v a i l a b l e . This new con-s t r u c t i o n w i l l add p o p u l a t i o n i n areas p r e s e n t l y l e s s populated. The proposed s i t e should be c l o s e enough to t h i s c o n s t r u c t i o n to serve the p o p u l a t i o n growth expected there. But a degree of caution i s necessary. L o c a t i n g a centre i n a r a p i d l y growing suburban area may seem on the surface to be an e x c e l l e n t i d e a . N a t u r a l l y , the d e s i r a b l e trend i s to l o c a t e i n areas of growing p o p u l a t i o n , but an a d d i c t i o n to growth areas can be dangerous and 6 s h o r t - s i g h t e d . A n a l y s i s must be conducted to determine i f the expected growth i n s a l e s p r o j e c t e d to a r i s e as a r e s u l t of 7 supposed p o p u l a t i o n growth w i l l i n f a c t take p l a c e . For example, Kane, op. c i t . , p. 40. 6 I b i d . , p. 42. 7 I b i d . , p. 43. 51 a centre may be proposed f o r an o u t l y i n g suburban area on the edge of a major c i t y , I t may be f e l t t hat the centre should be developed on a s u f f i c i e n t s c a l e to take advantage of a n t i c i p a t e d p o p u l a t i o n and s a l e s growth, and that the centre w i l l not r e a l i z e i t s f u l l s a l e s p o t e n t i a l f o r a number of years u n t i l t h i s a n t i c i -pated growth takes p l a c e . However, a n a l y s i s may show th a t the centre w i l l remain e c c e n t r i c , not c e n t r a l , to the centre of the p o p u l a t i o n . For example, the g r e a t e s t p r o p o r t i o n of the popula-t i o n growth may occur on one side of the proposed s i t e w i t h vacant homesites being f i l l e d In r a p i d l y , whereas on the other s i d e , homebuilding may be r e s t r i c t e d because of poor s o i l condi-t i o n s or zoning r e s t r i c t i o n s . So, even though the p o p u l a t i o n of the immediate area i s p r o j e c t e d to increase by a s u b s t a n t i a l percentage, care must be taken to ensure that the proposed centre i s not l o c a t e d on the outer f r i n g e of t h i s growth. I t should i n s t e a d l o c a t e between t h i s growth area and already b u i l t - u p areas. In f a c t , the new centre should be l o c a t e d between t h i s new growth area and any e x i s t i n g competitive r e t a i l f a c i l i t i e s . In t h i s way i t w i l l i n t e r c e p t business which would otherwise go 8 to the e x i s t i n g f a c i l i t i e s . Furthermore, i f the new centre does not l o c a t e i n t h i s f a s h i o n , i t i s p o s s i b l e t h a t new competing f a c i l i t i e s w i l l be developed there i n s t e a d which w i l l themselves i n t e r c e p t the business. This i l l u s t r a t e s the danger of l o c a t i n g on the f r i n g e of a populated area, e s p e c i a l l y when there are s t i l l s i t e s a v a i l a b l e on which competitors may develop competing cen t r e s . By studying p o p u l a t i o n d i s t r i b u t i o n maps wit h an eye Saul B. Cohen and ¥. Applebaum, "Major Consideration i n E v a l u a t i n g a Store S i t e , " I n Kornblau, op. c l t . , p. 87. 52 to area growth trends, highway developments, and p o s s i b l e new competitive s i t e s , the hazard of being s h o r t - c i r c u i t e d can be reduced. P o p u l a t i o n w i t h i n the trade area should be considered i n terms of f a m i l i e s , since the p o p u l a t i o n count i s used i n conjunction with the c a l c u l a t i o n of expenditure on r e t a i l goods taken from a f a m i l y expenditure survey. The f i r s t step i s to a r r i v e at an accurate count of the p o p u l a t i o n r e s i d i n g i n the trade area and to a s s i g n i t to the v a r i o u s segments of that trade area. The most accurate method i s an a c t u a l count of d w e l l i n g u n i t s , made by counting p h y s i c a l s t r u c t u r e s f o r s i n g l e f a m i l y houses and m a l l boxes f o r m u l t i p l e d w e l l i n g s . I n a c t u a l count i s v i r t u a l l y always necessary f o r a new shopping centre because the surrounding area i s l i k e l y to be one of recent r e s i d e n t i a l growth, and a v a i l a b l e p o p u l a t i o n s t a t i s t i c s w i l l be very i n a c c u r a t e . I f p o p u l a t i o n s t a t i s t i c s are a v a i l a b l e i n enough d e t a i l , these can be used Instead which, of course, i s l e s s c o s t l y . P o p u l a t i o n can be determined by: counting b u i l d i n g permits, t a k i n g a e r i a l photographs, r e f e r r i n g to the l a s t census and a d j u s t i n g I t . P o p u l a t i o n f i g u r e s are then analyzed according t o : 1. Number of f a m i l i e s . 2. Age-sex r a t i o s , e i t h e r i n t o t a l numbers or per 1,000 p o p u l a t i o n , w i t h c l a s s i f i c a t i o n by major age groups. 3. The number of persons per f a m i l y . Changes i n p o p u l a t i o n occur through n a t u r a l increase or decrease or through m i g r a t i o n . The p o p u l a t i o n f i g u r e s must be updated i f they are to be u s e f u l at a l l . Several methods are 53 used such as: h i r t h - d e a t h r a t e s , i n and out m i g r a t i o n , new d w e l l i n g u n i t s i n c o n s t r u c t i o n and the past growth r a t e (however, the s t r a i g h t - l i n e p r o j e c t i o n of p o p u l a t i o n growth r e q u i r e s an assumption th a t the many f o r c e s c o n t r i b u t i n g to p o p u l a t i o n change 9 w i l l remain c o n s t a n t ) . In many cases p r o j e c t i o n s are a v a i l a b l e from p r i v a t e planning o f f i c e s or u n i v e r s i t y r e s e a r c h departments - these pro-j e c t i o n s may be very accurate or i n c r e d i b l y wrong but should nevertheless be s t u d i e d . Only short term p r o j e c t i o n s , of f i v e years or l e s s can be made w i t h any confidence. This statement should not be d i s t u r b i n g , because f o r the l o c a t i o n a n a l y s t i t i s not as c r i t i c a l to know e x a c t l y how much as i t i s to know e x a c t l y where s i g n i f i c a n t p o p u l a t i o n change w i l l occur. P o t e n t i a l growth areas can be detected by going to the M u n i c i p a l Assessors O f f i c e and f i n d i n g out where land i s being p l o t t e d f o r f u t u r e r e s i d e n t i a l development. Plans f o r the extension of p u b l i c u t i l i t i e s such as water, sewage and gas l i n e s can provide an even lon g e r range clue to growth a r e a s . 1 0 Income In any t r a d i n g area the p o p u l a t i o n must be determined f i r s t and then the average income f o r that p o p u l a t i o n determined, si n c e these two v a r i a b l e s i n d i c a t e the t o t a l number of d o l l a r s a v a i l a b l e i n that trade area f o r consumption expenditures. By applying some k i n d of an average f o r the percentage expenditure Kane, op. c l t . , p. 47. I b i d . , p. 55. 54 f o r each type of merchandise i t i s p o s s i b l e to a s c e r t a i n the trade area p o t e n t i a l spending power f o r eaoh type of merchandise. (This t h e s i s w i l l not be concerned with d i s c u s s i n g d e t a i l e d p r a c t i c a l problems i n data c o l l e c t i o n . Rather i t w i l l be concerned w i t h what types of i n f o r m a t i o n should be a s c e r t a i n e d and why that i n f o r m a t i o n should be ascertained.) The p r i n c i p l e importance of a s c e r t a i n i n g income l e v e l s w i t h i n the trade area i s t h e i r use as a p a r t of the determination process I n v o l v i n g the l i k e l y f u t u r e shopping centre expenditure p a t t e r n s of area r e s i d e n t s . In other words, i t i s w e l l known that a c e r t a i n percentage of personal disposable income i s spent on shopping centre-type merchandise. Determining the p e r - c a p i t a Income then enables the researcher to a s c e r t a i n the d o l l a r value f o r t hat percentage normally spent on shopping centre merchandise. Every populated area has a c e r t a i n l e v e l of personal income, and t h i s l e v e l has a d i r e c t r e l a t i o n s h i p to the amount 11 people spend f o r v a r i o u s products of a l l types. In order to see how the v a r y i n g p a t t e r n of income l e v e l s r e l a t e s to a pro-posed l o c a t i o n , the a n a l y s t should construct an income map. For each c l o s e - i n segment i n the t r a d i n g area, a t a b l e should be prepared showing the breakdown of f a m i l i e s by s i z e and income. These data can be secured from a sample of the p o p u l a t i o n through an i n t e r v i e w i n g technique. In areas f a r t h e r from the proposed s i t e , an average f a m i l y s i z e , and an average income f i g u r e f o r that segment i s u s u a l l y adequate, though i t i s s u b j e c t , of course, to somewhat greater e r r o r because an average may represent e i t h e r many f a m i l i e s roughly s i m i l a r i n I b i d . , p. 57. 55 income or s i z e or two groups of f a m i l i e s considerably d i f f e r e n t I n income or s i z e . The average f a m i l y income can u s u a l l y be taken from the l a t e s t census and then adjusted f o r income changes Since that date. Information may also be a v a i l a b l e from the l o c a l planning commission, c i t y planning commissions, employment o f f i c e s , and var i o u s p u b l i c a t i o n s . In new growth areas, spot a p p r a i s a l s can be made showing the r e l a t i o n s h i p between d w e l l i n g value and income. Only i n very h i g h l y t r a n s i e n t or retirement areas are there l i k e l y to be very wide d i s c r e p a n c i e s . In an apartment area, rent l e v e l s are a good I n d i c a t i o n . In any event, spot i n t e r v i e w s could be made i n some of the o u t l y i n g areas, w i t h more comprehensive i n t e r v i e w i n g being conducted i n c l o s e - i n areas. To a s c e r t a i n whether the l o c a l i t y under study shows v a r i a t i o n s from the n a t i o n a l average, checks should be made w i t h any r e g i o n a l department or newspaper or any other person or people who may have c a r r i e d out s i m i l a r market research p r e v i o u s l y . Employment The a n a l y s i s of employment w i t h i n the re g i o n of the trade area l i n k s p o p u l a t i o n f i g u r e s w i t h income expenditure, since the f u t u r e spending power a v a i l a b l e to a new shopping centre w i l l be r e l a t e d to these f a c t o r s . For major r e g i o n a l shopping centres w i t h a l a r g e trade area, a wide range of l o c a l f a c t o r s w i l l a f f e c t the e x i s t i n g employment s t r u c t u r e ( f o r example, a d i v e r s i f i e d employment s t r u c t u r e , or a h i g h l y s p e c i a l i z e d one, as i n the case of a l a r g e motor v e h i c l e manu-f a c t u r i n g c e n t r e ) . Several other f a c t o r s should be considered when an a l y z i n g employment: 56 1. Unemployment - account should be taken of l o c a l employment p r o j e c t i o n s , and c o n s i d e r a t i o n given to such f a c t o r s as seasonal or emerging permanent unemploy-ment a r i s i n g from the c l o s i n g of an i n d u s t r y . 1 2 2. Character of employment - a count must be taken o f the incidence of s h i f t work, i n c l u d i n g the hours worked, since these may a f f e c t l o c a l shopping hours. The incidence of female workers should a l s o be s t u d i e d , since these consumers may be o b l i g e d to shop at unusual hours or c l o s e to t h e i r p lace of work.3-3 3. Future l o c a t i o n of i n d u s t r y - major new i n d u s t r i e s under c o n s t r u c t i o n and those f o r which planning permission has already been granted should be assessed i n terms of type, l o c a t i o n , and number and type of workers. 1^ Purchasing Power (Disposable Income) The volume of r e t a i l trade i s as much dependent on the wealth of a d i s t r i c t or community as upon i t s p o p u l a t i o n . There i s a strong c o r r e l a t i o n between the purchasing power f o r an area and the r e t a i l s a l e s f i g u r e s f o r t h a t area. The obvious explana-t i o n f o r t h i s i s t h a t w i t h more money to spend, more money w i l l be spent on r e t a i l goods. Therefore, a s c e r t a i n i n g the t o t a l purchasing power w i l l provide a good p r e d i c t o r of the amount of r e t a i l s a l e s to be expected from that p o p u l a t i o n . The amount of money a v a i l a b l e i n the t r a d i n g area f o r v a r i o u s types of goods depends upon the income l e v e l of the area, 1 2 I b i d . , pp. 20 - 22. l ^ J C o l i n S. Jones, Regional Shopping Centres: Their L o c a t i o n , P l a n n i n g , and Design, London. England. Business Books L t d . . 1969, p. 39. 1 4 I b i d . , p. 69. 57 Once the income l e v e l has "been a s c e r t a i n e d , i t should be p o s s i b l e to c a l c u l a t e the p o t e n t i a l f o r each product-type. T o t a l annual trade area r e t a i l expenditures f o r each product-type are normally c a l c u l a t e d by m u l t i p l y i n g the income of f a m i l i e s i n s i m i l a r income groups by the average r e t a i l expenditure percentage f a c t o r f o r each product-type (commonly published by a government agency which gives percentage-of-income expenditure f a c t o r s f o r each product-type). For example, the c a l c u l a t i o n could proceed: number of f a m i l i e s , m u l t i p l i e d by medium f a m i l y income f o r t h a t income group, m u l t i p l i e d by the percentage expenditure f a c t o r f o r a p a r t i c u l a r product-type equals the r e t a i l expenditure f o r a p a r t i c u l a r product-type. The preceeding a n a l y s i s i s intended to show two t h i n g s : 1) the t o t a l r e t a i l expenditure i n the area f o r a l l goods, and 2) the t o t a l r e t a i l expenditure f o r each type of good. These expenditure p a t t e r n s can vary according to d i f f e r e n c e s i n p r i c e s , v a r i a t i o n s i n shopping h a b i t s , and d i f f e r e n c e s i n Income l e v e l s . At lower Income l e v e l s , the percentage of f a m i l y disposable Income spent on c e r t a i n h i g h e r - p r i c e d "shopping" goods such as f u r n i t u r e and appliances may be d i f f e r e n t than that f o r higher-income f a m i l i e s . However, s a l e s of convenience items are not a f f e c t e d to any great degree by d i f f e r e n c e s i n f a m i l y income l e v e l s . These are goods, such as food, that are required d a i l y as n e c e s s i t i e s , and there i s a minimum amount which must be purchased r e g a r d l e s s of the f a m i l y income l e v e l . Sometimes income v a r i a t i o n s w i t h i n a t r a d i n g area can be ascertained by d r i v i n g the t r a d i n g area and n o t i n g the 15 d i f f e r e n c e i n housing c o n d i t i o n s . Knowing the general annual • K a n e» op« c l t . , p. 60. 58 income l e v e l f o r the t r a d i n g area, and knowing the percentage expenditure spent on each product-type, the p o t e n t i a l can he adjusted above or below a p a r t i c u l a r expenditure l e v e l according to whether housing c o n d i t i o n s are above or below average. Averages are o f t e n u s e f u l when working w i t h thousands of people, hence an average income t r a n s l a t e d Into an average expenditure produces an estimate of t o t a l p o t e n t i a l that can o f t e n be r e l i e d 16 upon. Once the p o t e n t i a l of the whole t r a d i n g area has been determined, i t i s safe to subdivide the area according to s i g n i -f i c a n t v a r i a t i o n s i n expenditure p o t e n t i a l t h a t are apparent. Distance u Distance takes time,** costs money, and tends to I n h i b i t consumer shopping movements. I t i s s a i d that people would p r e f e r to buy the great m a j o r i t y of t h e i r goods near t h e i r homes i f they were able to do so. The g r e a t e r the d i s t a n c e , the greater 17 must be the a t t r a c t i o n to p u l l t r a d e . A. Distance as a Travel Cost Among the f a c t o r s t h a t have been f r e q u e n t l y mentioned as a f f e c t i n g the s p a t i a l p a t t e r n s of consumer behaviour, t r a v e l costs have probably received p r i n c i p a l c o n s i d e r a t i o n . C l e a r l y , a consumer's t r a v e l behaviour i s i n f l u e n c e d by the expense, i n time and e f f o r t as w e l l as money, tha t he perceives to be i n -volved i n s e l e c t i n g among var i o u s r e t a i l centres o f f e r i n g the goods and s e r v i c e s d e s i r e d . These a n t i c i p a t e d costs of t r a v e l l i n g , 1 6 I b i d . 17 P.D. Converse, R e t a i l Trade Areas i n I l l i n o i s , Urbana, U n i v e r s i t y of I l l i n o i s P r e s s , 1946, p. 13. 59 the time and e f f o r t Involved i n preparing f o r and a c t u a l l y making the t r i p , are regarded as e x e r t i n g a f o r c e that c o n t r a c t s the distances consumers t r a v e l to s a t i s f y t h e i r needs. With I n c r e a s i n g d i s t a n c e from the centre, the consumer pe r c e i v e s h i s cost i n v i s i t i n g t h a t centre w i l l i ncrease s h a r p l y . This r e -f l e c t s the existence of opportunity c o s t : w i t h only so much time to devote to any number of a c t i v i t i e s i n a given p e r i o d , too much time spent i n the p u r s u i t of one a c t i v i t y has to be r e a l i z e d at the expense of other a c t i v i t i e s . T r i p frequencies tend to d e c l i n e as the distance r e -quired to make the t r i p i n c r e a s e s . Conversely, t r i p d i s t a n c e s tend to be lower as t r i p frequencies Increase. The most obvious reason f o r t h i s i n v o l v e s t r a v e l costs which occur because there i s a f r i c t i o n component of space t h a t can only be overcome by the expenditure of time and e f f o r t . The e f f e c t of t h i s f r i c t i o n i s to r e s t r i c t t r a v e l d i s t a n c e s i n the i n t e r e s t of l i m i t i n g t r a v e l c o s t s . B. Distance i n D r i v i n g Time The dependence of many l a r g e suburban r e g i o n a l centres on the motorized shopper has l e d i n c r e a s i n g l y to the d e f i n i t i o n of trade area boundaries s o l e l y i n terms of d r i v i n g time. The e a r l y use of the co n c e n t r i c r i n g technique has now l a r g e l y been replaced by the isochron or i s o p l e t h method, with contour l i n e s l i n k i n g places of equal d r i v i n g time from the subject l o c a t i o n . This technique i s i n answer to the observation that d i s t a n c e i n m i l e s does not adequately represent the degree of inconvenience experienced by consumers. For example, a f i v e m i l e d r i v e on the freeway r e q u i r e s f a r l e s s time and e f f o r t and f r u s t r a t i o n 60 than a d r i v e of the same dis t a n c e through congested c i t y t r a f f i c . T ravel time i s thought to provide a b e t t e r i n d i c a t i o n of t r a v e l costs as perceived by the consumer. Normally speaking, most shopping centre developers when d e f i n i n g the extent of t h e i r proposed trade area, a r b i t r a r i l y assume a c e r t a i n d r i v i n g time d i s t a n c e from the centre. I n most cases there i s no p a r t i c u l a r j u s t i f i c a t i o n given f o r the choice of a p a r t i c u l a r d r i v i n g time d i s t a n c e , except to say tha t i t i s based on "experience" aided by i n t u i t i o n as to the maximum d i s -tance w i t h i n which consumers w i l l be a t t r a c t e d to the centre. Estimates of the maximum d r i v i n g time commonly range from ten minutes to over an hour depending on the l o c a t i o n , a range which l e a d s one to suspect that the choice of any one p a r t i c u l a r d r i v i n g time i s l i k e l y to be open to considerable question. In many cases the l i m i t chosen i s based on the p r o x i m i t y of competing r e t a i l f a c i l i t i e s , and the l i m i t set at the p o i n t where i t i s assumed that the subject trade area f l a n k s the trade areas of other c e n t r e s . However, even i n t h i s assumption there i s s t i l l no j u s t i f i c a t i o n f o r s e l e c t i n g one time l i m i t over another as the p o i n t where consumers cease to be a t t r a c t e d to the subject c e n t r e . This subject w i l l be discussed In gre a t e r d e t a i l l a t e r i n Chapter V, but f o r the time being i t w i l l s u f f i c e to note t h a t the problem of a s c e r t a i n i n g how dis t a n c e a f f e c t s consumer s p a t i a l behaviour i s r e a l l y a question of a s c e r t a i n i n g what t r a v e l costs consumers are w i l l i n g to s u s t a i n i n the p u r s u i t of shopping s a t i s f a c t i o n - and q u a n t i f y i n g an answer to t h i s question remains the g r e a t e s t stumbling block i n l o c a t i o n research today. 61 C. Distance v s. Merchandise Desired E a r l y w r i t e r s recognized t h a t the type of merchandise sought by the consumer had a marked e f f e c t on the dis t a n c e he was w i l l i n g to t r a v e l to acquire i t . R e i l l y noted t h a t : l e a d i n g s t y l e and s p e c i a l t y s t o r e s . . . handle l i n e s of merchandise that people are w i l l i n g to t r a v e l some distance to secure .1° Consumer p e r c e p t i o n of t r a v e l costs i s associated with rewards a r i s i n g from the s a t i s f a c t i o n of f u l f i l l i n g a need f o r v a r i o u s goods and s e r v i c e s . These rewards vary i n degree according to the type of merchandise sought. Such rewards can exert an i n -f l u e n c e which tends to lengthen the distance a consumer i s w i l l i n g to t r a v e l . Thus there i s a tendency f o r the consumer to balance the a t t r a c t i o n of rewards a r i s i n g from higher degrees of s a t i s f a c t i o n against a tendency to economize on t r a v e l c o s t s . I t i s assumed that i n making a t r i p the consumer seeks to keep i t as short as p o s s i b l e i n order to avoid higher costs than are necessary. On the other hand, the t r i p has a d e f i n i t e reason f o r being made, namely some requirement of the consumer f o r which a s a t i s f a c t i o n i s sought. The more s e l e c t i v e t h i s requirement (and the more important the object or objects sought a f t e r are to the consumer) the g r e a t e r the p r o b a b i l i t y of i n c u r r i n g more t r a v e l time, and consequently g r e a t e r c o s t s , i n seeking s a t i s f a c t i o n . * 9 W i l l i a m J . fieilly, The Law of R e t a i l G r a v i t a t i o n , 1 s t ed., New York, W i l l i a m J . R e i l l y Company, 1931, p. 36. 19 J . E. Brush and E. L. Gauthier, Service Centres and Consumer  T r i p s , Department of Geography Research Paper 113, U n i v e r s i t y of Chicago P r e s s , 1967, p. 167. 62 D. Distance v s . P r i c e of Merchandise Consumers tend to t r a v e l f a r t h e r to buy h i g h e r p r i c e d goods than they would to buy lower p r i c e d goods. Such h i g h e r p r i c e d goods, p a r t l y because they consume a p r o p o r t i o n a t e l y l a r g e r share of the consumer's disposable income, are of g r e a t e r s i g n i f i c a n c e to the consumer who i s t h e r e f o r e more w i l l i n g to shop around and expend a g r e a t e r e f f o r t and t r a v e l f a r t h e r i n the attempt to ensure t h a t he gets " h i s money's worth." E. Distance v s . Class of Goods On the other hand, consumers are not w i l l i n g to t r a v e l so f a r or expend as much time and e f f o r t i n the p u r s u i t of goods such as convenience items which are of l e s s e r monetary and s o c i a l s i g n i f i c a n c e to them. Consumer shopping surveys conducted over many years have shown that f o r convenience goods, geographical convenience i s considered by consumers to be the most important f a c t o r i n t h e i r choice of stores i n which to shop. The consumer u s u a l l y chooses o u t l e t s from among those most conveniently s i t u a t e d near the home. Only t h e r e a f t e r do the f a c t o r s of merchandise and value and s e r v i c e come i n t o p l a y . Therefore, the trade area boundary f o r convenience goods i s considerably nearer to the centre than i s the boundary f o r higher order goods, or i n other words, the area of e f f e c t i v e a t t r a c t i o n does not extend as f a r from the centre f o r convenience goods as f o r higher order goods. Nelson, op. c i t . , p. 212. 63 P. Distance v s. Breadth of S e l e c t i o n In a d d i t i o n to the c l a s s of goods, another f a c t o r a f f e c t i n g the consumer's per c e p t i o n of t r a v e l costs i s the breadth of s e l e c t i o n i n merchandise. Presumably, the g r e a t e r the number of s e l e c t i o n s o f f e r e d at a r e t a i l f a c i l i t y , the grea t e r i s the consumer's expectation t h a t h i s shopping t r i p w i l l be s u c c e s s f u l at that f a c i l i t y . Consequently i t appears l o g i c a l that consumers w i l l show a w i l l i n g n e s s to t r a v e l g r eater d i s t a n c e s f o r any good or s e r v i c e as the breadth of s e l e c t i o n i n -creases. This would appear to be e s p e c i a l l y t r u e i n the case where the consumer wishes to "shop around" f o r an i n f r e q u e n t l y purchased, more s i g n i f i c a n t item. Broader s e l e c t i o n provides more opportunity to "shop around" f o r the " r i g h t " choice i n s t y l e , q u a l i t y , or p r i c e . There are a number of other f a c t o r s which modify the consumer's a t t i t u d e toward d i s t a n c e and the most important of these w i l l be discussed below under t h e i r r e s p e c t i v e headings. A c c e s s i b i l i t y , T r a f f i c , and Transportation One of the c h i e f reasons f o r choosing a p a r t i c u l a r s i t e i s to secure the maximum a c c e s s i b i l i t y and thereby to have 21 a v a i l a b l e as much of the business p o t e n t i a l as p o s s i b l e . The st o r e or centre must be a c c e s s i b l e to l a r g e areas and l a r g e p o p u l a t i o n d i s t r i b u t i o n s i f I t i s to secure a l a r g e r r e t a i l volume. I b i d . , p. 51. 64 A l t e r n a t i v e s i t e s must "be analyzed i n terms of the major access roads i n the area, In order to a s c e r t a i n whether these access roads have s u f f i c i e n t c a p a c i t y and are p r o p e r l y l o c a t e d to tap the p o t e n t i a l market i n the area, and whether they are of s u f f i c i e n t c a p a c i t y to permit the higher t r a f f i c use t h a t w i l l be demanded of them when the centre i s completed. I t i s a l s o necessary to make sure the consumers w i l l be able to e a s i l y enter these access routes i n order that i t w i l l be e a s i e r f o r a g r e a t e r number of consumers i n the t r a d i n g area to shop at the c e n t r e . A s i t e t h a t has good a c c e s s i b i l i t y i s one t h a t can be e a s i l y reached by customers, which i m p l i e s short d i s t a n c e s and 22 ease i n d r i v i n g . I t i s a r e l a t i v e term, of t e n used i n a com-p a r a t i v e sense to describe a s i t e that i s more e a s i l y reached than another. T r a f f i c congestion can reduce the s a l e s t h a t a centre gets from more d i s t a n t p a r t s of i t s trade area, a r e s u l t of the f a c t t h a t consumers are forced to expend a g r e a t e r amount of time and e f f o r t t o b a t t l e t h e i r way through t h i s t r a f f i c congestion as the d i s t a n c e i n c r e a s e s from the centre. Greater t r a f f i c conges-t i o n i n c r e a s e s the time required to reach the centre, and consumer r e s i s t a n c e to p a t r o n i z i n g a centre increases as the time and e f f o r t r e q u i r e d i n c r e a s e s . I f t r a f f i c f r i c t i o n i s h i g h , drawing power w i l l be more i n t e n s i v e , or i n other words, the centre w i l l draw from a smaller area. Saul B. Cohen and ¥. Applebaum, "Major Considerations i n E v a l u a t i n g a Store S i t e , " i n Kornblau, op. c l t . , p. 8 3 . 2 3 I b i d . , p. 8 5 . 65 Road surface c o n d i t i o n s a l s o a f f e c t a c c e s s i b i l i t y . S i t e approaches that are unpaved, pot-holed, narrow or steep g i v e poor a c c e s s i b i l i t y . S i m i l a r problems i n a c c e s s i b i l i t y a r i s e i f access must be obtained by t u r n i n g l e f t o f f a highway without the a i d of a t r a f f i c l i g h t . Such problems i n a c c e s s i b i l i t y are b a s i c a l l y r e l a t e d to the road networks near t o , and s e r v i n g , the centre. Poor access can severely r e s t r i c t the a c t u a l patronage, e s p e c i a l l y i f com-pe t i n g f a c i l i t i e s have e a s i e r access. In t h i s case, expected p r o j e c t e d s a l e s volumes may never m a t e r i a l i z e i f they have been deriv e d w i t h no adjustment f o r the poor access. I f the access i s poor enough that i t takes 3 or 4 minutes longer i n d r i v i n g time to reach the s i t e as compared to another, l o s s of patronage may w e l l be the r e s u l t . The e f f e c t of poor a c c e s s i b i l i t y i s that i t i n c r e a s e s the "nuisance" cost to the customer, or increas e s the e f f o r t he must make to v i s i t a p a r t i c u l a r s i t e . I f he i s shopping f o r convenience goods, where the e f f o r t t h r e s h o l d i s low, he may not make the e f f o r t , and may in s t e a d v i s i t a com-p e t i n g l o c a t i o n . The e f f e c t i s not so pronounced wi t h h i g h e r -order goods, f o r the customer w i l l normally expend a gre a t e r e f f o r t f o r these non-convenience goods anyway. However, the e f f e c t i s s t i l l l i k e l y to be n o t i c e a b l e , only Just to a l e s s e r extent. The s i g n i f i c a n c e of small t i m e - d i f f e r e n c e s i s , of course, 24 r e l a t e d to the s i z e of the trade area of the centre, the trade area f o r each type of product, and the d i s t r i b u t i o n of p o p u l a t i o n . In the case of convenience goods, which enjoy a smaller trade area 66 than higher-order goods, a few minutes i n d r i v i n g time may i n -clude a s i g n i f i c a n t p a r t of the trade area and could have serious consequences. In the case of h i g h e r order goods, a few minutes d r i v i n g time would have l e s s s i g n i f i c a n c e hut s t i l l some e f f e c t . T r a f f i c f l o w p a t t e r n s a f f e c t r e t a i l o u t l e t s i n that these flow p a t t e r n s can create considerable f r i c t i o n and thereby hamper a s i t e ' s a c c e s s i b i l i t y . Being l o c a t e d on an a r t e r y t h a t i s h e a v i l y congested i s not merely a problem i n p h y s i c a l conges-t i o n ; i t i s p s y c h o l o g i c a l as w e l l . Automobile shoppers do not enjoy the prospect of d r i v i n g along a route which i s jammed wit h through t r a f f i c . L o c a t i n g so t h a t access can be achieved e a s i l y o f f e f f i c i e n t , uncongested a r t e r i e s , can s i g n i f i c a n t l y enlarge the centre's trade area, since the time expenditure required to reach the centre i s l e s s from g r e a t e r d i s t a n c e s . D r i v i n g time depends p r i m a r i l y on the e x i s t i n g road net-work, and i s a f f e c t e d by road c a p a c i t y . Major r e g i o n a l centres are l a r g e t r a f f i c generators, which could give r i s e to acute d i f f i c u l t i e s i f heavy concentrations occurred on roads of i n -adequate c a p a c i t y . The c r e a t i o n of h i g h speed l i m i t e d access by-pass h i g h -ways around the c i t y , c a r r y i n g through t r a f f i c , has e s t a b l i s h e d a new c r i t e r i o n of a c c e s s i b i l i t y . T y p i c a l l y , these h i g h speed by-passes are i n t e r s e c t e d , perhaps w i t h great s e p a r a t i o n s , by many of the major s t r e e t s i n the community. A c c e s s i b i l i t y to the by-pass, then, or to a place where m o t o r i s t s can get o f f the by-pass (an Interchange) would be necessary i f the customers were to have easy access to the shopping centre. Furthermore, s i n c e l a r g e centres produce tremendous t r a f f i c problems, good 67 a c c e s s i b i l i t y from a s e r i e s of r a d i a l highways or s t r e e t s or major a r t e r i e s w i t h a minimum of congestion becomes a most 25 d e s i r a b l e l o c a t i o n a l c r i t e r i o n . Of course i t i s necessary to know the exact l o c a t i o n of 26 new highways or freeways and what areas they w i l l feed. The l o c a t i o n a n a l y s t should a s c e r t a i n the exact l o c a t i o n of access p o i n t s , o u t l e t s , and interchanges, the exact l o c a t i o n of over-passes and underpasses, and the exact l o c a t i o n of frontage roads. This i s necessary i f he i s to know i f a new highway w i l l i n e f f e c t become a b a r r i e r between the s i t e and a p o r t i o n of the e x i s t i n g t r a d i n g area. Anyone s e l e c t i n g a r e t a i l s i t e must know what the p r e l i m i n a r y d e t a i l e d plans are f o r such new roads so that these can be taken i n t o account. The r e l a t i o n s h i p of the new highway to the p o t e n t i a l t r a d i n g area i s what must be weighed. I f the road cuts through a populated area and has access ramps throughout, i t may create 27 good a c c e s s i b i l i t y . But i f the highway i t s e l f represents the outer boundary of the t r a d i n g area the l o c a t i o n becomes u n d e s i r a b l e . I f only 10% of the t r a f f i c on the highway i s of a l o c a l t r a d i n g area nature, and the balance i s composed of people i n the middle of a t r i p , i t i s u n l i k e l y t h a t those people w i l l shop at the 28 cen t r e . In t h i s case, a h i g h t r a f f i c count means v i r t u a l l y nothing when estimating volume s a l e s p r o j e c t i o n s . 2 ^ Nelson, op. c i t . , p. 180, Kane, op. c l t . t p. 66. 2 7 m d . , p. 63. 2 8 I b i d . 68 S t r e e t and highway c o n s t r u c t i o n must always be weighed by asking oneself what the changes w i l l do to the whole p a t t e r n of movement w i t h i n an area: W i l l e s t a b l i s h e d shopping d i s t r i c t s be strengthened or weakened by the new roads; w i l l new f o c a l p o i n t s be created t h a t w i l l a t t r a c t major r e t a i l i n g f a c i l i t i e s ; w i l l the new road open up the t r a d i n g area, or w i l l i t s l i c e i t i n h a l f ; w i l l l o c a l or through t r a f f i c use i t ; what competitors are l i k e l y to be a t t r a c t e d by t h i s development; e x a c t l y when w i l l the road be completed, and how does t h i s r e l a t e to the timing of p l a n n i n g . The t r a f f i c a r t e r y p a t t e r n s and t r a f f i c l i g h t l o c a t i o n s can s e v e r e l y a l t e r the trade area of a centre, i n that customers from d i f f e r e n t d i r e c t i o n s w i l l f i n d the e x i s t i n g road and t r a f f i c l i g h t networks more or l e s s time consuming and t h e r e f o r e more or l e s s convenient. Being l o c a t e d on the wrong s i d e of the highway can cause shoppers to p a t r o n i z e a competing f a c i l i t y which i s f a r t h e r away but e a s i e r and l e s s time consuming to reach. For example, shoppers from the east of a centre may be able to d r i v e d i r e c t l y to a centre l o c a t e d on the north side of an east-west freeway, without having to t u r n l e f t or wait f o r t r a f f i c l i g h t s . Those shoppers to the south of the centre may have to enter and e x i t from s e v e r a l t r a f f i c a r t e r i e s , wait f o r s e v e r a l t r a f f i c l i g h t s , and make a l e f t t u r n o f f a busy highway interchange onto a congested feeder road. So f o r these shoppers, even though they l i v e c l o s e r to t h i s centre than the shoppers l i v i n g to the east, the time r e q u i r e d to reach the centre may be considerably g r e a t e r , and they may e l e c t to choose a competing centre which may be f a r t h e r away i n d i s t a n c e , but more convenient and l e s s time con-suming to reaeh. In t h i s case, the shopping centre trade area 69 w i l l not extend as f a r south as i t does east. In assessing the road p a t t e r n s w i t h i n the trade area, 29 the f o l l o w i n g should be considered: 1. T r a f f i c a r t e r i e s - the number of l a n e s , width, and d i r e c t i o n of major routes; 2. I n t e r s e c t i o n s - the l o c a t i o n and ca p a c i t y of major i n t e r s e c t i o n s i n the trade area, e s p e c i a l l y those c l o s e t o , or se r v i n g the s i t e ; 3. T r a f f i c flows - t r a f f i c r a t e s at va r i o u s times of the day and days of the week; 4. M o b i l i t y f a c t o r s - speed l i m i t s , t r a f f i c l i g h t s , stop s i g n s , road surface c o n d i t i o n s , h i l l s , sharp corners, congestion, choking due to on-street p a r k i n g ; 5. A c c e s s i b i l i t y of main a r t e r i e s - i n c l u d i n g c a p a c i t i e s of freeways and the ease of entrance and e x i t from such freeways; 6. Proposed new roads. P r i v a t e and p u b l i c t r a n s p o r t a t i o n c a p a b i l i t i e s of the area should be considered. P r i v a t e t r a n s p o r t s t u d i e s should consider: the number of automobiles per f a m i l y i n the area; t r a v e l times from various p a r t s of the area to the s i t e ; adequacy of proposed parking f a c i l i t i e s ; and general t r a f f i c c o n d i t i o n s and a c c e s s i b i l i t y to the s i t e . The study of p u b l i c t r a n s p o r t a t i o n s e r v i c e s would i n c l u d e the cos t , t r a v e l times from v a r i o u s p a r t s 29 Jones, op. c i t . , p. 51. 70 of the area, route coverage of the area, frequency of schedules, 30 and the p o t e n t i a l s e r v i c e i f the new centre were b u i l t . Another c o n s i d e r a t i o n i s the manner i n which a c c e s s i b i l i t y i s a f f e c t e d by the amount of t r a f f i c f low i n t o the shopping centre i t s e l f . I f there i s customarily a long l i n e of shopping centre t r a f f i c t a k i n g a l e f t t u r n to enter the s i t e ( c u t t i n g across t r a f f i c i n the process) t h i s makes i t more d i f f i c u l t f o r d r i v e r s to enter the s i t e even i f a t r a f f i c l i g h t i s provided to stop on-coming t r a f f i c . In planning the parking f o r a shopping centre, i t may be advantageous to e l i m i n a t e a few parking spaces i n order to i n c r e a s e the a c c e s s i b i l i t y to the remaining parking spaces. In t h i s case parking and a c c e s s i b i l i t y are r e a l l y one i n the same problem i n t h a t they are both concerned w i t h maximizing convenience f o r the consumer. Money expended i n improving access to the shopping centre through c o n s t r u c t i o n of storage lanes and the l i k e i s as w e l l spent as i t i s on parking s t a l l s . The shopper can't park u n t i l he can get i n t o the l o t , and he w i l l not come again i f he has t r o u b l e g e t t i n g out. D i f f e r e n t Trade Areas f o r D i f f e r e n t Goods Previous s t u d i e s have shown th a t stores l o c a t e d i n the same shopping centre but s e l l i n g d i f f e r e n t goods and s e r v i c e s draw t h e i r business from the same general trade area - but that the drawing power and market p e n e t r a t i o n i s not n e c e s s a r i l y the 31 same f o r each s t o r e . 30 I b i d . , p. 52. 31 Prank J . Sparacio, Trade Area V a r i a t i o n s f o r D i f f e r e n t Store Departments," i n Kornblau, op. c l t . , p. 229. 71 A. Convenience Goods Convenience goods are u s u a l l y of small u n i t v a l u e , are purchased f r e q u e n t l y , are oft e n purchased on impulse, and are those which the consumer u s u a l l y d e s i r e s to purchase w i t h a minimum of time and e f f o r t at the most convenient and a c c e s s i b l e s t o r e . They are those goods that consumers w i l l not go out of t h e i r way to o b t a i n . B. Shopping Goods Shopping goods are t y p i c a l l y higher i n p r i c e than con-venience goods, and p r i c e and q u a l i t y are of g r e a t e r importance to the consumer. They are purchased l e s s f r e q u e n t l y and the buying d e c i s i o n u s u a l l y takes longer to make. Some of these items r e q u i r e major purchase d e c i s i o n s and Involve major income expenditure. For t h i s reason, p r i c e and q u a l i t y c o n s i d e r a t i o n s are important and consequently much shopping i s done t o obta i n the best value p o s s i b l e . S t y l e goods are a form of shopping goods and i n many cases c a r r y connotations of sta t u s to the con-sumer, the r e s u l t being t h a t a p a r t i c u l a r consumer i s w i l l i n g to spend more time, e f f o r t , t r a v e l f a r t h e r d i s t a n c e s , and spend more money i n order to obta i n goods which are more important to him. I f the assumption t h a t the frequency of purchase i s r e l a t e d to the type of goods sought i s v a l i d , we would expect t h a t , i n g e n e r a l , customers r e s i d i n g c l o s e to a centre w i l l buy food on each v i s i t to the centre; t h a t customers are w i l l i n g to t r a v e l f a r t h e r to obt a i n general merchandise which i s not r e a d i l y a v a i l a b l e to t h e i r s a t i s f a c t i o n nearer t h e i r home; and th a t the customers more d i s t a n t from the store may buy t h e i r food elsewhere 72 32 and come to the centre only to purchase general merchandise. I t f o l l o w s t h a t the general merchandise stores w i l l have a l a r g e r p r o p o r t i o n of customers r e s i d i n g f a r t h e r away from the s t o r e and t h a t the general merchandise primary trade area w i l l , t h e r e f o r e , he l a r g e r . The a c t u a l p h y s i c a l area of the general merchandise primary trade area becomes p r o p o r t i o n a t e l y l a r g e r than that of the convenience goods o u t l e t s as the d e n s i t y of p o p u l a t i o n de-33 c l i n e s . One main reason l i e s i n the f a c t that even though s t r a i g h t l i n e d i s t a n c e p r o p o r t i o n s may be the same, the i n c r e a s i n g r a d i u s of the c i r c l e encompasses a broader area. Drawing power i s a f f e c t e d by competitive c o n d i t i o n s w i t h i n the surrounding primary area, d i f f e r e n c e s i n highway p a t t e r n s , d e n s i t y of t r a f f i c f r i c t i o n , d e n s i t y of p o p u l a t i o n , and a c c e s s i b i l i t y . A l l other t h i n g s being equal, i t i s probably true that the s i z e of the convenience goods trade area remains i n p r o p o r t i o n to the shopping goods t r a d i n g area. However, i n areas of lower d e n s i t y , the drawing power f o r each type of goods extends over a broader area. This i s mainly because of time-distance f a c t o r s . In other words, i n areas of lower p o p u l a t i o n d e n s i t y , g r e a t e r distances can be t r a v e l l e d without a g r e a t e r expenditure of time and e f f o r t owing to a l e s s e r degree of t r a f f i c congestion. G e n e r a l l y speaking, we would expect some so r t of r a t i o to apply between time-distance f o r the convenience goods items as compared to time-distance f o r shopping goods items. For example, shopping goods customers I b i d . , p. 230. I b i d . , pp. 230 - 31. 73 might spend twice as much time t r a v e l l i n g to a f a c i l i t y as would convenience goods shoppers, and t h i s would apply r e g a r d l e s s of the p o p u l a t i o n d e n s i t y . However, t h i s i s a l t e r e d by the v a r i o u s f a c t o r s o u t l i n e d p r e v i o u s l y ; namely, competitive c o n d i t i o n s w i t h i n or surrounding the primary trade area, d i f f e r e n c e s i n highway p a t t e r n s ( a c c e s s i b i l i t y ) , and the i n t e n s i t y of t r a f f i c f r i c t i o n . In general though, we may conclude t h a t drawing power i s a f f e c t e d both by d i f f e r e n c e s i n the type of merchandise and also by popu-l a t i o n d e n s i t y . 0. S p e c i a l t y Goods The consumer's w i l l i n g n e s s to t r a v e l to a c e r t a i n o u t l e t o f f e r i n g a s p e c i f i c item f o r purchase i s a f f e c t e d by h i s w i l l i n g -ness to s u b s t i t u t e other items o f f e r e d at other l o c a t i o n s more convenient to the consumer. S p e c i a l t y goods are not as prone to s u b s t i t u t i o n as convenience goods. Consumers l o o k i n g f o r s p e c i a l t y goods are l o o k i n g f o r something s p e c i a l . Therefore, they are more w i l l i n g to shop around f o r them i n order to f i n d "Just the r i g h t t h i n g . " I s a r e s u l t they are normally w i l l i n g to expend more e f f o r t i n searching f o r these goods, and are w i l l i n g to t r a v e l g r e a t e r d i s t a n c e s , e s p e c i a l l y i f i n doing so they b e l i e v e there i s a g r e a t e r l i k e l i h o o d of f i n d i n g the r i g h t a r t i c l e . The l a r g e r the u n i t of purchase or the amount of money i n v o l v e d , the g r e a t e r the element of s t y l e inherent i n the merchandise, and the more tha t Item i s s i g n i f i c a n t to the consumer, the f a r t h e r the consumer w i l l t r a v e l to buy i t . I t f o l l o w s t h a t the e f f e c t i v e t r a d i n g area f o r s p e c i a l t y goods i s l a r g e r than t h a t f o r con-venience goods which are not so important to the consumer and f o r which the consumer i s more l i k e l y to accept a s u b s t i t u t e r a t h e r 7 4 than expend gr e a t e r e f f o r t searching f o r something which i s not r e a l l y of great importance to him. Furthermore, the l e s s f r e q u e n t l y a p a r t i c u l a r commodity i s purchased, the more people there must be i n the trade area to support an o u t l e t s e l l i n g only t h i s commodity. Because the commodity i s s o l d l e s s f r e q u e n t l y , and because more people are needed to support a f a c i l i t y s e l l i n g only t h i s commodity, and because there are fewer stores per c a p i t a t h a t s e l l t h i s commodity, people wanting to buy i t must t r a v e l f u r t h e r to get i t . Demographic Factors The a n a l y s t and the developer should know whether they are d e a l i n g with the f a m i l i e s of f a c t o r y workers or w i t h those of executives, w i t h young, l a r g e f a m i l i e s or w i t h o l d e r , smaller ones. Therefore we are d e a l i n g w i t h (1) income l e v e l , (2) occupa-34 t i o n a l type, ( 3 ) age l e v e l s , and ( 4 ) f a m i l y s i z e . Also important i s e t h n i c background. For example, i f c e r t a i n s e c t i o n s of the trade area are populated with people of European descent, c e r t a i n p a r t i c u l a r t a s t e s i n c l o t h i n g apparel, f u r n i t u r e , g r o c e r i e s e t c . may be p r e v a l e n t . The presence of such groups must be r e l a t e d to merchandising plans and tenant types i n the new centre. A. Income Groups The lower income p o p u l a t i o n w i l l spend a r e l a t i v e l y l a r g e r p r o p o r t i o n of t h e i r disposable Income f o r food than the h i g h e r income groups, and on the other hand, the h i g h income group w i l l spend more f o r l u x u r i e s p r o p o r t i o n a t e to t h e i r purchasing Kane, op. c l t . , p. 55. 75 power. Centres serving higher income groups o f t e n tend to b e n e f i t from higher per c a p i t a s a l e s as a r e s u l t of the higher disposable income per c a p i t a . A n a l y s t s seeking to estimate a s a l e s volume p o t e n t i a l f o r a new centre must be aware of the income l e v e l s p r e v a l e n t i n the trade area. They must a l s o advise the developer of predominant income groups i n the area so t h a t merchandise and tenant mix can be planned to maximum advantage. Higher income groups are normally i n a b e t t e r p o s i t i o n to a f f o r d higher p r i c e d , higher q u a l i t y merchandise, and i n f a c t o f t e n p r e f e r to p a t r o n i z e a centre o f f e r i n g t h i s merchandise even i f i t happens to be more d i s t a n t from them than another centre whose merchandising p o l i c y i s d i r e c t e d toward lower income groups. Upper income f a m i l i e s are o f t e n i n a b e t t e r p o s i t i o n to t r a v e l f a r t h e r and more oft e n to shop than lower income f a m i l i e s owing i n p a r t to t h e i r higher disposable income and the higher incidence of two cars i n t h i s group. This group i s normally more i n t e r e s t e d i n the higher p r i c e d items and w i l l t r a v e l f a r t h e r to ensure s a t i s f a c t o r y s e l e c t i o n i n p r i c e and q u a l i t y . Hence, a centre i n which can be found h i g h e r p r i c e d goods th a t appeal to the upper income f a m i l i e s may expect to a t t r a c t patronage from gr e a t e r d i s t a n c e s than a centre whose stores carry lower p r i c e d goods. I f , however, the trade area i s predominantly composed of lower income groups, then merchandising p o l i c i e s must be appropriate to t h i s group or the centre w i l l not a t t r a c t the p o t e n t i a l patron-age i t could i f the merchandise mix were b e t t e r matched to the character of the trade area. The suburban shopping centre serves a market q u i t e d i f f e r e n t from that of the downtown r e t a i l core. To a greater degree, the suburban centre market i s composed of younger people, 7 6 younger f a m i l i e s , and l a r g e r f a m i l i e s . The merchandise r e -quirements f o r t h i s market vary a c c o r d i n g l y : smaller s i z e s i n c l o t h i n g , c h i l d r e n ' s wear, and household f u r n i s h i n g s are more i n demand. The prevalence of young consumers r e q u i r e s that a com-p l e t e l y d i f f e r e n t merchandising approach he followed as compared to o l d e r people. With young growing f a m i l i e s , home f u r n i s h i n g s needs are h i g h e r and t h e i r purchases of higher order goods are h i g h e r . Consequently, the shopping centre which i s proposing to serve t h i s market must n e c e s s a r i l y t a i l o r i t s tenant and mer-chandise mix to s u i t t h i s market, or i t s a n t i c i p a t e d a t t r a c t i v e power and corresponding s a l e s volume p o t e n t i a l may not m a t e r i a l i z e . Income c l a s s , governed by the occupation of the head of the household, i s r e s p o n s i b l e f o r considerable v a r i a t i o n s In expenditure. In the lowest income group, r e t a i l expenditure accounts f o r a considerable amount of the f a m i l y income, the p r o p o r t i o n of t h i s amount decreasing w i t h the corresponding r i s e 35 i n incomes and depending on the type of t r a d e . The v i a b i l i t y of a major r e g i o n a l centre I s h e a v i l y dependent on s a l e s of durable goods, i n a d d i t i o n to s a l e s by convenience o u t l e t s , such as supermarkets. Consequently, a great r e l i a n c e i s placed on purchases of durable goods by the higher income groups, which have a g r e a t e r percentage of car owners and 36 more f l e x i b i l i t y i n shopping h a b i t s . The s p e c i a l importance of these f a c t o r s i s emphasized i n r e g i o n a l shopping centres where p o t e n t i a l trade from very low income groups i s of t e n disregarded Jones, op. c l t . , p. 45. 3 6 I b i d . 7 7 i n the economic a n a l y s i s , even i f t h i s amounts to over 50% 37 of the trade area. B. Incomes, S o c i a l C l a s s , and Age Groups B u c k l i n has produced some i n t e r e s t i n g f i n d i n g s regarding the r o l e t h a t demographic f a c t o r s p l a y i n consumer patronage be-hav i o u r . He found, among other t h i n g s , t h a t : 1. Consumers from neighbourhoods w i t h above average Incomes and s o c i a l s t a t u s showed a much higher p r o p e n s i t y to shop i n the downtown core than i n secondary suburban cen t r e s . 2. Consumers from below average neighbourhoods and lower s o c i a l s t a t u s were more i n c l i n e d to shop i n the suburban centres; and t h i s p r o p e n s i t y diminished w i t h r i s i n g s o c i a l s t a t u s and income l e v e l s . 3. Consumers were more l i k e l y to shop i n suburban centres when shopping i n the evening, but tended to p r e f e r the downtown core f o r day-time shopping t r i p s . 4. Shoppers w i t h c h i l d r e n tended to p r e f e r suburban centres, and a l s o p r e f e r r e d one-stop shopping at the suburban l o c a t i o n . 5. The more shopping stops a consumer was w i l l i n g to make, the more l i k e l y t hat •57 G. Baker and B. Funaro, Shopping Centres: Design and Operation, Reinhold P u b l i s h i n g Corp., New YorkV 1951, p. 19b. 78 consumer would p a t r o n i z e the down-town core. 6. On p r i c e c o n s i d e r a t i o n s alone, shoppers were more l i k e l y to shop downtown l o c a -t i o n s i n a n t i c i p a t i o n of b e t t e r p r i c e s a t i s f a c t i o n . 7. Suburban centres outranked the downtown core on convenience. 8 . A d v e r t i s i n g by downtown merchants had a much g r e a t e r e f f e c t on a consumer's shop-ping d e s t i n a t i o n than d i d suburban centre a d v e r t i s i n g . 9. Consumers were f a r more l i k e l y to shop 38 downtown f o r a p p a r e l . The above f a c t o r s must be taken i n t o account when esti m a t i n g the p r o b a b i l i t y of consumer patronage, because such f a c t o r s a f f e c t d i f f e r e n t consumers d i f f e r e n t l y i n t h e i r percep-t i o n of the a t t r a c t i o n of a p a r t i c u l a r o u t l e t and i n t h e i r w i l l i n g ness to s u s t a i n t r a v e l costs to v i s i t t h a t o u t l e t . For example, the existence of h i g h p r i c e d l i n e s of merchandise at a p a r t i c u l a r centre may heighten the a t t r a c t i o n of that centre as f a r as high income groups are concerned who would a l s o be more w i l l i n g to t r a v e l to that centre. However, these same high p r i c e d l i n e s of merchandise may very w e l l l e s s e n the a t t r a c t i v e power of that centre f o r low income groups who w i l l t h e r e f o r e be l e s s l i k e l y or l e s s w i l l i n g to s u s t a i n t r a v e l costs to shop at that centre. L o u i s P. B u c k l i n , Shopping P a t t e r n s i n an Urban Area, IBER S p e c i a l P u b l i c a t i o n s , Berkeley, 1967, pp. 111-12. 79 The suburban shopping centre enjoys c e r t a i n advantages over the downtown r e t a i l core and v i c e v e r s a . Several s t u d i e s have shown tha t consumers p r e f e r one o u t l e t over the other depending on d i f f e r e n t aspects of each. One study found that consumers tend to p r e f e r shopping centres f o r the f o l l o w i n g reasons ( i n order of descending importance): convenience, p a r k i n g , general enjoyment, one-stop shopping, s e l e c t i o n , and sal e s and bargains. On the other hand they p r e f e r downtown l o c a -t i o n s f o r these reasons (again descending i n importance): s e l e c -t i o n , convenience, enjoyable experience, s a l e s and bargains. In comparing downtown wi t h suburban shopping centres, the downtown core was p r e f e r r e d over the shopping centre i n terms of s e l e c t i o n , enjoyable experience, and sa l e s and bargains; but the shopping centre ranked ahead of the downtown core i n terms of convenience, 39 p a r k i n g , and one-stop shopping. Another study found t h a t con-sumers p r e f e r r e d shopping centres f o r the ease of reaching the cent r e , f o r the treatment by s a l e s people, f o r general shopping comfort, and f o r the ease of handling adjustments; whereas they p r e f e r the downtown shopping area f o r choice of merchandise, 40 p r i c e s , and the range i n s i z e s and colours of merchandise. I t i s evident t h a t such preferences have an e f f e c t on the patronage expectancy, but from the e a r l i e r d i s c u s s i o n i t should a l s o be evident that such preferences w i l l show v a r i a t i o n according to C o l i n S. Jones, Regional Shopping Centres: Their L o c a t i o n , P l a n n i n g and Design, Business Books L t d . , London, England. 1969. p. 10 quoting H. L. Waide, "Changing Shopping Habits and Their Impact on Town P l a n n i n g , " Town Pla n n i n g I n s t i t u t e J o u r n a l , October, 1963, p. 258. 40 I b i d . , p. 54 quoting J . P. A l e v i z o s and A. E. Beckwith, "Shopping H a b i t s , " Business Week, October 24, 1953. 80 the i n t e r - r e l a t i o n s h i p between demographic f a c t o r s and the a t t r a c t i o n s o f f e r e d by a p a r t i c u l a r o u t l e t . Geographical Factors Geographical b a r r i e r s can l i m i t the trade area and l i m i t 41 consumer patronage. The trade area can be cut o f f at n a t u r a l or man-made b a r r i e r s which are e i t h e r p h y s i c a l l y or p s y c h o l o g i c a l l y so o b s t r u c t i v e that nobody w i l l go beyond or around them w i t h any measurable r e g u l a r i t y . A r i v e r or freeway w i t h no crossovers f o r s e v e r a l m i l e s can be such a b a r r i e r . Other b a r r i e r s would i n c l u d e h e a v i l y congested a r t e r i e s , slum d i s t r i c t s , i n d u s t r i a l zones, r a i l w a y l i n e s , and unpopulated r e g i o n s . Recognition of the e f f e c t t h a t such b a r r i e r s can have on consumer s p a t i a l behaviour i s e s s e n t i a l i n any l o c a t i o n a l a n a l y s i s . V i s i b i l i t y of the s i t e and centre from the surrounding road network i s g e n e r a l l y considered important, e s p e c i a l l y i n smaller centres which are l e s s l i k e l y to a d v e r t i s e or sponsor promotions. To be hidden i s considered a disadvantage because of the l o s s of a d v e r t i s i n g appeal afforded by good exposure. I f a centre i s l o c a t e d adjacent to a major highway, but i s not v i s i b l e from t h a t highway, i t s a t t r a c t i v e power i s reduced because i t does not appear to be a c c e s s i b l e . Furthermore, being s i t u a t e d i n the middle of a jungle of r e t a i l f a c i l i t i e s , such as a r e t a i l s t r i p development, normally reduces v i s i b i l i t y and l e s s e n s the stand-out a d v e r t i s i n g e f f e c t which i n t u r n l e s s e n s the a t t r a c t i v e power of the f a c i l i t y . Kane, op• c i t . , p. 15. 81 Competition In a p p r a i s i n g the s a l e s p o t e n t i a l of a new l o c a t i o n under c o n s i d e r a t i o n , e s t a b l i s h i n g t h a t there i s a s u f f i c i e n t amount of t o t a l business a v a i l a b l e i n the new centre's a n t i c i -pated trade area i s only p a r t of the task. I t i s a l s o necessary to s i z e up the l i k e l y s i t e s of new competition as an I n d i c a t i o n of whether a s a t i s f a c t o r y share of the t o t a l s a l e s p o t e n t i a l 42 can be a t t a i n e d . A p p r a i s a l of competition i s a l s o needed f o r proper planning regarding the s p e c i f i c l o c a t i o n , the type and s i z e of centre to b u i l d and the merchandising and operating p o l i c i e s to meet the needs and wishes of customers. The l o c a t i o n a n a l y s t then i s concerned with competition at s e v e r a l l e v e l s : the broad market area, each major centre which i s i n competition w i t h h i s own, and the competition c o n f r o n t i n g the i n d i v i d u a l s i t e . In each case the a n a l y s i s of competition i n v o l v e s determination of who i s competition; the amount of competition, such as the number of centres or s t o r e s , the s a l e s volume and square f e e t of s e l l i n g area; and the q u a l i t y and e f f e c t i v e n e s s of competition, comprising such f a c t o r s as p h y s i c a l f a c i l i t i e s , operating and merchandising p r a c t i c e s , management, personnel, and consumer acceptance. The developer should have a f a i r l y complete up-to-date in v e n t o r y of the r e t a i l competitive f a c i l i t i e s i n the market area. This i n f o r m a t i o n i s used to evaluate the s p e c i f i c s i t e , to analyze I n d i v i d u a l competing companies, and to determine which Curt Kornblau and George L. Baker, "A Guide to E v a l u a t i n g Competition," i n Kornblau, op. c i t . , p..128. 82 areas are over-served In c e r t a i n f u n c t i o n s and which areas of opportunity are s t i l l l e f t open. Competition i s the aggregate of a l l r e t a i l i n g f a c i l i t i e s which together share the t o t a l market p o t e n t i a l - i n other words, 44 a l l r e t a i l f a c i l i t i e s which s e l l the same types of products. Any attempt to q u a n t i f y competition r e q u i r e s extensive f i e l d surveys where va r i o u s elements such as s t o r e s i z e , tenant s i m i -l a r i t i e s , p a r k i n g , age, e t c . are mapped and c l a s s i f i e d , and areas of current and f u t u r e store concentrations can be observed. When the competition map i s superimposed on a p o p u l a t i o n d e n s i t y map, i t becomes p o s s i b l e to determine which p a r t s of the general area are underdeveloped and which p a r t s are overdeveloped per c a p i t a w i t h s t o r e s . I f the trade areas of the various competing o u t l e t s are d e l i n e a t e d , the r e l a t i v e m e r i t s of s i t e s f o r proposed stores become c l e a r e r which i s of a s s i s t a n c e i n the task of choosing the general area f o r a new centre. A. S a t u r a t i o n When shopping centre developers speak of s t o r e "satura-t i o n " they mean a c o n d i t i o n where there i s Just the r i g h t amount of st o r e f a c i l i t i e s i n an area both to serve customers s a t i s f a c -t o r i l y and to y i e l d a f a i r r e t u r n on investment to the s t o r e 45 operators. In t h i s case, store s a t u r a t i o n i s d e s i r a b l e . How-ever, t h i s c o n d i t i o n i s an i d e a l which does not u s u a l l y e x i s t , 43 Saul B. Cohen and W. Applebaum, "Major Considerations i n E v a l u a t i n g a Store S i t e , " i n Kornblau, op. c i t . , p. 88. 44 I b i d . 45 W. Applebaum and Saul B. Cohen, "Guideposts to Store L o c a t i o n Strategy," i n Kornblau, op. c i t . , p. 29. 8 3 s i n c e o r d i n a r i l y an area i s e i t h e r understored or overstored. When an area i s understored, there are not enough f a c i l i t i e s to serve the p o t e n t i a l customers s a t i s f a c t o r i l y . E x i s t i n g shopping centres are crowded and customers are not served w e l l , but the centres y i e l d a good r e t u r n on Investment. Operators see the e x i s t i n g vacuum and the o p p o r t u n i t i e s i t o f f e r s , but o f t e n face a d i f f i c u l t task i n expanding present f a c i l i t i e s because of a l a c k of space a d j o i n i n g the e x i s t i n g centre. In such cases, they must look elsewhere f o r a s i t e on which to develop a new centre, which can r e s u l t i n two i n e f f i c i e n t centres s e r v i n g an area where one l a r g e r centre would have been more d e s i r a b l e . This p o i n t s out the c r i t i c a l n e c e s s i t y of planning f o r growth when contemplating a centre, and consequently securing the r e -quired l and f o r expansion w h i l e i t i s s t i l l a v a i l a b l e , even i f i t must l i e unused f o r a period of time. When an area i s overstored, the sto r e s are not crowded, and f a c i l i t i e s are abundant, but the centre operator i s l i k e l y 46 not g e t t i n g a f a i r r e t u r n on investment. I t i s obvious then that a key c o n s i d e r a t i o n f o r developers, when contemplating a new centre, i s to determine whether the area i s understored or overstored. I f h i s develop-ment when completed s t i l l l eaves the area understored, he must r e a l i z e the p o t e n t i a l danger of new competing centres being b u i l t to s a t i s f y the excess p o t e n t i a l , and t h i s may endanger h i s pro-f i t a b i l i t y and r e t u r n on investment. Obviously, a l s o , he must avoid c o n s t r u c t i n g a centre i n an area which i s overstored, f o r 4 6 I b i d . 84 he w i l l l i k e l y never r e a l i z e a s a t i s f a c t o r y r e t u r n on investment unless the e x i s t i n g f a c i l i t i e s are so obsolete that h i s new centre w i l l e f f e c t i v e l y capture a d i s p r o p o r t i o n a t e share of the t r a d e . Normally, i f store f a c i l i t i e s are expanded beyond the needs of an area, p r o d u c t i v i t y w i l l be reduced. This w i l l show up as lower s a l e s per square f o o t of s e l l i n g area and i n lower p r o f i t s . B. Under-supply of Modern Stores The need f o r new f a c i l i t i e s can be due to a l a c k of adequate, modern s t o r e s , even though there i s an abundance of o l d , obsolete s t o r e s . When the e x i s t i n g competitive f a c i l i t i e s are obsolete, the developer of the new centre knows that such competition i s not r e a l l y as great as i t would at f i r s t appear on the b a s i s of r e t a i l square footage In an area. The new centre would l i k e l y draw many of the customers away from such obsolete f a c i l i t i e s . 0. Future Strategy of Competitors Any a n a l y s i s of competition would be Incomplete without t a k i n g i n t o c o n s i d e r a t i o n what p o s s i b l e f u t u r e measures the com-p e t i t i o n could take. This r e q u i r e s not only an e v a l u a t i o n of e x i s t i n g s i t e s , but also an i n s i g h t i n t o p o t e n t i a l s i t e s which are r i p e f o r development, and an awareness of p o p u l a t i o n growth p a t t e r n s and s t o r e development p o l i c i e s and s i t e s e l e c t i o n 47 p a t t e r n s . I t i s not safe to assume t h a t the current competition Saul B. Cohen and W. Applebaum, "Major Considerations i n E v a l u a t i n g a Store S i t e , " i n Kornblau, op. c i t . , p. 89. 85 i s the only competition t h a t w i l l face the centre i n the f u t u r e . This means tha t the developer must analyze competitors' plans to renovate o l d f a c i l i t i e s or develop new ones, and must evaluate p o t e n t i a l s i t e s which are lar g e enough to permit new shopping centre development. Of course a centre can he unique and have a long l i f e - s p a n . I t can be unique i n s e v e r a l ways: when i t i s the only r e t a i l f a c i l i t y of i t s type s e r v i n g a given market area; when i t i s the only one of i t s k i n d i n the t o t a l choice of goods and s e r v i c e s i t o f f e r s ; or when i t has a "monopoly" l o c a t i o n , so s t r a t e g i c and favourable that i t cannot even be approximated by a competitor ( i n some cases i t may be that the centre s i t e was the l a s t r e a d i l y a v a i l a b l e piece of land s u i t a b l e f o r development and to acquire a competing s i t e would r e q u i r e e x c e s s i v e l y expensive development). I l l of t h i s i n f o r m a t i o n i s required by the developer and each of h i s tenants i f they are to know the current market p o t e n t i a l and have some i d e a of the f u t u r e market p o t e n t i a l a v a i l a b l e to them. B a s i c a l l y , the competition f o r each tenant-type proposed f o r the new centre should be analyzed to determine whether or not s u f f i c i e n t p o t e n t i a l e x i s t s f o r the tenant i n the new centre, and a l s o what p o t e n t i a l does e x i s t which can then be t r a n s l a t e d i n t o square footage store s i z e f o r each tenant i n the centre. D. Competition by Class of Goods 1 l a r g e shopping centre w i l l have two co n c e n t r i c t r a d i n g areas. One w i l l be a t r a d i n g area f o r the convenience goods f a c i l i t i e s roughly equivalent i n s i z e and i n shape to what i t 48 would be i f the convenience f a c i l i t i e s stood there alone. 4 8 Nelson, op. c i t . , p. 212. 86 Therefore, t h i s trade area should be o u t l i n e d on a map as i f the shopping goods f a c i l i t i e s were not present at a l l , and a l l com-p e t i t i v e r e t a i l stores w i t h i n t h i s area should be measured as i f the study were being made f o r a separate convenience goods centre. The reason i s that the supermarket w i l l draw business from approxi-mately the same t r a d i n g area t h a t i t would have i f the department stor e and other b i g stores were not i n the centre, and secondly, i t would secure a d d i t i o n a l business from i n c i d e n t a l shopping f o r g r o c e r i e s by people l i v i n g beyond the i n n e r area whose p r i n c i p a l purpose i n coming to the centre i s to v i s i t the l a r g e r s t o r e s . However, the opposite may be true i n some cases, e s p e c i a l l y i f i t i s more d i f f i c u l t to v i s i t t h i s centre than a r e l a t i v e l y c l o s e -by non-congested convenience goods centre. E. Assessing Competitors In the l a r g e r trade area and f o r a number of m i l e s i n every d i r e c t i o n beyond i t , a l l major shopping centres should be measured. A l s o , any major shopping goods o u t l e t s , other than shopping centres, should also be measured. Measurements would i n c l u d e : Gross and net space, e f f e c t i v e n e s s , and d o l l a r volume p o t e n t i a l . The a b i l i t y of the new centre to compete s u c c e s s f u l l y w i t h e x i s t i n g competition must be analyzed - i t i s a l s o necessary to analyze whether or not e x i s t i n g competition w i l l be able to compete s u c c e s s f u l l y with the proposed new centre. The f o l l o w i n g 49 should be analyzed f o r each competitor: Kane, op. c i t . , p. 79. 87 1. A v a i l a b i l i t y of parking 2. A c c e s s i b i l i t y of the store 3. The congestion problem 4. The a t t r a c t i v e n e s s of the store f r o n t 5. The p r i c e , q u a l i t y and qu a n t i t y of merchandise in v o l v e d 6. The existence or l a c k of a i r c o n d i t i o n -i n g and e s c a l a t o r s 7. Merchandising a b i l i t y of the store 8. A t t r a c t i v e n e s s of the decor 9. Age of the store Age and appearance are important items to consider because every s t o r e , even the biggest and showiest, w i l l progress i n t o a shop-worn o l d age i f not renewed p e r i o d i c a l l y . Old age can be ch a r a c t e r i z e d by p h y s i c a l d e t e r i o r a t i o n : l a c k of f l o o r space, shabby s h e l v i n g and f i x t u r e s , faded p a i n t , worn f l o o r t i l e s , i n -adequate p a r k i n g , weather-beaten s i g n s , and a d e c l i n e i n employee 50 confidence. The l o c a t i o n a l p a t t e r n of the competition presents s t r a t e g i c questions to the a n a l y s t . As he s t u d i e s competitive p o s i t i o n i n g i n r e l a t i o n to h i s own l o c a t i o n , he w i l l begin to get a f i n a l impression of what the property i s worth. Perhaps the main questions to be asked at t h i s juncture are: Can more people i n the t r a d i n g area get to our s i t e more e a s i l y than that of any other centre? I f not, how many people can reach us without passing our competitors f i r s t ? W i l l our l o c a t i o n a l advantages be as good ten I b i d . , p. 127. 88 years from now as they are today? The types of operations the new centre must compete with are a v i t a l matter, e s p e c i a l l y i n r e l a t i o n to the type of store t h a t i s planned. Does the competition s t r e s s low p r i c e , high q u a l i t y , customer s e r v i c e , s p e c i a l t r a d i n g stamps, l a t e hours, 51 Sunday hours? Once competitive f a c i l i t i e s have been p l o t t e d and t a b u l a t e d , s u b j e c t i v e judgments must be made on the centre's trade i n t e r c e p t i o n p o t e n t i a l , the power of the proposed centre to cap-tur e some measure of the business normally given to the other 52 c e n t r e s . The assessment of the degree of i n t e r c e p t i o n should be based on the c h a r a c t e r i s t i c t h a t shoppers w i l l not go past one centre to another having equal f a c i l i t i e s , and w i l l p a t r o n i z e the nearest centre ( a l l other t h i n g s being equal). Greatest i n t e r -c e p t i o n w i l l occur w i t h the customers of other centres whose nor-mal route passes the subject l o c a t i o n , and the extent of t h i s p o t e n t i a l must be gauged from the survey of competition o u t l i n e d above. I l l such questions regarding the competitive c l i m a t e w i t h i n which the proposed centre must operate w i l l have a d i r e c t bearing on the p o t e n t i a l consumer patronage and the p o t e n t i a l s a l e s volume which w i l l be a v a i l a b l e to the new centre. 51 I b i d . , p. 79. §§ V. Gruen and L. Smith, Shopping Towns USA: The Planning of  Shopping Centres, New York, Reinhold P u b l i s h i n g Corp., I960, p. 35. 53 Nelson, op. c i t . , p. 54. 89 Market Share Of equal importance to the n e c e s s i t y of estimating the t o t a l p o t e n t i a l r e t a i l expenditure i n the trade area i s the n e c e s s i t y to evaluate a centre's prospects f o r p e n e t r a t i n g t h i s trade area and capturing a s a t i s f a c t o r y share of the market 54 expenditure p o t e n t i a l . I t i s t h i s share which i s considered to be the centre's p o t e n t i a l s a l e s volume. Market share i s the pro-p o r t i o n of t o t a l p o t e n t i a l s a l e s t h a t a store or centre captures 55 from a given area. To estimate what percentage of the t o t a l r e t a i l expendi-t u r e of the area w i l l be a t t r a c t e d to the p r o j e c t e d shopping centre i s a very d i f f i c u l t t a s k , and i s commonly subject to e r r o r s i n judgment. The developer d e s i r i n g to open a centre i n a new l o c a t i o n , and who has the experience of s a l e s volumes r e a l i z e d i n other c e n t r e s , often compares the p o p u l a t i o n and buying power of the trade areas of operating centres with t h a t of the trade area f o r the new l o c a t i o n . Various methods of a s c e r t a i n i n g market share are discussed i n l a t e r chapters but the determination of market share commonly i n v o l v e s studying the r e p u t a t i o n of the tenants, s i z e of the centre, competition, access, t r a n s p o r t a t i o n f a c i l i t i e s , income d i s t r i b u t i o n , the nature and extent of merchan-d i s e o f f e r e d i n the centre, and i n f a c t most of the other f a c t o r s mentioned i n t h i s chapter. Saul B. Cohen and ¥. Applebaum, "Major Considerations i n E v a l u a t i n g a Store S i t e , " i n Kornblau, op. c l t . , p. 9 3 . 5 5 I b i d . 90 S i t e F a ctors There are v a r i o u s f a c t o r s concerning the centre i t s e l f which, i f considered when planning the f a c i l i t y , can create l o c a t i o n a l advantages f o r the centre which i n t u r n enhance i t s a t t r a c t i v e power. L o c a t i o n i t s e l f i s not the only f a c t o r determining the l e v e l of success of the o p e r a t i o n , or even the business volume. Centres t h a t o f f e r the best r e t a i l i n g f a c i l i t i e s can expect to outperform t h e i r i n f e r i o r competitors. I f a developer can develop the dominant, most a t t r a c t i v e f a c i l i t i e s i n the area, then he can expect to achieve a higher l e v e l of s a l e s than i f poorer f a c i l i t i e s were developed. Therefore, the planned character of the new f a c i l i t i e s can have an a l l - i m p o r t a n t bearing on the centre's expected s a l e s volume. The f o l l o w i n g can be considered a t t r a c t i v e aspects of the centre: s t o r e s i z e s and centre s i z e ; a t t r a c t i v e design and l a y o u t ( a t t r a c t i v e decor, good i n t e r - s t o r e c i r c u l a t i o n , covered m a l l s , a i r c o n d i t i o n i n g ) ; s t o r e and tenant-types; merchandise mix, merchandising a b i l i t y of the tenants, breadth of s e l e c t i o n , range of s i z e s , c o l o u r s , and s t y l e s ; r e g u l a r l y competitive p r i c e s and market-oriented p r i c i n g p o l i c i e s ; the r e p u t a t i o n of the centre and the r e p u t a t i o n of i t s p r i n c i p a l tenant; the image of the centre as to whether or not i t i s h i g h or low q u a l i t y or i s an a t t r a c t i v e and enjoyable place to v i s i t ; the adequacy of the s e r v i c e ; adequate p a r k i n g ; amenities such as r e s t a u r a n t s , r e s t -rooms, and community f a c i l i t i e s ; the hours of business; and the a d v e r t i s i n g and promotional programs. All of these can i n f l u e n c e the l e v e l of business volume which the new centre can expect to achieve. 91 Store S i z e and Centre S i z e As long as the developer i s not r e s t r i c t e d hy land a v a i l a b i l i t y , zoning r e s t r i c t i o n s , or monetary c o n s i d e r a t i o n s , the s i z e of the centre should be c l o s e l y r e l a t e d to the buying p o t e n t i a l of the area to which i t belongs.-' The l a r g e r centres o f f e r a breadth and depth of a s s o r t -ment which serves as a magnet f o r drawing a l a r g e volume of cus-tomers and drawing them from g r e a t e r d i s t a n c e s . With extreme s i z e , a centre may a t t a i n a p o s i t i o n of area dominance, and shoppers tend to be more a t t r a c t e d to a shopping f a c i l i t y as the 57 s i z e of th a t f a c i l i t y i n c r e a s e s . I f a centre i s considerably l a r g e r than any of i t s competitors, then i t s trade area w i l l l i k e l y be more extensive than the trade area of a smaller centre e s p e c i a l l y i f the l a r g e r centre o f f e r s more f u n c t i o n s . But the degree to which a l a r g e centre w i l l enjoy a broader trade area i s of course condi-t i o n e d by l o c a t i o n a l f a c t o r s such as t r a f f i c congestion, road p a t t e r n s , competition, e t c . G e n e r a l l y speaking, the l a r g e r the centre and the more f u n c t i o n s o f f e r e d , the more extensive w i l l be 58 the trade area. I f a new centre i s planned too small to handle the p o t e n t i a l volume w i t h i n i t s trade area, i t may at f i r s t be very s u c c e s s f u l , but e v e n t u a l l y l a r g e r centres o f f e r i n g more func-t i o n s to serve the p o t e n t i a l customers w i l l draw customers away from the smaller centre l e a v i n g i t w i t h a smaller than optimum 56 Kane, op. c l t . , p. 121. 57 Saul B. Cohen and W. Applebaum, "Major Considerations i n E v a l u a t i n g a Store S i t e , i n Kornblau, op. c i t . , p. 9 A . 58 W. Applebaum and Saul B. Cohen, "Guideposts to Store l o c a t i o n S t r ategy," i n Kornblau, op. c i t . , p. 33. 92 trade area and reduced drawing power. In such a case, the centre should e i t h e r have "been planned as a smaller neighbourhood or community centre, or I t s m e r i t s as a l a r g e r r e g i o n a l centre should 59 have been considered. A. Centre S i z e and Cumulative A t t r a c t i o n The theory of cumulative a t t r a c t i o n or cumulative generation s t a t e s t h a t : "A given number of stores d e a l i n g i n the same merchandise w i l l do more business i f they are l o c a t e d adjacent or i n p r o x i m i t y to each other than i f they are widely s c a t t e r e d . " ^ 0 Up to a p o i n t cumulative increments to a centre's a t t r a c t i v e power a r i s e when more stores are grouped together. I t w i l l be noted l a t e r t hat there i s an upper l i m i t to the number of stores which can be grouped together beyond which i n e f f i c i e n c i e s occur. A, grouping of s t o r e s a t t r a c t s a t o t a l s a l e s volume which i s l a r g e r than the sum of the s a l e s volumes each one of them would a t t r a c t s e p a r a t e l y , owing to the extended t r a d i n g area and increased market p e n e t r a t i o n which r e s u l t s from t h e i r mutual a s s o c i a t i o n i n the shopping centre. Of course an adequate market p o t e n t i a l must e x i s t f o r each store i n the centre or t h e i r i n c l u s i o n i n the centre w i l l not augment tha t centre's a t t r a c t i v e power. The combined drawing power of a l l stores i n a r e g i o n a l centre determines the trade area and volume of customer business. Although the outer l i m i t s of a centre's trade area are determined by the drawing power of i t s most powerful s t o r e , every s t o r e i n 59 Saul B. Cohen and W. Applebaum, "Major Cons i d e r a t i o n s , " i n Kornblau, op. c i t . , p. 96. Kelson, op. c i t . , p. 58. 93 the centre draws business from a l l p a r t s of the trade area w i t h an i n t e n s i t y which diminishes at a d i f f e r e n t r a t e w i t h i n c r e a s i n g d i s t a n c e owing to the v a r y i n g d i s t a n c e thresholds f o r d i f f e r e n t c l a s s e s of merchandise. This i s a l s o r e f l e c t e d i n v a r i a t i o n s i n the share of market p o t e n t i a l achieved. The tenant cannot always assume th a t the trade area f o r h i s store w i l l be extended as a r e s u l t of being associated w i t h other s t o r e s , since t h e i r drawing power may be no greater than h i s own. However, g e n e r a l l y speaking, most smaller r e t a i l o u t l e t s do increase t h e i r drawing power by a s s o c i a t i n g with a l a r g e department sto r e i n a r e g i o n a l centre. Furthermore, they o f t e n f i n d t h a t t h e i r share of the market (market pene t r a t i o n ) w i l l be higher due to the h i g h e r drawing power of the centre as a whole. B. Maximum vs . Optimum Centre S i z e Over the years, the tendency has been to construct ever l a r g e r centres. This tendency i s the r e s u l t of an attempt to f i n d the optimum overhead p o i n t - the p o i n t at which average overhead and operating costs are lower per d o l l a r of s a l e s . The competitive f a c t o r i s a l s o somewhat in v o l v e d (on the theory that other things being equal, people p r e f e r to p a t r o n i z e the l a r g e s t mart, which has, presumably, the l a r g e s t s e l e c t i o n ) , as w e l l as the b e l i e f t h a t i n v u l n e r a b i l i t y i n c r e a s e s w i t h s i z e . I t i s c l e a r , however, th a t no one s i z e or design w i l l prove to be the most e f f e c t i v e f o r a l l neighbourhoods and a l l s i t u a t i o n s . There i s a l s o c e r t a i n l y some p o i n t at which increased s i z e w i l l not r e s u l t i n lower operating costs, i n f a c t , at t h i s p o i n t operating costs w i l l i n c r e a s e , # Although there i s recent evidence to suggest that t h i s tendency has diminished. 94 The answer to t h i s question of optimum s i z e i s c r i t i c a l as f a r as l o c a t i o n i s concerned. I t i s not only a question of the cost of the p a r c e l of land i n v o l v e d , but a l s o a question of l o c a -t l o n a l f a c t o r s connected w i t h s i z e . A very l a r g e centre must have a very much l a r g e r t r a d i n g area than a small one, and the need th e r e f o r e f o r access to l a r g e populations i m p l i e s a set of s i t e c h a r a c t e r i s t i c s q u i t e d i f f e r e n t from those of a neighbourhood 61 super market. The most important f a c t o r i n the s i z e d e c i s i o n i s the determination of the optimum number of square f e e t of s e l l i n g area required to s e r v i c e the p o t e n t i a l trade area. Too l a r g e a f a c i l i t y w i l l have low s a l e s per square f o o t , and too small a f a c i l i t y w i l l not be able to serve the p o p u l a t i o n , w i l l become very congested, and w i l l not be able to take advantage of a l l the business t h a t i t might be able to get i f i t were the optimum s i z e . C. S i z e vs. A v a i l a b l e P o t e n t i a l The s i z e of a planned centre should be most d i r e c t l y 62 r e l a t e d to i t s p r o j e c t e d sales p o t e n t i a l , but competitive s i z e , a n t i c i p a t e d t r a d i n g area, growth and other circumstances of l o c a -t i o n must be f a c t o r e d i n t o the d e c i s i o n as w e l l . Furthermore, the s i z e of each tenant's operation must be geared to the market poten-t i a l f o r h i s type of o p e r a t i o n . I t i s apparent that i f one of the i n d i v i d u a l tenants i n the centre has occupied space which i s too l a r g e f o r h i s s a l e s volume p o t e n t i a l , then h i s r e n t s are too high f o r the volume p o t e n t i a l , and h i s p r o f i t a b i l i t y , t h e r e f o r e , w i l l I b i d . , p. 38. I b i d . , p. 146. 95 s u f f e r , endangering h i s a b i l i t y to continue to pay r e n t , which i n t u r n endangers h i s a b i l i t y to remain as a tenant. Of course i n t h i s case the developer stands to l o s e r e n t a l Income which would i n e v i t a b l y a f f e c t h i s p r o f i t l e v e l . Therefore, i t i s very impor-ta n t t h a t the i n d i v i d u a l tenants i n the centre occupy only that space which can provide an optimum s a l e s p o t e n t i a l per square f o o t of area. Questions must be answered such as: W i l l more space increase the volume p o t e n t i a l , w i l l there be enough space to d i s -p l a y t h a t range of goods necessary to capture the maximum p o t e n t i a l a v a i l a b l e i n the trade area, and b a s i c a l l y , what i s the proper amount of space r e q u i r e d to handle any given estimated volume p o t e n t i a l ? A l s o , i s there a good p o p u l a t i o n growth p o t e n t i a l i n the t r a d i n g area? I f there i s , there might be no choice but to b u i l d the l a r g e r f a c i l i t y now or else face the bother of expanding i n two or three years, or even more dangerously, face the prospect of competition moving i n and b u i l d i n g f a c i l i t i e s designed to cap-t u r e the untapped market p o t e n t i a l which cannot be handled at t h i s f a c i l i t y . A centre s i z e t h a t i s j u s t r i g h t today but w i l l be too small i n a year represents as se r i o u s an e r r o r as b u i l d i n g i t too small to begin w i t h . A p r o j e c t i o n should t h e r e f o r e be made of p o s s i b l e business i n c r e a s e s over the per i o d of the l e a s e , and the centre designed to handle t h i s a n t i c i p a t e d i n crease i n volume. D. S i z i n g f o r the Future In p r a c t i c e , shopping centres are o f t e n developed to handle the f u t u r e market p o t e n t i a l , not the e x i s t i n g p o t e n t i a l . ^ 3 I b i d . , p. 145. 96 Such centres are sometimes u n p r o f i t a b l e i n the beginning, because the trade area i s s t i l l i n a growth process, and s a l e s and p r o f i t s may be s u b s t a n t i a l l y below the p r o j e c t e d p o t e n t i a l . However, i n a year or more the increased p o p u l a t i o n i n the trade area and the i n c r e a s i n g f a m i l i a r i t y of the centre i n the area o f t e n r e s u l t i n a d d i t i o n a l s ales that are s u f f i c i e n t to permit the achievement of p r o f i t g o a l s . E. S i z e vs. Required Minimum Sales Per Square Foot Perhaps the most s e n s i b l e method of determining the optimum store space f o r each tenant would be to determine what s a l e s l e v e l per square f o o t each tenant f e e l s i s the necessary minimum before t h e i r operation can become p r o f i t a b l e . Each n a t i o n a l department store and each experienced l o c a l chain store should have a f a i r l y c l e a r i d e a on the s a l e s per square f o o t l e v e l t h a t must be a t t a i n e d before the operation w i l l be p r o f i t a b l e . Taking these s a l e s per square f o o t f i g u r e s , i t i s p o s s i b l e to estimate the s i z e required by d i v i d i n g the s a l e s volume p r o j e c t i o n f o r t hat f a c i l i t y by the necessary s a l e s per square f o o t f i g u r e to a r r i v e at the number of square f e e t necessary to serve that volume p o t e n t i a l . However, i t must be noted that t h i s process i n v o l v e s c i r c u l a r reasoning, since that volume p o t e n t i a l i s i t s e l f based on a p r i o r s i z e assumption. F. Tenant S i z e vs. A f f o r d a b l e Rent The proposed rent has a l a r g e bearing upon store s i z e too, because the rent should be no more than a c e r t a i n percentage of the tenants expected s a l e s . So, f o r example, i f a r e t a i l e r ' s 97 expected s a l e s are $50,000 per month, and from past experience he knows that he can pay no more than 5% of that i n r e n t , then d i v i d i n g through by the rent per square f o o t w i l l give him the number of square f e e t t h a t he can a f f o r d to r e n t . (An example would be: a s t o r e has $30,000 per week p o t e n t i a l and needs $ 2.50 per square f o o t to be p r o f i t a b l e , so 030,000 d i v i d e d by $ 2.50 equals 12,000 square f e e t . ) Therefore i f the weekly s a l e s volume p o t e n t i a l i s determined, and the a n a l y s t or the developer has a s c e r t a i n e d the weekly s a l e s per square f o o t that each tenant type must r e q u i r e to break even and make a p r o f i t , then he d i v i d e s the weekly s a l e s volume p o t e n t i a l f o r each tenant by each tenant's break-even s a l e s per square f o o t to get the number of square f e e t f o r break-even op e r a t i o n . There i s no s o p h i s t i c a t e d formula f o r a n t i c i p a t i n g the number of square f e e t of s e l l i n g area required to handle a p o t e n t i a l volume, but r a t h e r the a n a l y s t makes an e m p i r i c a l survey of r e t a i l types and determines from t h i s survey what s a l e s per square f o o t l e v e l s are considered necessary i n p r a c t i c e . In summary, the centre s i z e and the space that each tenant occupies should c o i n c i d e w i t h the p r o j e c t e d p o t e n t i a l of the trade area. However, i t must always be remembered that the s i z e assumed f o r the centre has a d i r e c t bearing on the s a l e s volume that w i l l l i k e l y m a t e r i a l i z e . Therefore, when esti m a t i n g p o t e n t i a l s a l e s volumes f o r a proposed centre, the estimate w i l l depend to some extent on the p r i o r s i z e assumption: a l t e r a t i o n s i n t h i s s i z e assumption can a l t e r the a t t r a c t i v e power of the centre which w i l l i n t u r n a f f e c t the consumer patronage estimate and the corresponding s a l e s volume estimate. 98 Design and Layout In order f o r the developer to ensure that h i s shopping centre i s a t t r a c t i v e and therefore w i l l draw l a r g e r business volumes, i t i s necessary that h i s l a y o u t be convenient and e f f e c t i v e . For example, the department store should not be l o c a t e d across the parking l o t from a l l the other s t o r e s . The major generator i n the shopping centre must be so placed t h a t entrances and e x i t s from the shopping centre w i l l f o r c e the pedestrians to walk past the other f a c i l i t i e s i n the centre i n order to reach the major generator. I f t h i s i s not done these other stores w i l l be by-passed and w i l l not be very s u c c e s s f u l . The centre as a whole 64 w i l l be l e s s s u c c e s s f u l and p o s s i b l y u n p r o f i t a b l e . Various types of tenants must be placed together so that dead areas are not created, and the centre arranged f o r shoppers' convenience. Store f a c i l i t i e s should i n c l u d e v a r i o u s s e r v i c e shops (barber and beauty f o r example) i n order that the centre provides some of the s e r v i c e s associated w i t h a shopper's goods shopping t r i p . They too must be p r o p e r l y l o c a t e d i n the l a y o u t of the shopping centre. They should not be i n a high t r a f f i c area, because they are not high volume producers, so they would not maximize the p r o f i t a b i l i t y of the centre i n a high t r a f f i c l o c a t i o n . The design of shopping centres i s i n e v i t a b l y t i e d to a s e l e c t i o n of tenant types which must be so arranged as to generate p e d e s t r i a n t r a f f i c throughout the centre. The dominant tenant I s u s u a l l y anxious to gain what he deems to be the most d e s i r a b l e l o c a t i o n . In a shopping centre, i f the department store I b i d . , p. 236. 99 hogs the road frontage and has i t s own parking l o t , there i s no n a t u r a l p e d e s t r i a n flow back past the other stores i n which case 65 these stores s u f f e r . l l s o , i t would be unwise to place the department store at the entrance to the centre because the pedes-t r i a n s would go no f u r t h e r down the m a l l and the v a r i o u s f a c i l i t i e s placed i n the m a l l would receive very l i t t l e t r a f f i c flow past t h e i r windows. The best l a y o u t i s one i n which the f a c i l i t i e s are arranged so as to create a flow-through s i t u a t i o n from one entrance to the other entrance on another side of the centre. S i m i l a r l y , i n a two l e v e l shopping centre, i f one f l o o r i s without a major magnet, then the consumers w i l l not take the t r o u b l e to v i s i t t hat f l o o r . Obviously, the l a y o u t of the centre can c e r t a i n l y a f f e c t the p r o f i t a b i l i t y f o r each tenant, but I t can a l s o have a l a r g e a f f e c t on c r e a t i n g a p l e a s i n g image i n the minds of the con-sumers who v i s i t that centre, a f a c t which increases the consumer's enjoyment of shopping at that centre, and consequently enhances the centre's a t t r a c t i v e power. This t h e s i s i s not concerned w i t h the a c t u a l placement of the i n d i v i d u a l tenant types w i t h i n the shopping centre, except to say that poor l a y o u t examples such as the preceding can a l t e r the a t t r a c t i v e n e s s of the shopping centre and thereby harm i t s drawing power. Therefore, i t i s extremely important that the shopping centre developer employ an a r c h i t e c t who i s thoroughly f a m i l i a r with the p r i n c i p l e s of s u c c e s s f u l shopping centre design so that he w i l l ensure that the l a y o u t enhances the shopping centre's drawing power and i s not d e t r i m e n t a l to i t . G e n e r a l l y I b i d . , p. 243. 100 speaking, s t o r e s e l e c t i o n should he made i n accordance with the volume estimates determined i n the economic study, and the arrange-ment should ensure compatible groupings since they enhance the centre's drawing power. B r i g h t , a t t r a c t i v e , c o l o u r f u l decor, modern a e s t h e t i c design and m a t e r i a l s , covered m a l l s , a i r c o n d i t i o n i n g , and spaciousness a l s o enhance the centre's a t t r a c t i v e image which a f f e c t s i t s drawing power. Store Types - Tenant Types In each shopping centre, there i s t h e o r e t i c a l l y a best s e l e c t i o n of tenants which w i l l generate the most business and produce the most income. Although i n many cases t h i s w i l l not be p o s s i b l e , the developer should nevertheless attempt to come as cl o s e to t h i s i d e a l as p o s s i b l e . In judging tenants, the developer should examine t h e i r a d v e r t i s i n g budget, apparent aggressiveness, completeness of stock, r e p u t a t i o n , merchandising a b i l i t y , s t a b i l i t y , generating power, p r i c i n g p o l i c i e s , t h e i r v a r i o u s o f f e r i n g s , and whether or not they are geared to supply goods to the low income, middle income or h i g h income groups t h a t are found i n t h i s p a r t i c u l a r trade area. Every shopping centre has what are known as key tenants and secondary tenants. The key tenant i n a r e g i o n a l shopping centre would be a department s t o r e , and the key tenant i n the sma l l e r centres might be a supermarket. Smaller tenants pay hi g h e r rent charges per square f o o t than key tenants, since key tenants are given a concession to enter the centre as a tenant i n the f i r s t p l a c e . 101 Apart from the key tenants, the type and required area of each tenant w i l l he d i r e c t l y r e l a t e d t o : 1) The amount of trade done i n any p a r t i c u l a r good by the key tenant. 2) The estimated p o t e n t i a l s a l e s as c a l c u l a t e d i n the economic survey. A. Tenants vs. P o t e n t i a l L o c a t i o n f i n d i n g s have a major bearing on which tenants should be included i n the centre, i n the sense that i t must be determined t h a t p o t e n t i a l e x i s t s f o r that type of tenant i n t h a t c e n t r e , and then beyond t h a t what amount of space i s required f o r t h a t tenant i n the centre. The developers should conduct a market survey of the competition e x i s t i n g f o r each f u n c t i o n which he plans to i n c l u d e i n h i s shopping centre i n order to i n s u r e adequate s a l e s p o t e n t i a l s t i l l e x i s t s f o r the tenant type t h a t he i s pro-posing to i n c l u d e . B. Tenants as A t t r a c t o r s The tenant types a v a i l a b l e In a centre w i l l have a major bearing on the centre's a t t r a c t i v e power i n i t s trade area. Per-haps the most o v e r r i d i n g c o n s i d e r a t i o n i s that the tenant o f f e r i n g s w i t h i n the centre match as c l o s e l y as p o s s i b l e the p o t e n t i a l i n t h a t centre's trade area. The b e t t e r the match, the more a t t r a c -t i v e the centre w i l l be to i t s trade area. The more a t t r a c t i v e the centre, the more business w i l l accrue to the centre. I f the tenant s e l e c t i o n does not match the trade area, t h i s w i l l be d e t r i m e n t a l to the centre's a t t r a c t i v e power. In s e l e c t i n g major tenants f o r a shopping centre, i t i s important to r e a l i z e that b e t t e r known tenants very o f t e n have b e t t e r consumer acceptance since many of the people i n a trade 102 area already shop at t h e i r s t o r e s i n other l o c a t i o n s . Furthermore, i t i s a l s o important to r e a l i z e t h a t the a d v e r t i s i n g programs c a r r i e d on by these b e t t e r tenants may have a s i g n i f i c a n t l y broader coverage i n the market area because of t h e i r l o c a t i o n s elsewhere i n the general r e g i o n , and t h i s higher-powered a d v e r t i s i n g can have a s i g n i f i c a n t impact on the drawing power of the centre. I f the tenant I s w e l l known to shoppers In the area, and I f he already has an extensive a d v e r t i s i n g program, then he w i l l l i k e l y p l a y a s i g n i f i c a n t r o l e i n drawing customers to t h i s centre, and w i l l have b e t t e r market acceptance which improves the new centre's p r o b a b i l i t y of success. 0. Tenant Mix A balanced tenant mix means that there i s an I d e a l group 66 of d i f f e r e n t types of stores i n the shopping centre. The tenant mix i s Important f o r two reasons. F i r s t , the success of the centre depends g r e a t l y on the shopper being able to f i n d the v a r i e t y of Items that he r e q u i r e s In a one-stop shopping e x p e d i t i o n . Therefore there i s a great advantage to having as many types and l i n e s of merchandise as p o s s i b l e a v a i l a b l e to that shopper. Secondly, the v a r i e t y of merchandise and tenants i n a centre must be balanced so that there i s not an excessive d u p l i c a t i o n of goods and s e r v i c e s . Interviews w i t h consumers i n the trade area are i n -v a l u a b l e i n determining t h e i r a t t i t u d e s towards v a r i o u s types of L. Smith, and V. Gruen, "How to P l a n Successful Shopping Centres," A r c h i t e c t u r a l Forum, March, 1954, p. 145. 103 goods and where they shop f o r them. I f i t appears t h a t good f a c i l i t i e s are l a c k i n g f o r c e r t a i n q u a l i t y and p r i c e ranges i n women's c l o t h i n g or f u r n i t u r e and appliances f o r example (as evidenced by the l a r g e percentage of shoppers l e a v i n g the area to shop elsewhere f o r these items) then the survey p o i n t s out tenant-type p o t e n t i a l s and produces i n f o r m a t i o n which can be i n v a l u a b l e i n planning tenancies, merchandise mix, q u a l i t y range, p r i c e range, and breadth of s e l e c t i o n , a l l of which have a d i r e c t i n -f l u e n c e on the centre's a t t r a c t i v e power. Merchandise Mix Merchants have recognized d i f f e r e n c e s between consumers shopping In downtown and suburban centre s t o r e s . F a m i l i e s i n the suburbs are t y p i c a l l y home-owning, home-entertaining, c h i l d r a i s i n g , i n f o r m a l , and y o u t h f u l consumers. They need sportswear and casual c l o t h i n g , c h i l d r e n ' s wear, home f u r n i s h i n g s , appliances, and household convenience items. These items are more i n demand i n the suburbs. The suburban consumers t y p i c a l l y are from d i f f e r e n t income c l a s s e s , have d i f f e r e n t t a s t e s , and r e q u i r e d i f f e r e n t mer-chandising p o l i c i e s i f t h e i r patronage i s to be captured. They w i l l be a t t r a c t e d to the r e t a i l o u t l e t s which t a i l o r t h e i r merchan-d i s e s e l e c t i o n to t h i s market. Obviously then the centre's a b i l i t y to a t t r a c t consumer patronage i s dependent on i t s a b i l i t y to match i t s merchandise s e l e c t i o n to the character of the market i t wishes to a t t r a c t . As mentioned p r e v i o u s l y , the gre a t e r the number of s e l e c t i o n s o f f e r e d at a r e t a i l o u t l e t , the gr e a t e r i s the consumer's expectation t h a t h i s shopping t r i p w i l l be s u c c e s s f u l . Consequently i t might be expected t h a t consumers w i l l show a w i l l i n g n e s s to 104 t r a v e l g r e a t e r d i s t a n c e s f o r any good or s e r v i c e as the number of o f f e r i n g s i n c r e a s e at a p a r t i c u l a r f a c i l i t y . Furthermore, the gr e a t e r the breadth and depth of s e l e c t i o n In q u a l i t y , s t y l e s , c o l o u r s , s i z e s , and p r i c e s o f f e r e d , the more a t t r a c t i v e w i l l be the r e t a i l f a c i l i t y which o f f e r s t h i s s e l e c t i o n . •A. Merchandise Mix and A t t r a c t i v e Power Each tenant i n the shopping centre must t a i l o r h i s mer-chandising, stock s e l e c t i o n , p r i c e s and s t y l e s c a r e f u l l y to the income and buying h a b i t s of the people i n the trade area. He must know whether these consumers are on "champagne budgets" or "beer budgets." He must appeal to the s p e c i f i c character of the market he wishes to a t t r a c t through merchandising p o l i c i e s a f f e c t i n g the q u a l i t y , p r i c e , assortment, and depth of h i s s e l e c -t i o n . Consumers t y p i c a l l y shop l o c a l l y f o r convenience items; they p a t r o n i z e higher-order centres f o r such items as f u r n i t u r e and appliances where more choice i n s t y l e , p r i c e , and q u a l i t y are necessary; and they p a t r o n i z e h i g h e s t - o r d e r centres f o r c l o t h i n g or such s t a t u s items which demand great care i n s e l e c t i o n . P r i c e , q u a l i t y , and s e l e c t i o n vary according to Income c l a s s as determi-nants of consumer patronage. Higher income groups may be more q u a l i t y or s t y l e conscious and they w i l l tend to search out and p a t r o n i z e those o u t l e t s which o f f e r e i t h e r a broader s e l e c t i o n i n s t y l e s and q u a l i t i e s or h i g h e r - p r i c e d , h i g h e r - s t y l e d , b e t t e r q u a l i t y items. Lower Income c l a s s e s who are more r e s t r i c t e d b u d g e t a r i l y may be more p r i c e conscious and t h e i r shopping patronage w i l l r e f l e c t t h e i r more pronounced pr i c e - c o n s c i o u s n e s s . A. centre's 105 a b i l i t y to a t t r a c t patronage - w i l l depend on i t s a b i l i t y to adjust i t s merchandising appeal to match the f a c t o r s which motivate con-sumers i n the trade area. P r i c i n g P o l i c i e s I t i s necessary to acquire data on p r i c e s a c t u a l l y i n f o r c e i n the area, and then a s c e r t a i n what p r i c e s should be charged by the tenants i n the proposed centre to be competitive w i t h others i n the trade area. I f they are h i g h e r , t h i s may d e t r a c t from the a t t r a c t i o n of the centre, but i f on the other hand they are competitive and compatible w i t h the character of the trade area, t h i s w i l l enhance the shopping centre's drawing power. Image The image which a shopping centre p r o j e c t s has a d e f i n i t e e f f e c t on the centre's drawing power, although the exact e f f e c t i s d i f f i c u l t to measure. Two e s s e n t i a l l y i d e n t i c a l s tores with e s s e n t i a l l y s i m i l a r market p o t e n t i a l s , but with d i f f e r e n t images, w i l l have d i f f e r e n t business volumes. S i m i l a r l y , the share of the market secured by one centre i n i t s trade area can be completely d i f f e r e n t from t h a t of a s i m i l a r type of centre operating w i t h i n an i d e n t i c a l trade area. This r e f l e c t s the f a c t t h a t the image of the centre can a f f e c t the centre's drawing power and market share. The consumer's image of a centre i s formed on the b a s i s of many f a c t o r s , i n c l u d i n g the centre's age, promotional programs, merchandise mix, p r i c e s , s e r v i c e s , personnel and p h y s i c a l f a c i l i -t i e s . The p h y s i c a l c h a r a c t e r i s t i c s of the centre I n c l u d i n g 106 landscaped areas, f o u n t a i n s , ponds, s c u l p t u r e , advertisement booths, r e s t a u r a n t s , benches, I n t e r i o r and e x t e r i o r a r c h i t e c t u r a l design, l i g h t i n g , modern sto r e f r o n t s , and colour a l l increase and enhance the a t t r a c t i v e n e s s of the centre. When a centre's image Is unique, and customers l i k e i t , the trade area f o r that centre i s l i k e l y to extend f a r t h e r and market p e n e t r a t i o n I s l i k e l y to be more Intense. I f many st o r e s i n the centre develop an image which i s unique and p l e a s i n g to the customers, the e n t i r e centre w i l l b e n e f i t from the r e s u l t i n g Increments to a t t r a c t i v e power. Parking Since the outstanding c h a r a c t e r i s t i c of the shopping centre i s the a v a i l a b i l i t y of f r e e p a r k i n g , i t i s appropriate t h a t the parking requirements be studied as p a r t of the process of a n a l y z i n g the centre. The need f o r parking i s w e l l recognized, p a r t l y because parking spaces are a v i s i b l e t a n g i b l e asset of the f a c i l i t y , but mainly because the consumer often equates good park-i n g w i t h ease of a c c e s s i b i l i t y by automobile. A. Adequacy of Par k i n g F a c i l i t i e s The main c o n s i d e r a t i o n i n determining the amount of parking to be provided should be that the parking f a c i l i t i e s be adequate to handle the peak l o a d of any average week. Without t h i s c a p a c i t y , the centre w i l l s u f f e r a l o s s of patronage as con-sumers w i l l f i n d i t too d i f f i c u l t to get near the centre i n these Nelson, op. c i t . , p. 252. 107 peak volume p e r i o d s . On the other hand, sometimes there i s a d i s -advantage i n having too much parking since a l a r g e bare parking l o t 68 makes the shopping centre look unsuccessful and u n a t t r a c t i v e . G e n e r a l l y speaking though, up to a p o i n t , each a d d i t i o n a l parking space can c o n t r i b u t e to more sales f o r the centre. I f the centre can handle a d d i t i o n a l business, and there i s not enough parking to handle t h a t business, then the p r o v i s i o n of a d d i t i o n a l parking space would increase the s a l e s volume of the centre. Obviously, then, adequate parking f a c i l i t i e s are a b s o l u t e l y necessary i f the centre i s to a t t a i n i t s maximum p o t e n t i a l s a l e s . The shopping centre developer, then, would be wise i n p r o v i d i n g an allowance f o r expansion i n parking f a c i l i t i e s , i n case i t becomes obvious a f t e r opening t h a t i n i t i a l p arking p r o v i s i o n s were inadequate and were h i n d e r i n g the centre's a b i l i t y to achieve i t s maximum p o t e n t i a l . The parking requirements f o r the centre can only be ascertained a f t e r a n a l y z i n g the f o l l o w i n g f a c t o r s : the s i z e of the centre, the types of tenants, and the merchandise o f f e r e d ; the s i z e of the trade area; the Incidence of car ownership; and the extent to which patronage depends on the motorized shopper (and the extent to which inadequate p u b l i c t r a n s p o r t a t i o n coverage of the trade area n e c e s s i t a t e s automotive t r a n s p o r t ) . 69 P a r k i n g l o t s should be s p e c i f i c a l l y designed. They are more advantageously placed i f they are i n f r o n t of the centre or v i s i b l e from the main approach a r t e r i e s where shoppers can see I b i d . , p. 2 5 3 . I b i d . , p. 2 5 8 . 108 70 tha t they are a c c e s s i b l e . Entrance and e x i t from the l o t and ease of c i r c u l a t i o n w i t h i n i t are as important as an adequate s i z e . Shoppers should not have to walk great distances from t h e i r cars to the nearest s t o r e . I l l of these c o n s i d e r a t i o n s can be i n -v a l u a b l e aids to maximizing the sa l e s p o t e n t i a l f o r the centre, since they provide g r e a t e r convenience to the shopper and thereby reduce the f r i c t i o n or costs of making that shopping t r i p which i n t u rn makes the centre a more a t t r a c t i v e p lace to v i s i t . Amenities To be a s u c c e s s f u l venture f o r the developer and to produce the h i g h e s t business volume f o r the tenants, a shopping centre should be designed to be more than j u s t a group of stores w i t h f r e e p a r k i n g . I t i s extremely d i f f i c u l t to a l t e r the normal c i r c u l a t i o n p a t t e r n s of consumers, and the opportunity to park w i l l not accomplish t h i s alone. There should be i n a d d i t i o n a number of amenities which create more pleasant and d e s i r a b l e surroundings. Restaurants, places to s i t down, p l a y areas f o r c h i l d r e n , r e s t rooms, b r i g h t and c o l o u r f u l new store f r o n t s , p l a n t i n g and f o u n t a i n s , and music are a l l designed to make the 71 centre a more convenient, pleasant place to shop. S p e c i a l a t t e n t i o n i n the planning stages can be given to d e t a i l s which would tend to make the centre a place which serves the community, a market place to which people w i l l come not only f o r shopping, but f o r s o c i a l and r e c r e a t i o n a l a c t i v i t i e s I b i d . , p. 253. I b i d . , p. 247. 1 0 9 as w e l l . With the i n c o r p o r a t i o n of community f a c i l i t i e s , the centre p l a y s more than a s t r i c t economic r o l e , and i n t h i s way o f f e r s more i n the way of a t t r a c t i o n s . Auditoriums are some-times included to strengthen the i d e n t i t y w i t h the community and community r e l a t i o n s . Skating r i n k s , howling a l l e y s , t h e a t r e s , and l a r g e covered malls s u i t a b l e f o r l a r g e p u b l i c gatherings are common. Such f a c i l i t i e s o f t e n f a c i l i t a t e promotional programs, bazaars, and s p e c i a l events which do much to enhance the a t t r a c -t i v e power of the centre. The centre assumes some of the charac-t e r of the o l d - s t y l e market places i n the sense t h a t i t o f f e r s i n t e r e s t i n g d i v e r s i o n s . Such amenities have an amazing Impact on consumers as f a r as the image of the centre i s concerned, and i n c r e a s e i t s a t t r a c t i v e n e s s and a t t r a c t i v e power. The greater the a t t r a c t i v e power, the more l i k e l y the centre w i l l do more business, and i f the amenities help to increase that a t t r a c t i v e power they are u s u a l l y worth f a r more than t h e i r c o s t . Hours of Business The hours of business adopted by a centre can have a s i g n i f i c a n t e f f e c t on the drawing power of that centre. I t must be r e a l i z e d t h a t today more and more women are working a f t e r they are married, and i n many cases they can only shop i n the evenings or on weekends. I f a s t o r e wishes to remain competitive with other stores who o f f e r evening or weekend hours, i t must also o f f e r those hours or the l i k e l i h o o d i n c r e a s e s that i t w i l l not r e a l i z e the f u l l s a l e s p o t e n t i a l a v a i l a b l e to i t . An important c h a r a c t e r i s t i c of r e t a i l i n g i s the time convenience i n shopping. Stores must a s c e r t a i n the hours of the day or week when i t w i l l be convenient f o r t h e i r customers to buy 110 the goods and s e r v i c e s they want. I t i s u s u a l l y advantageous f o r the shopping centre tenants to c a r e f u l l y consider what hours they w i l l remain open f o r business, a d e c i s i o n which w i l l depend on many f a c t o r s i n c l u d i n g the types of merchandise o f f e r e d , the economic and s o c i a l c l a s s e s of the c l i e n t e l e , and the character of the l o c a t i o n . Each tenant w i l l make h i s own d e c i s i o n hut i t i s to t h e i r advantage to c o l l a b o r a t e on the d e c i s i o n so t h a t the centre, as a whole, can o f f e r s e r v i c e s over s p e c i f i e d d a i l y p e r i o d s . T y p i c a l l y , when the department s t o r e s are open so are the other s t o r e s . R e s t r i c t e d shopping hours can i n many instances r e s t r i c t patronage i f the f a m i l y car i s not a v a i l a b l e during those hours 72 f o r shopping t r i p s . More and more shoppers are demanding evening hours due to the f a c t more consumers only have time to shop i n the evening or a f t e r work. In North America, the preference f o r evening shopping hours i s i l l u s t r a t e d by the f o l l o w i n g survey f i n d i n g s : "the duration of the stay was 51 minutes as compared w i t h 29 minutes during the day; 31$ of a l l shopping t r i p s were made a f t e r 6:00 p.m.; i n community centres, up to 60% of a l l trade 73 was done a f t e r 6:00 p.m.; and i n r e g i o n a l centres up to 4 0 $ . " ^ The percentage of trade done on each day of the week i s highest on Thursday, F r i d a y and Saturday owing to two f a c t o r s , the f i r s t being the longer hours normally provided on those three days, and secondly, the t r a d i t i o n a l shopping p a t t e r n which emphasizes end-of-week shopping. Evening hours can create some s h i f t problems 72 Jones, op. c i t . , p. 54. 73 Donald 1. C u r t i s s , Operation Shopping Centres, Urban Land I n s t i t u t e , Washington, D. C , 1961, pp. o and l b b . I l l f o r the v a r i o u s tenants of the shopping centre but i f they do not open i n the evening, they run the r i s k of l o s i n g business to other r e t a i l e r s who do remain open. Obviously then, convenient shopping hours can have a s i g n i f i c a n t bearing on the a b i l i t y of the centre to a t t r a c t i t s f u l l p o t e n t i a l patronage. A d v e r t i s i n g That considerable b e n e f i t s can accrue from an e f f e c t i v e , powerful a d v e r t i s i n g and promotional program i s w e l l recognized although i t i s a d i f f i c u l t problem to measure the b e n e f i t s q u a n t i t a t i v e l y . The types of customer appeals used i n the centre's a d v e r t i s i n g program are normally geared to the character of both the trade area and the centre I t s e l f . P r i c e , q u a l i t y , v a r i e t y , or s e r v i c e may be stressed i n media a d v e r t i s i n g through magazines, trade j o u r n a l s , newspapers, d i r e c t m a i l , r a d i o , and t e l e v i s i o n . S p e c i a l events, bazaars, h o l i d a y promotions, and seasonal pro-motions are common centre-wide events, i l l such appeals attempt to a t t r a c t more consumers to the centre. Since the p o t e n t i a l s a l e s volume estimate f o r the centre i s dependent on the a t t r a c t i v e power of the centre, and since the a t t r a c t i v e power can be increased w i t h an e f f e c t i v e a d v e r t i s i n g program, a c e r t a i n e f f e c t i v e n e s s i n a d v e r t i s i n g must be assumed when gauging the new centre's a t t r a c t i v e power which w i l l i n turn become a key determinant i n the d e r i v a t i o n of the s a l e s volume estimate. 112 Summary of Factors In t h i s chapter, the i n t e n t i o n has been to enumerate and examine the v a r i o u s arguments, assumptions, concepts, and r e l a t i o n s h i p s thought to be v a l i d In a d i s c u s s i o n of the f a c t o r s which i n f l u e n c e consumer patronage behaviour. The m a t e r i a l de-veloped here w i l l be r e f e r r e d to throughout the remainder of t h i s t h e s i s , and was presented w i t h the i n t e n t i o n of s p e c i f y i n g the " b u i l d i n g b l o c k s " which a n a l y s t s and model b u i l d e r s should con-s i d e r as "raw m a t e r i a l s " when developing procedures and models to a i d i n the process of sales volume e s t i m a t i n g . In view of the l e n g t h of t h i s chapter and the i n v o l v e d d i s c u s s i o n on a great v a r i e t y of separate t o p i c s , and f o r the sake of c l a r i t y , the main p o i n t s have been extracted and b r i e f l y summarized below. A. General Considerations There are a number of r e g i o n a l and demographic f a c t o r s which a f f e c t the s a l e s p o t e n t i a l a v a i l a b l e to a new centre. These would i n c l u d e : 1. Economic outlook - the h e a l t h and growth of the r e g i o n a l economy. 2. P o p u l a t i o n - the number, d i s t r i b u t i o n , composi-t i o n , d e n s i t y , growth p a t t e r n , Income, expendi-t u r e s , and buying h a b i t s of the p o p u l a t i o n . 3. Income l e v e l s - they a f f e c t the percentage of income spent f o r v a r i o u s products of a l l types. The expenditure p a t t e r n s of consumers vary 113 with t h e i r income l e v e l , which d i r e c t l y a f f e c t s expenditures f o r d i f f e r e n t product c l a s s e s . 4. Employment - the character of employment i n the region a f f e c t s purchasing power, spending p a t t e r n s , shopping h a b i t s , and merchandise requirements. B. Resistance Factors Of the f a c t o r s and i n f l u e n c e s which a f f e c t consumer s p a t i a l behaviour, some tend to i n h i b i t consumer patronage. Such f a c t o r s can be described as r e s i s t a n c e f a c t o r s . Distance takes time, costs money, and r e t a r d s trade movements. Any circumstances which w i l l i n c rease the costs of making a t r i p (costs i n the sense of time, e f f o r t , money, i n -convenience) w i l l l e s s e n the l i k e l i h o o d that a consumer w i l l under-take the t r i p . Resistance tends to i n c r e a s e as distance increases and t r i p frequencies d e c l i n e . Trip d i s t a n c e s tend to be lower as t r i p frequencies i n c r e a s e . Distance i n time u n i t s more a p t l y represents the costs perceived by the consumer i n making the t r i p . The impact of distance v a r i e s according t o : the type of merchan-d i s e sought; the s e l e c t i o n , q u a l i t y , p r i c i n g , and depth of mer-chandise sought; the degree of importance to the consumer of c e r t a i n required goods; the degree of s e l e c t i v i t y i n the purchase d e c i s i o n ; the s o c i a l s i g n i f i c a n c e attached to c e r t a i n shopping requirements; p s y c h o l o g i c a l blocks caused by v a r i o u s geographical b a r r i e r s ; and consumer w i l l i n g n e s s to s u b s t i t u t e other merchandise. A c c e s s i b i l i t y , t r a f f i c congestion, and road c a p a c i t i e s can a l t e r the e f f e c t of d i s t a n c e . 114 The number of competitors, t h e i r merchandising p o l i c i e s , s i z e , age, q u a l i t y and e f f e c t i v e n e s s , a t t r a c t i v e n e s s , and parking f a c i l i t i e s a l l a f f e c t the patronage and sales volume which a proposed centre can expect to capture. C. A t t r a c t i o n Factors The a t t r a c t i v e power of the centre v a r i e s according t o : the extent to which merchandise o f f e r i n g s match the character of the trade area and the demands of the consumers; store s i z e s and the o v e r a l l s i z e of the centre; a t t r a c t i v e design and l a y o u t ; tenant-types; merchandise mix, breadth of s e l e c t i o n , range of c o l o u r s , s i z e s , and s t y l e s ; competitive and market-oriented p r i c i n g p o l i c i e s ; r e p u t a t i o n of the centre; the pr o j e c t e d image of the centre; adequacy of parking f a c i l i t i e s ; amenities; hours of business; and promotional e f f e c t i v e n e s s . The a t t r a c t i v e power of the centre v a r i e s w i t h the above f a c t o r s , but the importance and e f f e c t of each v a r i e s i n turn according to the f a m i l y s i z e , age groupings, income s t a t u s , and s o c i a l s t a t u s of the consumers i n the area. (Although i t has not been e x p l i c i t l y s t a t e d , i t should be apparent that many of the above co n s i d e r a t i o n s are aspects of e f f e c t i v e shopping centre management. I t should t h e r e f o r e be evident that the a t t r a c t i v e power of the centre can be enhanced w i t h good management.) -PART B TECHNIQUES. IN LOCATION ANALYSIS CHAPTER V METHODS FOR DETERMINING TRADE AREA POTENTIAL I n t r o d u c t i o n I t I s one t h i n g to understand what a t r a d i n g area i s and what f a c t o r s are important i n the measurement of that trade area, hut i t i s q u i t e another matter to apply t h i s knowledge i n the case of a centre yet to he b u i l t . Having reviewed the b a s i c conceptual f a c t o r s and i n t e r r e l a t i o n s h i p s which i n f l u e n c e con-sumer patronage behaviour, the task now i s to examine the va r i o u s p r a c t i s e d methods of d e f i n i n g the p o t e n t i a l trade area and e s t i -mating the s a l e s p o t e n t i a l f o r a proposed centre. S p e c i f i c a l l y , the purpose i s to determine how adequately the preceding f a c t o r s and i n t e r r e l a t i o n s h i p s are recognized and q u a n t i f i e d i n the methods, and a l s o to what extent these methods are capable of generating r e l i a b l e , accurate r e s u l t s based on sound, o b j e c t i v e measurements. With t h i s o b j e c t i v e i n mind, the f o l l o w i n g d i s c u s s i o n w i l l b r i e f l y survey a few of the commonly p r a c t i s e d approaches. Ge n e r a l l y speaking, the methods to be examined f o l l o w a s e q u e n t i a l procedure which i n c l u d e s : the establishment i n advance of a t e n t a t i v e t r a d i n g area f o r a n a l y s i s ; the assumption of a t e n t a t i v e conceptual image of the proposed shopping centre f o r the # purpose of estimating the a t t r a c t i v e power of the envisaged f a c i l i t i e s ; the determination of the t o t a l disposable income of the r e s i d e n t s of the area through p o p u l a t i o n s t u d i e s * income a n a l y s i s , and consumer expenditure s t u d i e s ; an a n a l y s i s of com-p e t i t i v e drawing power; the study of consumer movements, h a b i t s , a t t i t u d e s , and c h a r a c t e r i s t i c s to determine the l i k e l i h o o d of 116 patronage from v a r i o u s p a r t s of the trade area; and the r e l a t i o n of the f i n d i n g s to the subject s i t e , culminating i n an estimate of the sales volume p o t e n t i a l f o r the proposed c e n t r e . 1 Market Share Method As p r e v i o u s l y discussed i n Chapter I I I , the f i r s t step i n the research program n e c e s s i t a t e s s e t t i n g up a l i k e l y hypothesis (or a range of hypotheses) as to the most l i k e l y s i z e and character of the proposed f a c i l i t i e s i n order to estimate the a t t r a c t i v e power of those hypothesized f a c i l i t i e s . This i s necessary before the t r a d i n g area can be d e l i n e a t e d , since the boundary of a centre's area of i n f l u e n c e (trade area boundary) depends on the s i z e and character of the f a c i l i t i e s and t h e i r a b i l i t y to a t t r a c t patronage. I f subsequent research i n d i c a t e s that the i n i t i a l assumption as to the s i z e of the envisaged f a c i l i t i e s was i n c o r r e c t , then the an a l y s t i s supposed to adjust h i s i n i t i a l assumption. He begins by "guessing" what s i z e and type of centre w i l l be s u c c e s s f u l , analyzes the p o t e n t i a l f o r that s i z e , and i f necessary a l t e r s h i s i n i t i a l guess s u c c e s s i v e l y u n t i l the optimum s i z e i s discovered. However, a f t e r having made t h i s i n i t i a l assumption, the problem I s to define the l i m i t s of the trade area i n accordance w i t h the hypothesized a t t r a c t i v e power of the hypothesized f a c i l i t i e s . I t i s at t h i s stage t h a t s u b j e c t i v e judgment enters i n t o the d e c i s i o n . In most cases the ana l y s t using t h i s method must a r b i t r a r i l y decide 2 on a boundary f o r the trade area. U s u a l l y the p r a c t i s e i s to draw 1 Kelson, op. c i t . , pp. 183 - 232 discusses many of the t r a d i t i o n a l methods of sales volume est i m a t i n g and describes the above sequen-t i a l procedure at some l e n g t h . 2 I b i d . , pp. 188 - 90. 117 on a map se v e r a l d r i v i n g - t i m e i s o p l e t h s which r a d i a t e out from the subject s i t e , and then a r b i t r a r i l y decide which d r i v i n g - t i m e i s o -p l e t h i s l i k e l y to represent the maximum dis t a n c e consumers w i l l be w i l l i n g to t r a v e l to the centre. Seldom i s there any p a r t i c u l a r j u s t i f i c a t i o n given f o r the choice of any p a r t i c u l a r d r i v i n g - t i m e d i s t a n c e , except t h a t the choice i s supposedly based on "experience" and i n t u i t i o n as to the maximum distance w i t h i n which consumers w i l l be a t t r a c t e d to the centre given a c e r t a i n hypothesized a t t r a c t i v e power of the subject s i t e (not q u a n t i f i e d ) and given the presence of other competing f a c i l i t i e s ( a l so not q u a n t i f i e d ) . These estimates of the maximum d r i v i n g - t i m e can vary widely, f o r example from ten minutes to over an hour depending on the l o c a t i o n , a range which r a i s e s the s u s p i c i o n that the choice of any one p a r t i c u l a r time i s open to considerable question. In any case, the trade area Is s u b j e c t i v e l y and a r b i t r a r i l y d e l i m i t e d according to such a pro-cedure i n conjunction with other f a c t o r s such as geographical b a r r i e r s , p r o x i m i t y of competing centres, and l o c a l a c c e s s i b i l i t y f a c t o r s . G e n e r a l l y speaking the ana l y s t sets the l i m i t s of the trade area at a p o i n t beyond which he f e e l s the business volume 3 coming to the centre w i l l be i n s i g n i f i c a n t or immeasurable. Supposedly, i f i n subsequent f i e l d work, the analyst decides he has made a mistake and the trade area boundary should be f a r t h e r out from the centre (normally as a r e s u l t of personal i n t e r v i e w s which i n d i c a t e that consumers beyond the i n i t i a l l y assumed boundary would indeed be i n t e r e s t e d i n p a t r o n i z i n g the centre) the a n a l y s t simply r e s e t s the boundary f a r t h e r away. Regardless of the a n a l y t i c a l procedure, and e s p e c i a l l y i f comprehensive extensive I b i d . 118 personal Interviews are not conducted, i t i s d i f f i c u l t to place much confidence i n a trade area boundary determined i n such an a r b i t r a r y manner. Nevertheless, t h i s i s the f i r s t step i n the 4 procedure, the b a s i c s of which are o u t l i n e d below: Step 1) Define the trade area by s u b j e c t i v e l y e s t i m a t i n g the drawing power of the hypothesized f a c i l i t i e s (by guessing the a t t r a c t i v e power of the centre and guessing the distance i n p h y s i c a l or time u n i t s t h a t consumers w i l l be w i l l i n g to t r a v e l i n response to th a t a t t r a c t i v e power, as discussed above). Step 2) The trade area i s subdivided i n t o census d i s t r i c t s or smal l e r s u b d i v i s i o n s depending on the amount of d e t a i l d e s i r e d and the budgeted research expense, or according to v a r i o u s geographic and s o c i a l economic c h a r a c t e r i s -t i c s . The s i z e , growth, and q u a l i t y of the trade area are analyzed along w i t h p o p u l a t i o n growth, income l e v e l s , and the area's general s t a t e of economic h e a l t h . Step 3) The p o p u l a t i o n i n each segment of the trade area i s 6 determined as a c c u r a t e l y as p o s s i b l e . Depending on the year f o r which sales volumes p r o j e c t i o n s are being made, f u t u r e changes i n p o p u l a t i o n are pr o j e c t e d on the b a s i s of employment trends, n a t u r a l i n c r e a s e s or vo l u n t a r y m i g r a t i o n , and p u b l i c p o l i c y on planning and housing g e n e r a l l y . Jones, op. c l t . , pp. 66 - 68. 5 Nelson, op. c l t . , p. 191. 6 I b i d . , p. 197. 119 Interviews are o f t e n conducted throughout the trade area to determine: a) a t t i t u d e s toward e x i s t i n g and proposed f a c i l i t i e s i n terms of s a t i s f a c t i o n , b) shopping h a b i t s and patterns of patronage, c) a t t i t u d e s towards p r i c i n g and merchandise s e l e c t i o n , or what Is demanded i n t h i s area, and d) socio-economic f a c t o r s such as employment s t a t u s , income s t a t u s , s o c i a l s t a t u s , f a m i l y 7 s i z e , and age groups. A c c e s s i b i l i t y s t u d i e s are conducted to a s c e r t a i n : a) time-distance from the proposed s i t e to each s e c t i o n of the trade area, b) road networks and t h e i r t r a f f i c c a p a c i t y , c) automobile incidence and the adequacy of p u b l i c t r a n s p o r t f a c i l i t i e s , d) the l o c a t i o n of each spending u n i t In r e l a t i o n to e x i s t i n g r e t a i l f a c i l i t i e s and the proposed centre, and e) the ease of t r a v e l to g e x i s t i n g r e t a i l f a c i l i t i e s and the proposed centre. E x i s t i n g r e t a i l f a c i l i t i e s must be assessed. Data on competitive stores must g e n e r a l l y be gathered i n f i e l d s t u d i e s . Information may Include: l o c a t i o n of the com-p e t i t i v e f a c i l i t i e s ; type of l o c a t i o n ( f o r example s i n g l e s t o r e , neighbourhood, community or r e g i o n a l c e n t r e ) ; h i s t o r i c a l data about the s t o r e s ' or centres' growth r a t e and the aggressiveness of each competitor; the age, q u a l i t y , design, c o n d i t i o n , and appearance of each st o r e or centre; square f e e t of competitive s e l l i n g pp. 198 - 209. p. 211. 120 area; merchandising p o l i c i e s i n c l u d i n g the q u a l i t y v a r i e t y , p r i c i n g , s p e c i a l l i n e s f e a t u r e d , p r i v a t e brands, and a d v e r t i s i n g p r a c t i c e s ; s t o r e hours; park-i n g f a c i l i t i e s ; consumer acceptance of each f a c i l i t y ; share of the market captured by each o u t l e t ; and the Q estimate of the sales volume achieved by each o u t l e t , ^ a subject which presents i t s own s p e c i a l problems i n measurement. To d i g r e s s f o r a moment, t h i s subject i s b r i e f l y considered below before the d i s c u s s i o n returns to Step 7 i n the general procedure. Interviews i n the biggest centres are f r e -quently h e l p f u l i n e s t a b l i s h i n g the general trade area l i m i t s f o r those centres. In making s a l e s estimates of a competitive f a c i l i t y , the a n a l y s t o f t e n conducts customer i n t e r v i e w s to obtain consumer l o y a l t i e s , p references, i n d i c a t i o n s on p r i c i n g which are favourable to t h a t market and general opinions on the v a r i o u s com-p e t i t i v e o u t l e t s a v a i l a b l e i n the r e g i o n . The most d i f f i c u l t problem i n eva l u a t i n g competitive s t o r e s i s est i m a t i n g s a l e s . The a n a l y s t has no r e l i a b l e set of t o o l s with which to generate s a l e s estimates, but through systematic e f f o r t must attempt to estimate as a c c u r a t e l y as p o s s i b l e . The number of customers p a t r o n i z i n g an o u t l e t provides some i n d i c a t i o n s as to sa l e s l e v e l s . The technique of counting customers i s sometimes employed i n order to I b i d . , pp. 211 - 213-121 compare the number of customers w i t h that of another 10 s t o r e , the s a l e s of which are known. I t should be noted that these methods are of course very s u b j e c t i v e , which i n d i c a t e s the l a c k of more p r e c i s e l y defined q u a n t i t a t i v e t o o l s w i t h which to evaluate competition. Obviously, the more q u a n t i -t a t i v e data a v a i l a b l e to the a n a l y s t , the b e t t e r the l i k e l i h o o d that he can produce an accurate estimate of the impact of competition. The most common approach i n v o l v e s measuring the square footage of store area, which i s then m u l t i p l i e d by a conversion index i n order to a r r i v e at a sales f i g u r e . For example, a conversion index of $5.00 per square f o o t may be a p p l i e d against the number of square f e e t of s e l l i n g area to a r r i v e at an estimate of s a l e s . Conversion i n d i c e s are u s u a l l y based on t y p i c a l indus-t r y performance, or on the experience of i n d i v i d u a l tenant-types i n the centre, or on s u b j e c t i v e " f e e l " or i n t u i t i o n . However, whatever the conversion index used, the a n a l y s t must adjust the s a l e s r e s u l t thereby obtained to r e f l e c t other f a c t o r s such as the s t o r e ' s a s s o c i a t i o n w i t h other generative businesses nearby, the merchandise o f f e r i n g s , store age and appearance, and e f f e c t i v e promotional e f f o r t s . The hazard i n the conversion index approach i s that f o r i n d i v i d u a l s tores a conversion index may be f a r o f f the mark. Therefore, a good deal of caution should be exercised when applying such conversion i n d i c e s . In the f i n a l a n a l y s i s , an accurate sales estimate seems to depend l a r g e l y on the a n a l y s t ' s experience, s k i l l , i n g e n u i t y , and judgment. (* See Curt Kornblau and George L. Baker, "A Guide to E v a l u a t i n g Competition," i n Kornblau, op. c i t . , p. 133. 122 Step 7) Total disposable income of each s e c t i o n of the trade area i s c a l c u l a t e d e i t h e r by m u l t i p l y i n g per c a p i t a income data f o r each s e c t i o n of the trade area by that s e c t i o n ' s p o p u l a t i o n or by m u l t i p l y i n g average f a m i l y income by the number of f a m i l i e s . The r e s u l t a n t f i g u r e i s m u l t i p l i e d by a percentage f a c t o r to a r r i v e at the "disposable" p o r t i o n of that income, or that p o r t i o n a v a i l a b l e f o r r e t a i l expenditure a f t e r the payment of taxes, mortgages, insurance, e t c . Step 8) R e t a i l expenditure f a c t o r s (which are based on n a t i o n a l averages of the percentage of disposable income spent on each type of merchandise) are a p p l i e d to the t o t a l d isposable income to o b t a i n the percentages of that income normally spent on each type of merchandise. These are t o t a l l e d f o r each s e c t i o n of the trade area and i n d i c a t e the t o t a l r e t a i l expenditure p o t e n t i a l of the trade area f o r the types of merchandise o f f e r e d i n the proposed f a c i l i t y . Step 9) With the a i d of s u b j e c t i v e judgment, percentage f a c t o r s are a r b i t r a r i l y assigned which represent the t o t a l volume of trade i n each area f o r each c l a s s of merchan-d i s e which w i l l go to the proposed centre.^" 1 Sometimes two percentage f a c t o r s are a p p l i e d , one f o r convenience goods and the other f o r shopping goods. The summation Nelson, op. c i t . , p. 217. 123 of these estimates gives the t o t a l s a l es volume pro-12 j e c t i o n f o r the proposed centre. Step 10) The estimated sales volume f o r the proposed centre i s t r a n s l a t e d i n t o r e quired s e l l i n g area i n square f e e t by d i v i d i n g the expected annual volume by what i s con-sidered to be an acceptable sales per square f o o t 13 f i g u r e . For example, i f i n a given year s u c c e s s f u l r e g i o n a l centres tend to r e q u i r e between $50 - $70 per square f o o t of s e l l i n g area to achieve s a t i s f a c t o r y p r o f i t s , then the annual volume estimate i s d i v i d e d by These percentage f a c t o r s are based on the a n a l y s t ' s i n t u i t i v e judgment as to how e f f e c t i v e the proposed centre w i l l be i n cap-t u r i n g a share of the p o t e n t i a l market. The a n a l y s t b a s i c a l l y d i s t r i b u t e s the p o t e n t i a l among the v a r i o u s competing o u t l e t s i n c l u d i n g the proposed centre. Since there i s r a r e l y ( i f any) j u s t i f i c a t i o n on q u a n t i t a t i v e grounds f o r the choice of any one p a r t i c u l a r percentage f a c t o r as the exact p r o p o r t i o n of the poten-t i a l expenditure which the proposed f a c i l i t y w i l l capture, the f a c t o r chosen must be viewed with considerable c a u t i o n . I t i s common f o r such a r b i t r a r y market share percentage f a c t o r s to be g r o s s l y i n e r r o r as a r e s u l t of inadequate and u n q u a n t i f l e d judg-ments as to the proposed centre's drawing power. Often these f a c t o r s are chosen without any explanation as to how they were derived or why a p a r t i c u l a r f i g u r e i s more s u i t a b l e than another. A research r e p o r t which f o r example uses a market share percentage f a c t o r of 14.5$ but does not mention the j u s t i f i c a t i o n f o r the choice of such a p r e c i s e f i g u r e can only be viewed with t o t a l d i s -t r u s t . The market share or market p e n e t r a t i o n achieved by a centre i n a p a r t i c u l a r area w i l l depend on that centre's a t t r a c t i v e power and on the f a c t o r s which i n f l u e n c e consumer patronage behaviour ( i n f a c t , most of the f a c t o r s mentioned i n Chapter I V ) . The distance of an area from the centre, the appeal of the subject centre, and the r e l a t i v e appeal of a l l competing f a c i l i t i e s are a few of the f a c -t o r s which a f f e c t the subject centre's trade area p e n e t r a t i o n . Accurate assessment of the e f f e c t t h a t the new centre w i l l have on the patronage behaviour of the trade area customers i s an extremely d i f f i c u l t task and one which demands more p r e c i s e l y defined and q u a n t i f i e d techniques i f the choices of market share percentage f a c t o r s are to be accepted w i t h any measure of confidence. Nelson, op. c i t . , p. 225. 124 a s p e c i f i c f i g u r e i n t h i s range to produce an estimate of the t o t a l s e l l i n g area required to s u c c e s s f u l l y handle t h i s a n t i c i p a t e d volume. S i m i l a r l y , Industry averages of the s a l e s per square f o o t considered neces-sary by each tenant-type f o r s u c c e s s f u l operation are sometimes appl i e d to the volume expectancy f o r each tenant-type to a s c e r t a i n the s e l l i n g area which each tenant-type can s u c c e s s f u l l y occupy i n the new centre. Again, there i s a considerable danger i n applying such averages to any p a r t i c u l a r s i t u a t i o n , and i t should be recognized that the procedure produces approximate s o l u t i o n s only. Vacuum C a l c u l a t i o n Method In t h i s method, primary and secondary trade areas are o u t l i n e d around a s i t e based on a r b i t r a r y p r e - s e l e c t e d t r a v e l 14 time l i m i t a t i o n s and n a t u r a l b a r r i e r s . Data on p o p u l a t i o n , Income, and the t o t a l business volume a v a i l a b l e i n the trade area are developed. Then a l l the stores and centres w i t h i n or close to the trade area are p h y s i c a l l y measured so that t h e i r volume capacity can be determined. The method f o r doing t h i s i s to a s s i g n each competing r e t a i l f a c i l i t y a c e r t a i n s a l e s per square f o o t based on n a t i o n a l averages f o r that type of f a c i l i t y and then m u l t i p l y t h i s f i g u r e by the square footage of each f a c i l i t y to determine t h e i r volume c a p a c i t y . The d o l l a r volume capacity of the stores and centres w i t h i n or close to the trade area are 1 4 I M d . , p. 151. 125 then subtracted from the t o t a l volume a v a i l a b l e i n the area. The balance or "vacuum" represents the p o t e n t i a l f o r the proposed 15 new centre. This technique b a s i c a l l y attempts to show which areas are under-served w i t h r e t a i l f a c i l i t i e s . But a s s i g n i n g p r o p o r t i o n s of t o t a l s a l es to each competitive o u t l e t on the b a s i s of normal or average sales per square f o o t r a t i o s assumes that the new f a c i l i t y w i l l only p i c k up the excess expenditure p o t e n t i a l . I t does not p r o p e r l y consider whether the new f a c i l i t y w i l l i n f a c t capture a s u f f i c i e n t p r o p o r t i o n of the p o t e n t i a l expenditure to render c e r t a i n e x i s t i n g o u t l e t s u n p r o f i t a b l e . I t assumes that the e x i s t i n g o u t l e t s w i l l continue to a t t r a c t normal volumes a f t e r the new proposed f a c i l i t y opens, a conclusion which i s not always borne out by r e a l i t y . Furthermore, the method i m p l i e s that the proposed f a c i l i t y ' s a t t r a c t i v e power has no bearing on the expenditure which that f a c i l i t y w i l l r e c e i v e . I t w i l l supposedly only receive the r e s i d u a l expenditure, r e g a r d l e s s of that a t t r a c t i v e power, or time-distance f a c t o r s , or a c c e s s i b i l i t y , or the convenience of the new l o c a t i o n . This c o n c l u s i o n on l o g i c a l grounds appears to be absurd. Any s a l e s volume estimate based on t h i s approach would have to be viewed with considerable c a u t i o n . Analog Method One way to determine the t r a d i n g area and the s a l e s volume p o t e n t i a l w i t h i n i t f o r a proposed centre i s to know what kin d of a t r a d i n g area an e x i s t i n g centre of s i m i l a r s i z e , l o c a t i o n 1 5 Jones, op. c i t . , p. 65. 126 type, and operating c h a r a c t e r i s t i c s commands, p r e f e r a b l y one under 16 the same ownership as the proposed centre. I f t r a d i n g area models of e x i s t i n g centres are a v a i l a b l e to the a n a l y s t , the task of d e f i n i n g one f o r a proposed centre becomes l e s s d i f f i c u l t , s i n c e the a n a l y s t may be able to d e l i n e a t e the p o t e n t i a l t r a d i n g area boundaries w i t h b e t t e r accuracy through the use of analogs. An analog i s a v i s i b l e e quivalent of an envisaged s i t u a t i o n , and so by using analogies the a n a l y s t a p p l i e s knowledge of e x i s t i n g s i t u a t i o n s to undeveloped s i t u a t i o n s t h a t appear to be c l o s e l y s i m i l a r . An analog i s the q u a n t i f i e d experience, or performance r e c o r d , of an e x i s t i n g r e t a i l f a c i l i t y , i n r e l a t i o n to known market f a c -t o r s , consumer shopping behaviour p a t t e r n s , and store c h a r a c t e r i s t i c s . These analogs are used as bench marks f o r p r e d i c t i n g the s a l e s of proposed new s t o r e s which are s i m i l a r i n e s s e n t i a l respects to the analog s i t e s . ! T The v i r t u e of t h i s p r o j e c t i o n method i s t h a t i t i s based upon q u a n t i f i e d aspects of the t r a d i n g area i n combination w i t h the known performance of other s i m i l a r o u t l e t s i n s i m i l a r s i t u a t i o n s . Analogs do not provide a magic formula - no two s i t u a t i o n s are e x a c t l y a l i k e , and the a v a i l a b l e analogs must t h e r e f o r e be i n t e r -preted and tempered by the s t o r e l o c a t i o n a n a l y s t In the l i g h t of h i s s u b j e c t i v e judgment . 1° ^ Kane, op. c l t . , p. 31. 17 ' W. Applebaum, "The Analog Method f o r E s t i m a t i n g P o t e n t i a l Store S a l e s , " i n Kornblau, op. c l t . , p. 232. 1 8 I b i d . 127 This method f o r e stimating p o t e n t i a l s a l e s volumes depends on both q u a n t i f i e d experience and s u b j e c t i v e judgment. The l e s s q u a n t i f i e d experience a v a i l a b l e , the more i t becomes necessary to r e l y on s u b j e c t i v e judgment. Q u a n t i f i e d experience r e f e r s to r e s u l t s obtained from measurements of r e t a i l s a l e s i n r e l a t i o n to known market f a c t o r s , consumer patronage behaviour, and r e t a i l f a c i l i t y c h a r a c t e r i s t i c s . Analogous s i t u a t i o n s o f s i m i l a r f a c i l i t i e s and s i m i l a r market f a c t o r s , when s t a t i s t i c a l l y q u a n t i -f i e d and r e l a t e d , can become bench-marks f o r reference when con-du c t i n g s a l e s volume analyses on new, but s i m i l a r s i t u a t i o n s . An analog might i n c l u d e the f o l l o w i n g i n f o r m a t i o n : l o c a t i o n of the o u t l e t , type of o u t l e t , s i z e of o u t l e t , annual s a l e s volume, s a l e s per square f o o t , income l e v e l s i n t h a t trade area, main method of t r a n s p o r t a t i o n used by customers, number of customers w i t h i n v a r i o u s time-distances from the c entre, the drawing power of the centre w i t h i n c r e a s i n g d i s t a n c e from the c e ntre, market p e n e t r a t i o n (market share) achieved, per c a p i t a s a l e s , t o t a l expenditure p o t e n t i a l , and the q u a n t i t y , q u a l i t y , and competitive p o s i t i o n of competing o u t l e t s i n terms of t h e i r market s h a r e s . 1 ^ The l o c a t i o n a n a l y s t would then examine those analogs c o l l e c t e d f o r competing f a c i l i t i e s or s i m i l a r f a c i l i t i e s and would s e l e c t those analogs most c l o s e l y approximating the f a c t o r s of the new proposed l o c a t i o n . By averaging the analogs which are a c t u a l case s t u d i e s of s i m i l a r , a c t u a l s i t u a t i o n s , and then modifying or a d j u s t i n g these averages to f i t the v a r i a t i o n s i n the proposed s i t e as compared w i t h the previous ones, the a n a l y s t estimates 1 9 IM-d.. PP. 234 - 240. 128 the expected patronage, the expected per c a p i t a s a l e s , and the t o t a l s a l e s volume f o r the subject centre. In many cases the analog technique cannot be used since there are e i t h e r no analogs w i t h which to compare, or the analogs are too d i s s i m i l a r to permit adjustments of any accuracy. There i s no t h e o r e t i c a l content to the method: r e a l i t y i s recorded w i t h no attempt to e x p l a i n . c a u s a t i o n . Therefore, i f the r e a l i t y d escribed i n the analog i s g r o s s l y d i s s i m i l a r to that of the subject s i t e , there i s no t h e o r e t i c a l explanation of how to com-pensate f o r the d i f f e r e n c e s . Therefore the method demands tha t a c l o s e approximation of the subject s i t e be a v a i l a b l e . In f a c t , the method was advocated as a r e s u l t of the r e c o g n i t i o n t h a t theory had not yet developed to the p o i n t where i t could a c c u r a t e l y q u a n t i f y the myriad f a c t o r s i n f l u e n c i n g consumer patronage. Therefore, without attempting to t h e o r i z e , the method merely advocates comparing a proposed s i t u a t i o n w i t h an e m p i r i c a l l y observed one and a d j u s t i n g the a c t u a l , observed s i t u a t i o n to account f o r the d i f f e r e n c e s between i t and the proposed s i t u a t i o n . Provided these d i f f e r e n c e s are not too extreme, and provided s u i t a b l e analogs are a v a i l a b l e , and provided s u b j e c t i v e judgments are accurate, the method could provide a reasonably accurate pre-d i c t i o n . However, analogs are seldom a v a i l a b l e i n s u f f i c i e n t d e t a i l , v a r i e t y , or s u i t a b i l i t y , and consequently a considerable number of s u b j e c t i v e judgments are u s u a l l y necessary which i n -creases the p r o b a b i l i t y of e r r o r . 129 L i m i t a t i o n s A. R i g i d Sales L e v e l Assumption One c r i t i c i s m of the vacuum c a l c u l a t i o n method i s i t s apparent f a i l u r e to a l l o w f o r the i n c r e a s i n g e f f i c i e n c y i n the use of f l o o r space, i n terms of s a l e s per square f o o t . In other words, the method assumes th a t the v a r i o u s e x i s t i n g centres are already at maximum sa l e s and would not be able to handle increased s a l e s volumes without expanding f a c i l i t i e s . I t a l s o assumes that the new f a c i l i t y w i l l only capture the r e s i d u a l p o t e n t i a l which i s supposedly under-served, which i s why the method tends to pro-duce a more conservative s a l e s volume estimate than the market share method, which g e n e r a l l y gives an o p t i m i s t i c assessment of s a l e s p o t e n t i a l . This i s mainly because the market share percentage f a c t o r s assigned i n the market share method f o r the drawing power i n each trade area segment normally produce higher estimates of trade capture than when the e x i s t i n g s a l e s p o t e n t i a l i s a l l o c a t e d to a l l e x i s t i n g competitors f i r s t and only the r e s i d u a l considered as p o t e n t i a l f o r the new centre. B. Expensive and Lengthy In the market share method, the depth of the p r e l i m i n a r y research provides u s e f u l i n f o r m a t i o n which can be used i n the design of the shopping centre and i n planning the promotional techniques, but the l e n g t h of time and expense required f o r any research of t h i s type i s a disadvantage e s p e c i a l l y where competi-t i o n f o r p o t e n t i a l s i t e s and markets i s h i g h . I t i n v o l v e s con-s i d e r a b l e f i e l d surveys and consumer research s t u d i e s which are expensive and r e q u i r e experienced i n t e r v i e w e r s , p a r t i c u l a r l y i n 130 the assessment of shopping h a b i t s and preferences. In assessing the competition, e s t a b l i s h i n g the r e l a t i v e e f f i c i e n c y and a t t r a c -t i o n of each competing r e t a i l f a c i l i t y by survey methods even i f only on a sample b a s i s i s lengthy and depends on e f f e c t i v e i n t e r -viewing and data p r o c e s s i n g . Furthermore, o f t e n the a n a l y s i s takes l i t t l e account of such f a c t o r s as increased car ownership, or of d i f f e r e n t expenditure p a t t e r n s and shopping h a b i t s i n the v a r i o u s income groups. C. Necessity f o r S u b j e c t i v e Judgment The number of assumptions made o f t e n places the v a l i d i t y of the r e s u l t s i n doubt, and a l s o emphasizes the n e c e s s i t y of ob-t a i n i n g accurate data. The main problem, however, occurs i n the c a l c u l a t i o n of the trade area l i m i t s and the c o r r e c t market share percentage f a c t o r s . There i s u s u a l l y very l i t t l e t h e o r e t i c a l J u s t i f i c a t i o n i n the reasons f o r e i t h e r the choice of a p a r t i c u l a r d r i v i n g - t i m e f o r the trade area boundary, or the choice of market share percentages. The a n a l y s t merely i n t u i t i v e l y weighs the v a r i o u s f a c t o r s to a r r i v e at a "guesstimate" of drawing power and market p e n e t r a t i o n . While the f i e l d work and o r i g i n a l research are d i r e c t e d p r i m a r i l y toward i n c r e a s i n g the accuracy of judgment f o r these estimates, and although these estimates are based on l o c a l circumstances, they are s t i l l a r b i t r a r y , s u b j e c t i v e Judgments. E s t i m a t i n g the business volume f o r a new o u t l e t Involves p r e d i c t i n g what i n d i v i d u a l s w i l l do when they are o f f e r e d d i f f e r -ent a l t e r n a t i v e s from those they had before. From the preceding d i s c u s s i o n , i t appears t h a t there i s no way of e l i m i n a t i n g the use of Judgment. The n e c e s s i t y f o r s u b j e c t i v e Judgment at v a r i o u s stages i n these methods r e f l e c t s the l a c k of more p r e c i s e l y 131 defined q u a n t i t a t i v e t o o l s . D. Danger of Cumulative E r r o r s In u s i n g the methods discussed i n t h i s chapter, the a n a l y s t i s fo r c e d to make assumptions e s p e c i a l l y i n the areas of market share percentages, trade l o s s to competing r e t a i l f a c i l i t i e s , market shares i n the event of new competing o u t l e t s opening nearby, and the a c t u a l l i m i t s of the trade area. That a danger e x i s t s f o r making cumulative e r r o r s i s evident i n the f o l l o w i n g d i s c u s s i o n . When t r y i n g to estimate the p o t e n t i a l volume of a trade area, the a n a l y s t must f i r s t of a l l e s t a b l i s h a t e n t a t i v e trade area t h a t can be analyzed, at the same time c r e a t i n g a conceptual image of the completed shopping centre i n order to determine the str e n g t h of a t t r a c t i o n which would be exerted by the hypothesized f a c i l i t i e s . I t appears t h a t only a f t e r t a k i n g such steps i s i t p o s s i b l e to a c c u r a t e l y determine the po p u l a t i o n r e s i d i n g w i t h i n t h a t t e n t a t i v e area which then enables the c a l c u l a t i o n of the t o t a l income and the p o t e n t i a l shopping centre expenditures as a p r o p o r t i o n of t h a t income. (The a t t r a c t i o n of the centre a l s o of course p l a y s a l a r g e p a r t i n determining the market share t h a t the new centre i s l i k e l y to achieve w i t h i n t h a t p a r t i c u l a r defined area.) However, i f the i n i t i a l trade area boundaries which are set a r b i t r a r i l y are g r o s s l y i n e r r o r then a l l of the r e s u l t i n g data on p o p u l a t i o n and income w i t h i n t h a t area are a l s o g r o s s l y i n e r r o r . For example, f i r s t of a l l the trade area l i m i t s are estimated which then means t h a t the p o t e n t i a l customers and the t o t a l expenditure p o t e n t i a l are confined to t h a t estimated area. These estimates i n t u r n are m u l t i p l i e d by estimated market share percentage f a c t o r s to a r r i v e at an estimated p o t e n t i a l expenditure 132 from that area f o r the new centre. This i s a p r e t t y sketchy pro-cess i n v o l v i n g the danger of cumulative e r r o r s i n Judgment, which probably accounts f o r the f a c t t h a t many volume estimates d i f f e r s i g n i f i c a n t l y from the r e a l i z e d r e s u l t s a f t e r opening. E. S e n s i t i v i t y of the Volume Estimate to D r i v i n g Time Assumptions D i f f e r e n c e s i n the assumption made regarding what d r i v i n g -time l i m i t to set when d e l i n e a t i n g the trade area can have a pro-found e f f e c t on the measurement of p o t e n t i a l volume. The volume p o t e n t i a l i s extremely s e n s i t i v e to changes i n t h i s d r i v i n g - t i m e l i m i t . For example, I f the d r i v i n g - t i m e l i m i t i s changed to f i f t e e n minutes from ten minutes, t h i s i s a 50% Increase i n s t r a i g h t time-distance, but a considerably l a r g e r i n crease i n the s i z e of the enclosed area owing to the f a c t t h a t the area of the c i r c l e i n c r e a s e s p r o p o r t i o n a t e l y f a s t e r than i t s r a d i u s . There-f o r e , In t h i s example, the time-distance has increased by 50% but the area enclosed w i t h i n that time-distance has increased by more than 100$. Therefore, t h e , t o t a l p o t e n t i a l expenditure w i t h i n f i f t e e n minutes d r i v i n g - t i m e i s more than twice as l a r g e as that w i t h i n ten minutes d r i v i n g time. Obviously, i f such small changes i n the d r i v i n g time assumption can produce such wide v a r i a t i o n s i n the trade area s i z e (and t h e r e f o r e the t o t a l r e t a i l expenditure) then I t i s d i f f i c u l t to place much confidence i n a s a l e s estimate which i s based on a p a r t i c u l a r trade area boundary d r i v i n g time assumption s i n c e the r e s u l t s are so s e n s i t i v e to v a r i a t i o n s i n that assumption. 133 Summary The market share method, vacuum c a l c u l a t i o n method, and analog method are a few of the more common methods employed i n analyses of s a l e s volume p o t e n t i a l . . The analog method i n v o l v e s a d j u s t i n g the data derived from analogous trade areas to f i t the subject s i t u a t i o n . The market share method s u b j e c t i v e l y d e l i n e a t e s the trade area according to a r b i t r a r i l y assigned d r i v i n g time l i m i t s i n conjunction w i t h i n t u i t i v e judgments regarding competi-t i v e f a c i l i t i e s and other a t t r a c t i o n - r e s i s t a n c e f a c t o r s . The method then r e q u i r e s a s u b j e c t i v e assignment of the derived trade area p o t e n t i a l to a l l the competing f a c i l i t i e s w i t h i n a t t r a c t i n g range of the subject s i t e . The vacuum c a l c u l a t i o n method a l s o s u b j e c t i v e l y d e l i n e a t e s the trade area but then a s c e r t a i n s the cur r e n t r e t a i l volume achieved by each e x i s t i n g competitor and s only a l l o c a t e d the r e s i d u a l p o r t i o n of the t o t a l p o t e n t i a l to the proposed f a c i l i t y . Each method has shortcomings, e s p e c i a l l y i n the r e l i a n c e on a r b i t r a r y and s u b j e c t i v e judgments i n the areas of d e l i n e a t i n g the trade area and a s s i g n i n g market shares. The l a c k of more p r e c i s e , o b j e c t i v e , q u a n t i t a t i v e measurements l e s s e n s the degree to which the r e s u l t s can be accepted w i t h confidence. F u r t h e r -more, extensive f i e l d surveys are oft e n necessary to improve the accuracy of those s u b j e c t i v e judgments. In an attempt to overcome some of the shortcomings discussed above, v a r i o u s researchers have proposed the use of models expressed i n mathematical formulae as a means of generating estimates more q u i c k l y and c o n s i s t e n t l y based on more o b j e c t i v e l y q u a n t i f i e d measurements. These models are discussed i n the next chapter. CHAPTER VI MODELS PGR DETERMINING TRADE AREA POTENTIAL I n t r o d u c t i o n A model can be described as f o l l o w s : A model l i t e r a l l y c o n s i s t s of "named" v a r i a b l e s embedded i n mathematical formulae ( s t r u c t u r a l r e l a t i o n s ) , numerical constants (parameters), and a computational method oft e n programmed f o r the computer ( a l g o r i t h m ) . 1 Models attempt to i d e n t i f y primary v a r i a b l e s which are s u f f i c i e n t to describe a r e l a t i o n s h i p , while r e c o g n i z i n g t h a t any one f a c t o r or s e v e r a l d i f f e r e n t f a c t o r s may a f f e c t the weighting of those v a r i a b l e s . The p r o b a b i l i t y model attempts to d e s c r i b e to what extent something i s l i k e l y to be the e f f e c t of some other causal v a r i a b l e s . I f i t i s not an exact " d e t e r m i n i s t i c " r e l a t i o n s h i p , the p r o b a b i l i t y model allows f o r the i n f l u e n c e of unknown f a c t o r s by s t a t i n g the e f f e c t i n terms of a p r o p o r t i o n a t e occurrence of t h a t outcome. In t h i s sense, the p r o b a b i l i s t i c models do not produce the exact e f f e c t of a number of causal v a r i a b l e s , but r a t h e r s t a t e the l i k e l i h o o d of that e f f e c t o c c u r r i n g . The d i f f e r e n c e between l i k e l i h o o d and r e a l i t y i s a f u n c t i o n of con-d i t i o n a l f a c t o r s which a f f e c t the causal v a r i a b l e s and produce a d i f f e r e n t r e s u l t . Models then attempt to describe average u n i f o r m i t i e s i n behaviour which can be expressed i n mathematical form. The mathe-m a t i c a l equations are s t r u c t u r e d r e l a t i o n s h i p s of abstracted I . S. Lowry, "A Short Course i n Model Design," Journal of the American I n s t i t u t e of P l a n n e r s , V o l . 31, 1965, p. 159. 135 v a r i a b l e s , and on the average, behaviour i s expected to occur as described i n these mathematical formulas. E a r l y Models of R e t a i l G r a v i t a t i o n R e i l l y and Converse Over the past s e v e r a l decades much a t t e n t i o n has focused on the g r a v i t y concept of human i n t e r a c t i o n . E a r l y models of t h i s type were analogies to Newton's U n i v e r s a l Law of G r a v i t a t i o n which i n general terms stated t h a t the f o r c e between two masses was d i r e c t l y p r o p o r t i o n a t e to the s i z e of each mass and I n v e r s e l y p r o p o r t i o n a t e to the square of the di s t a n c e s separating them. This i s expressed i n the formula: GMm where F = f o r c e , G = a u n i v e r s a l constant ( g r a v i t a t i o n a l c o n s t a n t ) , M = one mass, m = the other mass, and d = the di s t a n c e between the masses. In general terms, the g r a v i t y concept of human I n t e r -a c t i o n d i s p l a y s i t s s i m i l a r i t y to Newton's law by p o s t u l a t i n g t h a t i n t e r a c t i o n between two centres of p o p u l a t i o n concentration v a r i e s d i r e c t l y w i t h some f u n c t i o n of the p o p u l a t i o n s i z e of the two centres and v a r i e s I n v e r s e l y w i t h some f u n c t i o n of the d i s -tance separating them. Most of the "laws" of r e t a i l g r a v i t a t i o n i n marketing l i t e r a t u r e are based to a l a r g e extent on the st u d i e s begun by 2 R e i l l y i n 1927. R e i l l y ' s s t u d i e s were conducted over a three 2 W. J . R e i l l y , The Law of R e t a i l G r a v i t a t i o n , 2nd ed., New York, W i l l i a m J . R e i l l y Company, 1953. 136 year p e r i o d w i t h the object of d i s c o v e r i n g some method f o r measuring the r e t a i l i n f l u e n c e of a c i t y (or the amount of trade drawn from I t s surrounding a r e a s ) . Converse has o f f e r e d a number 3 of refinements and extensions to the r e s u l t s obtained by R e i l l y . B a s i c a l l y , the combined e f f o r t s of R e i l l y and Converse are sum-marized i n the s i x equations described below. Each equation i s examined along w i t h a b r i e f d i s c u s s i o n of the methodology by which e m p i r i c a l support f o r them was d e r i v e d . The o r i g i n a l law was s t a t e d by R e i l l y : Two c i t i e s a t t r a c t r e t a i l trade from any intermediate c i t y or town i n the v i c i n i t y of the breaking p o i n t approximately i n d i r e c t p r o p o r t i o n to the p o p u l a t i o n of the two c i t i e s and i n i n v e r s e p r o p o r t i o n to the square of the d i s t a n c e s from these two c i t i e s to the intermediate town. where Ba and Bd = p r o p o r t i o n s of r e t a i l trade from the intermediate town a t t r a c t e d by c i t i e s A and B r e s p e c t i v e l y ; Pa and Pb = the p o p u l a t i o n s of c i t i e s A and B; and Da and Db = the d i s t a n c e s from the intermediate town to c i t i e s A and B. Converse and h i s a s s o c i a t e s developed an equation known as the breaking p o i n t formula, w r i t t e n : Db = Da + Db J P. D. Converse, A Study of R e t a i l Trade Areas i n East C e n t r a l  I l l i n o i s , Urbana, U n i v e r s i t y of I l l i n o i s P r e s s , 1943; R e t a i l Trade  Areas i n I l l i n o i s , Urbana, U n i v e r s i t y of I l l i n o i s P r e s s , 1946; "New Laws of R e t a i l G r a v i t a t i o n , " J o u r n a l of Marketing. XIV, October, 1949. 4 I b i d . , p. 9. Mathematically t h i s statement can be w r i t t e n : Ba _ Pa x Db c Bb Pb Da 2 (VI - 1) (VI - 11) 137 where Db = dis t a n c e from c i t y B to the breaking p o i n t , or t h a t p o i n t where trade ceases to be a t t r a c t e d to c i t y B and i s in s t e a d a t t r a c t e d to c i t y A. In a d d i t i o n , Converse developed another law of r e t a i l g r a v i t a t i o n , s t a t e d : A t r a d i n g centre and a town i n or near i t s trade area d i v i d e the trade of the town approximately i n d i r e c t p r o p o r t i o n to the pop u l a t i o n of the two towns and i n v e r s e l y as the squares of the dis t a n c e f a c t o r s , using,. 4 as the dis t a n c e f a c t o r of the home town.-5 Mathematically, t h i s i s expressed: Ba - Pa x 4 2 > • Bb Hb (VI - 111) where Ba = the p r o p o r t i o n of the trade going to the outside town; Bb = the p r o p o r t i o n of trade r e t a i n e d by the home town; Hb = po p u l a t i o n of the home town; Pa = po p u l a t i o n of the outside town; and 4 = the i n e r t i a f a c t o r . According to Converse, the i n e r t i a -d i s t a n c e f a c t o r r e f l e c t s the e f f o r t to overcome the i n e r t i a of 6 t r a v e l l i n g to a stor e close at hand. I f a small town l o s e s trade to more than one l a r g e r town, then the p r o p o r t i o n l o s t to these towns i s determined by using m u l t i p l e s of 4 to obtai n a t o t a l 7 i n e r t i a f a c t o r . Converse s t a t e s t h a t experimentation w i t h t h i s 8 method has l e d him to conclude t h a t i t works s a t i s f a c t o r i l y . Two more equations have been t e n t a t i v e l y proposed by Converse to inc r e a s e p r e d i c t i v e accuracy i n those cases where a 5 Converse, J o u r n a l of Marketing, XIV, p. 382. 6 I b i d . 8 I b i d . 138 t r a d i n g centre i s more than twenty times the s i z e of the i n t e r -mediate town. They are the same as the above two equations except t h a t the d i s t a n c e exponential parameter i s changed to 3 although Converse admits t h a t i n s u f f i c i e n t data had been gathered i n support of t h i s m o d i f i c a t i o n , hence h i s l a b e l l i n g of t h i s m o d i f i -9 c a t i o n " t e n t a t i v e . " The f i n a l equation developed by Converse I s a m o d i f i c a -t i o n of equation (VI-111). Because of urban congestion, neigh-bouring small towns were found to r e t a i n a l a r g e r p r o p o r t i o n of t h e i r f a s h i o n goods than equation (VI-111) p r e d i c t s . A f t e r data c o l l e c t i o n , I t was determined t h a t the i n e r t i a - d i s t a n c e f a c t o r should be 1.5 Instead of 4. The above-mentioned equations summarize the laws of r e t a i l g r a v i t a t i o n . They were developed, s t r u c t u r e d , and q u a n t i -f i e d on the b a s i s of e m p i r i c a l observations. R e i l l y attempted to determine the causal f a c t o r s which would e x p l a i n the phenomenon of the d i v i s i o n of r e t a i l trade between two c i t i e s , and a l s o to determine what r e l a t i o n s h i p the f a c t o r s bore to each other and to the phenomenon. R e i l l y a s c e r t a i n e d that the s p e c i f i c f a c t o r s of p o p u l a t i o n of the c i t i e s and d i s t a n c e from the c i t i e s must be the determining f a c t o r s . He s t a t e s : I t i s so r e a d i l y acceptable that the amount of outside trade which a c i t y enjoys i n any surrounding town i s a d i r e c t f u n c t i o n of the p o p u l a t i o n of that c i t y and an i n v e r s e func-t i o n of the d i s t a n c e of the c i t y from tflwn, t h a t the general law needs no support. I b i d . , p. 3 8 3 . R e i l l y , The Law of R e t a i l G r a v i t a t i o n , p. 71. 139 R e l l l y reasons t h a t i t i s inconvenient and c o s t l y f o r people to t r a v e l to shop. But on the other hand, he i s not n e a r l y so cer-t a i n that p o p u l a t i o n i s the c o r r e c t v a r i a b l e i n a d i r e c t r e l a t i o n -s h i p . He mentions t h a t i t i s not simply a matter of a l a r g e c l u s t e r of people alone which causes other people to t r a v e l to t h a t c i t y to shop, but r a t h e r i t i s the existence of such a t t r a c -t i o n s as l a r g e r e t a i l stores w i t h a wide v a r i e t y and depth of goods, s o c i a l and r e c r e a t i o n a l a t t r a c t i o n s , and the i n f l u e n c e of the l a r g e c i t y ' s a d v e r t i s i n g media which cause people to shop t h e r e . In f a c t , he mentions a lo n g l i s t of f a c t o r s which may i n -f l u e n c e the d i v i s i o n of trad e , and dis t a n c e and po p u l a t i o n are only two of the many. However, R e l l l y reasons that a t t r a c t i o n s o f f e r e d i n the c i t y are only f e a s i b l e as a r e s u l t of the l a r g e p o p u l a t i o n , and t h e r e f o r e , the degree of a t t r a c t i o n must be c o r r e l a t e d s t r o n g l y w i t h p o p u l a t i o n , which leads R e i l l y to conclude t h a t i n view of t h i s r e l a t i o n s h i p , i t i s reasonable to use popu-11 l a t i o n as a "proxy" v a r i a b l e f o r these other f a c t o r s . R e i l l y sums up the preceding argument as f o l l o w s : ...evidence secured - shows th a t the po p u l a t i o n of a c i t y and the dis t a n c e from t h a t c i t y to another comparable c i t y are the primary f a c t o r s t h a t c o n d i t i o n the r e t a i l trade i n f l u e n c e of that c i t y ; that p o p u l a t i o n and dis t a n c e are r e l i a b l e indexes of the behaviour of other f a c t o r s ; t h a t other f a c t o r s are e i t h e r so c l o s e l y r e l a t e d t o , or so d i r e c t l y dependent upon, these two primary f a c t o r s that the e f f e c t s of the dependent f a c t o r s tend to balance out when c i t i e s are compared on the b a s i s of popu-l a t i o n and distance. 1 2 I b i d . , pp. 30 - 3 2 . I b i d . , pp. 31 - 3 2 . 140 This general statement was then expressed as the "general law": Ba _ P a H x Db n Bh P b W Da 1 1 (YI . y i l ) His research then attempted to evaluate e m p i r i c a l l y the exponents f o r p o p u l a t i o n and d i s t a n c e . He concluded t h a t the value of the p o p u l a t i o n exponent should he one, although no evidence i s c i t e d i n support of t h i s c o n t e n t i o n . The d i s t a n c e exponent was c a l c u l a t e d 225 times by f i r s t s e l e c t i n g an intermediate town which was a breaking p o i n t (deter-mined by a n a l y z i n g c r e d i t e n q u i r i e s to a s c e r t a i n the p o i n t where shoppers from outside the c i t y ceased to apply f o r c r e d i t at s t o r e s i n the l a r g e r c i t y ) , and then plugging distances (highway m i l e s ) and populations Into h i s formula and s o l v i n g f o r the d i s t a n c e exponent. The values he c a l c u l a t e d ranged from 0 to 12.5, but the g r e a t e s t number of observations (87 out of 225 observations) f o r any s i n g l e value-range occurred i n the range 1.51 to 2.5. As a r e s u l t , he concluded: a c l e a r mode occurs i n the range of 1.51 -2.50 which shows that the exponent of d i s -tance i s nearer to the second power than to any other even power.^3 The f a c t that the exponential value chosen by R e i l l y was only one of a d i s t r i b u t i o n of v a l u e s , and t h a t the value was a modal value, has tended to be f o r g o t t e n . P r a c t i t i o n e r s who use t h i s model o f t e n assume t h a t i t i s p r e c i s e and r i g o r o u s , so t h a t when erroneous r e s u l t s are generated i n s p e c i f i c s i t u a t i o n s , the exponential value R e i l l y , Methods f o r the Study of R e t a i l R e l a t i o n s h i p s , p. 50. 141 I s o f t e n attacked and denounced f o r being too p r e c i s e when i n f a c t i t was never intended to be. As R e i l l y e x p l a i n s : Since the c a l c u l a t i o n of the appropriate exponent i n any p a r t i c u l a r case i s a com-p l i c a t e d problem i n mathematics, and sin c e the r e t a i l e r s who w i l l use t h i s law, as a r u l e , are not mathematicians, the a p p l i c a -t i o n of the law has been s i m p l i f i e d ^ . s o t h a t o r d i n a r y r e t a i l e r s can use i t . 1 4 He then t e s t e d h i s equation on t h i r t y p a i r s of t r a d i n g centres to determine i f p r e d i c t e d breaking p o i n t s matched c l o s e l y w i t h the r e s u l t s of f i e l d s t u d i e s , and concluded t h a t h i s law was reasonably accurate. Converse l a t e r published a study i n which he reported that h i s e f f o r t s to check R e i l l y ' s law r e s u l t e d i n f a i r l y c l o s e c o r r e l a t i o n between the p r e d i c t i o n s and the e m p i r i c a l r e s u l t s . on the whole, i t works w i t h a r e l a t i v e l y h i g h degree of accuracy. 15 However, i n a l a t e r study, he cautioned: In areas where there i s l e s s d i f f e r e n c e i n s i z e between the primary and secondary t r a d i n g centres or between the t r a d i n g centres and the towns from which they draw t r a d e , the law of r e t a i l g r a v i t a t i o n may perhaps not p r e d i c t the movement of trade w i t h the accuracy found i n the t e r r i t o r y here s t u d i e d . 1 6 In a r e l a t i v e l y recent study, Jung presented some data 17 which he maintains r e f u t e s R e i l l y ' s law. His argument centred I b i d . , p. 16. 15 P. D. Converse, A Study of R e t a i l Trade Areas In East C e n t r a l  I l l i n o i s , pp. 23 - 5^ K \ 1 6 P. D. Converse, R e t a i l Trade Areas i n I l l i n o i s , p. 18. 17 ' A. P. Jung, "Is R e i l l y ' s Law of R e t a i l G r a v i t a t i o n Always True?" J o u r n a l of Marketing. XXIV, October, 1959, p. 62. 142 on the f a c t t h a t h i s e m p i r i c a l l y derived breaking p o i n t s d i d not f i t the p r e d i c t i o n s produced by R e i l l y ' s law. I t seems, though, t h a t what has been disputed i n t h i s study i s not the "general law," but r a t h e r the s p e c i f i c equation i n which the value of one f o r the p o p u l a t i o n exponent and the value of two f o r the dis t a n c e exponent are employed. But t h i s i s not p a r t i c u l a r l y s u r p r i s i n g i n view of both R e i l l y ' s and Converse's admitted r e c o g n i t i o n t h a t the value of the dis t a n c e exponent was only a modal value out of a r a t h e r broad d i s t r i b u t i o n of e m p i r i c a l l y derived v a l u e s . L i m i t a t i o n s In R e i l l y * s law, the a t t r a c t i o n of po p u l a t i o n and the f r i c t i o n of distance both are considered. But Nelson examines R e i l l y ' s law and concludes t h a t " a l l t h i s law says i s that people w i l l normally go to the biggest place they can get to the e a s i e s t . " 1 8 There i s the problem of applying R e i l l y ' s law i n sub-urban areas where the i n f l u e n c e of competing r e t a i l centres o f t e n o v e r l a p s . R e i l l y h i m s e l f observed t h a t "the i n f l u e n c e of two nearby c i t i e s almost i n v a r i a b l y o v e r l a p , " and f e l t t hat h i s law 19 was i n a p p r o p r i a t e under such circumstances. As a r e s u l t many w r i t e r s have f e l t t h a t the law i s i n a p p r o p r i a t e f o r measuring the i n f l u e n c e of r e t a i l centres i n the suburban s i t u a t i o n where such overlapping of competitive Influence i s common. Some authors, however, do not agree. For example, Baker Nelson, The S e l e c t i o n of R e t a i l L o c a t i o n s , p. 149 R e i l l y , The Law of R e t a i l G r a v i t a t i o n , p. 59. 143 and Funaro f e l t t hat when measuring the p u l l of a l a r g e suburban shopping centre, S e i l l y ' s law may be a p p l i e d Just as a p t l y as i t 20 has been to town shopping areas. However Nelson recognizes t h a t the law was developed to measure the Impact of r u r a l t r a d i n g c e n t r e s , and even w i t h adaptations to f i t the law to urban s i t u a -t i o n s , there i s considerable doubt as to i t s a p p l i c a b i l i t y i n 21 such cases. The law was o r i g i n a l l y created to t e s t the drawing power of p a i r s of r u r a l t r a d i n g centres between which were farm areas c o n t a i n i n g few a l t e r n a t i v e shopping f a c i l i t i e s or none at a l l . Even w i t h a l l the adaptations which have been made to t r y and f o r c e t h i s law to f i t urban s i t u a t i o n s , a law created to measure the impact of r u r a l t r a d i n g centres cannot be used i n -d i s c r i m i n a t e l y to estimate the volume of urban shopping d i s t r i c t s or new shopping centres. In m e t r o p o l i t a n regions I t i s extremely d i f f i c u l t to employ t h i s model because competition i s found i n so many d i f f e r e n t d i r e c t i o n s at v a r y i n g l e v e l s of drawing power i n -t e n s i t y . Furthermore, d i s t a n c e d i s t i n c t i o n s may be only a matter of moments. R e i l l y ' s law i n d i c a t e s a r e l a t i v e l y f i x e d perimeter or breaking p o i n t f o r the trade area, whereas i n the urban s i t u a -t i o n , the trade area boundaries vary and overlap considerably depending on the degree of a t t r a c t i o n of each a l t e r n a t e o u t l e t and on the r e l a t i v e a c c e s s i b i l i t y and d i s t a n c e between them. Much of the c r i t i c i s m of R e i l l y ' s law has focused on the exponents, p a r t i c u l a r l y the exponent of d i s t a n c e . Huff noted t h a t the m a j o r i t y of market a n a l y s t s u s i n g the formula have Baker and Funaro, Shopping Centres: Design and Operation, p. 8. Nelson, The S e l e c t i o n of R e t a i l L o c a t i o n s , p. 150. 144 apparently assumed th a t the d i s t a n c e exponent which R e i l l y estimated as v a l i d f o r i n t e r - u r b a n r e t a i l movements was a l s o v a l i d 22 f o r i n t r a - u r b a n areas. The i n t r a - u r b a n s i t u a t i o n i s j u s t not as simple as the i n t e r - u r b a n s i t u a t i o n where market centres and consumers are more widely s c a t t e r e d and I s o l a t e d . In s h o r t , i n t e r r u p t i v e I n f l u e n c e s are f a r more pr e v a l e n t and intense i n the suburban s i t u a t i o n . For h i s 225 cases R e i l l y obtained d i s t a n c e exponents ranging from G.O to 12.5 but s e l e c t e d 2.0 because the modal value f e l l w i t h i n the range.1.51 to 2.5. l e t the modal c l a s s contained only o n e - t h i r d of the v a l u e s . Furthermore, t h i s value was only meant to apply t o shopping goods, and no evidence i s c i t e d f o r what the value would be f o r other, or more s p e c i f i c , c a t e g o r i e s of merchandise. Subsequently, new exponents were suggested by Converse but these too apply to broad ca t e g o r i e s of merchandise and are intended f o r use i n the i n t e r - u r b a n s e t t i n g . Carrothers has suggested t h a t the d i s t a n c e exponent i t s e l f may be a v a r i a b l e , i n v e r s e l y r e l a t e d to the s i z e of p o p u l a t i o n . He a l s o contends that populations of d i f f e r e n t s i z e s should be r a i s e d to v a r i a b l e powers g r e a t e r than one, p a r t l y on account of the g r e a t e r i n f l u e n c e exerted by l a r g e r centres as a r e s u l t of t h e i r c o l l e c t i v e l y g r e a t e r 23 a t t r a c t i v e power. From our d i s c u s s i o n i n Chapter IV, i t would a l s o be l o g i c a l to assume t h a t the d i s t a n c e exponent would vary " D. L. Huff, Determination of Intra-Urban R e t a i l Trade Areas, U n i v e r s i t y of C a l i f o r n i a , Graduate School of Business A d m l n i s t r a -t i o n , Los Angeles, 1962, p. 5. 23 G. A. P. C a r r o t h e r s , "An H i s t o r i c a l Review of the G r a v i t y and P o t e n t i a l Concepts of Human I n t e r a c t i o n , " J o u r n a l of the American  I n s t i t u t e of Planners, V o l . 22, 1956, pp. 94 - 102. 145 w i t h improved t r a n s p o r t a t i o n , b e t t e r a c c e s s i b i l i t y , geographic i n f l u e n c e s i n s p e c i f i c areas, and w i t h demographic v a r i a t i o n s , a l l of which are subject to g r e a t e r v a r i a t i o n i n the i n t r a - u r b a n s i t u a t i o n . The l i m i t a t i o n s of R e i l l y ' s law are not, however, con-f i n e d to the exponential v a l u e s . The main shortcoming i s t h a t i t considers only two v a r i a b l e s , p o p u l a t i o n and d i s t a n c e , i n i t s general formula as f a c t o r s i n r e t a i l drawing power whereas i t i s known tha t s e v e r a l other f a c t o r s do exert considerable i n f l u e n c e on consumer s p a t i a l behaviour i n a d d i t i o n to p o p u l a t i o n and d i s -tance. R e l l l y was not unaware of the importance of other v a r i a b l e s t h a t might a f f e c t the geographic d i s t r i b u t i o n of consumer patron-age. He d i d f e e l , however, th a t the other f a c t o r s were of minor importance compared to the two named. Po p u l a t i o n i s a proxy v a r i a b l e f o r a t t r a c t i o n , and d i s -tance i s a proxy v a r i a b l e f o r e f f o r t . This a l s o b a s i c a l l y means th a t p o p u l a t i o n i s a proxy v a r i a b l e f o r b e n e f i t s , and di s t a n c e i s a proxy v a r i a b l e f o r c o s t s . The use of the proxy v a r i a b l e s popu-l a t i o n and di s t a n c e as s u f f i c i e n t l y r e p r e s e n t a t i v e causal v a r i a b l e s has been the focus of considerable c r i t i c i s m . Various researchers over the years have suggested r e p l a c i n g p o p u l a t i o n i n the formula w i t h f r o n t footage of r e t a i l space, or square f e e t of s e l l i n g area, or d o l l a r s a l e s volumes. D r i v i n g time has been s u b s t i t u t e d f o r d i s t a n c e i n m i l e s ( r e a l i z i n g that time-distance i s a b e t t e r i n d i c a t o r of the costs perceived by the consumer i n making the t r i p ) although t h i s m o d i f i c a t i o n s t i l l tends to ignore the p o s s i b i l i t y of s i g n i f i c a n t w a l k - i n business. However, even wi t h these m o d i f i c a t i o n s , the law can be f r e q u e n t l y i n a c e u r a t e , because 146 s t i l l only f l o o r space ( f o r example) and d r i v i n g time are con-s i d e r e d as a f f e c t i n g consumers' shopping h a b i t s . I t i s t r u e t h a t these are two Important f a c t o r s and t h e i r appeal as proxy v a r i a b l e s i n the formula l i e s i n the f a c t t h a t they are e a s i l y q u a n t i f i a b l e v a r i a b l e s . But gross inaccuracy can r e s u l t when other e q u a l l y s i g n i f i c a n t f a c t o r s such as those o u t l i n e d and presented i n Chapter IV are ignored, f a c t o r s which can r i g h t l y i n f l u e n c e the extent and I n t e n s i t y of consumer patronage. Such f a c t o r s which warrant c o n s i d e r a t i o n i n c l u d e the f o l l o w i n g : the e f f e c t s of d i s t a n c e vary w i t h the type of merchan-d i s e under c o n s i d e r a t i o n ; the impact of competition cannot be r e s t r i c t e d to only p a i r s of competing o u t l e t s as i n R e i l l y ' s law but a l s o must i n c l u d e a l l other competing o u t l e t s i n the v i c i n i t y of the subject centre; merchandising c a p a b i l i t i e s and parking f a c i l i t i e s i n the smaller centre might be f a r s u p e r i o r to those i n the l a r g e r centre, a f a c t which would tend to r e s u l t i n a h i g h e r capture of patronage at the s m a l l e r centre than would be i n d i c a t e d s t r i c t l y on the b a s i s of p o p u l a t i o n or square footage of s e l l i n g area alone; d i f f e r e n c e s i n a c c e s s i b i l i t y between competing centres e i t h e r as a r e s u l t of b e t t e r t r a n s p o r t a t i o n f a c i l i t i e s and road networks, or d i f f e r e n t geographical or man-made b a r r i e r s can produce v a r i a t i o n s i n consumer patronage which would not n e c e s s a r i l y be evident w i t h t h i s model which considers only d i s t a n c e modified by a p a r t i c u l a r exponent; the breadth of s e l e c t i o n , the p r i c e ranges and the q u a l i t y of the merchandise o f f e r e d can s i g n i f i c a n t l y a f f e c t the drawing power of a centre and extend and i n t e n s i f y i t s a t t r a c -t i v e power, a f a c t which does not appear to receive adequate recog-n i t i o n i n a formula which considers only s i z e ( i n e i t h e r p o p u l a t i o n 147 or square footage) as the a t t r a c t i v e v a r i a b l e ; the r e l a t i o n s h i p s between merchandise o f f e r i n g s and the demographic composition of the surrounding market area are not e x p l i c i t l y considered - i f the merchandise o f f e r e d does not p r o p e r l y match the d e s i r e s of the consumers i n the area, the a t t r a c t i v e power of t h a t centre may be l e s s than that I n d i c a t e d by the s i z e v a r i a b l e alone; the i n f l u e n c e of socio-economic f a c t o r s on consumer t r a v e l and the d i f f e r e n t market areas f o r d i f f e r e n t types of goods i s not e x p l i c i t l y accounted f o r ; other a t t r a c t i v e aspects such as the centre's r e p u t a t i o n , the r e p u t a t i o n of member s t o r e s , a r c h i t e c t u r a l f e a t u r e s , amenities, community f a c i l i t i e s , l e i s u r e f a c i l i t i e s , the extent and q u a l i t y and e f f e c t i v e n e s s of promotional programs, the d i f f e r e n t c l a s s e s of merchandise o f f e r e d (from lower to higher o r d e r ) , the v a r i e t y of tenant-types, the image p r o j e c t e d by the centre, and the hours of business o f f e r e d f o r consumer convenience a l l may produce v a r i a t i o n s i n a t t r a c t i v e power which are not represented adequately by the s i n g l e v a r i a b l e of s i z e ( e i t h e r p o p u l a t i o n or square f o o t a g e ) . The f a i l u r e of R e i l l y ' s law i n p a r t i c u l a r c i r -cumstances I s r e l a t e d to these other f a c t o r s . R e i l l y ' s law measures f o r c e s that are gross i n scope and ignores or inadequately accounts f o r other important v a r i a b l e s . I t i s hard, and indeed sometimes i m p o s s i b l e , to a s s i g n true numerical values to v a r i a b l e s such as those mentioned above (and discussed more completely i n Chapter I V ) , but they cannot be ignored and so must be given at l e a s t an i n t u i t i v e weighting. 148 More fundamental i s the c r i t i c i s m t h a t the g r a v i t y con-cept i s e s s e n t i a l l y an e m p i r i c a l n o t i o n w i t h l i t t l e t h e o r e t i c a l content; that i s , i t cannot e x p l a i n observed r e g u l a r i t i e s . This l i m i t a t i o n was expressed by Thompson who s t a t e s t h a t : such laws must be regarded as l i t t l e more than h i s t o r i c a l " a c c i d e n t s " i n absence of t r a c i n g out a t h e o r e t i c a l connection between t h e i r e m p i r i c a l l y determined weights and exponents and the corresponding behavioural v a r i a b l e s on which they r e s t . 2 ^ The most that can be s a i d i n defence of R e i l l y ' s law i s t h a t a l l e l s e being equal, presumably the g r e a t e r the s i z e of a centre the g r e a t e r may be expected to be i t s r e t a i l p r o v i s i o n and t h e r e f o r e i t s shopping a t t r a c t i o n , and presumably the greater the d i s t a n c e to be t r a v e l l e d to reach these f a c i l i t i e s the g r e a t e r w i l l be the expenditure of time, e f f o r t , and c o s t , and hence the g r e a t e r the f r i c t i o n to t r a v e l . But as mentioned above the law as o r i g i n a l l y presented does not provide an e n t i r e l y dependable t o o l f o r pro-j e c t i o n , and appears to require considerable i n t u i t i v e s u b j e c t i v e adjustment i f i t i s to be u s e f u l at a l l i n shopping centre patronage e s t i m a t i n g . R e i l l y ' s law i s d e t e r m i n i s t i c i n nature. I t merely o f f e r s a formula f o r c a l c u l a t i n g the breaking p o i n t between trade areas, which i s defined as a p a r t i c u l a r d i s t a n c e between the centre i n question and a competing centre at which the r e l a t i v e a t t r a c t i o n of the two competing centres i s approximately equal. But i n densely populated urban areas, there may be many centres a t t r a c t i n g the consumer w i t h i n the distance that the consumer i s D. L. Thompson, A n a l y s i s of R e t a i l i n g P o t e n t i a l i n M e t r o p o l i t a n  Areas, U n i v e r s i t y of C a l i f o r n i a P r e s s , Berkely, 1964, p. 6. 149 w i l l i n g to t r a v e l . None of these centres have r i g i d l y defined trade area boundaries. Rather, the trade areas overlap con-s i d e r a b l y . The breaking p o i n t concept l o s e s i t s usefulness i n t h i s s i t u a t i o n i f the object of the a n a l y s i s i s to determine not which one of two competing centres a consumer w i l l p a t r o n i z e but which ones (of the many) he w i l l l i k e l y p a t r o n i z e more o f t e n than the ot h e r s . In t h i s s e t t i n g the consumer does not act i n a d e t e r m i n i s t i c manner - he does not always v i s i t a c e r t a i n centre because he happens to r e s i d e w i t h i n the breaking p o i n t perimeter (trade a r e a ) . Rather, he w i l l l i k e l y or probably act i n a c e r t a i n f a s h i o n , i n which case h i s behaviour i s dependent on the number of a l t e r n a t i v e s a v a i l a b l e to him and h i s per c e p t i o n as to the b e n e f i t s and costs associated w i t h each a l t e r n a t i v e . This be-haviour can be described and p r e d i c t e d i n p r o b a b i l i s t i c terms. This i s the concern of p r o b a b i l i t y a n a l y s i s , a subject to which the remainder of t h i s chapter i s d i r e c t e d . P r o b a b i l i s t i c Models The g r a v i m e t r i c models discussed i n the preceding sec-t i o n are a l l macro-models. The consumer behaviour studied i s t r e a t e d i n a h i g h l y aggregated f a s h i o n , at the r e g i o n a l or in t e r - u r b a n l e v e l . However, l o c a t i o n a n a l y s i s at the i n t r a - u r b a n l e v e l i s concerned w i t h problems In determining consumer behaviour at the m i c r o - l e v e l , t h a t i s at the l e v e l of the i n d i v i d u a l f i r m s and con-sumers where I n d i v i d u a l d e c i s i o n s are conditioned by l o c a l circum-stances. Since R e i l l y * s i n i t i a l c o n t r i b u t i o n , the n o t i o n of a s i n g l e downtown shopping core has been superseded by a n o t i o n of 150 many a l t e r n a t e centres of r e t a i l a c t i v i t y , the most important of which are planned shopping c e n t r e s . These centres do not enjoy an e x c l u s i v e l y c a p t i v e trade area but r a t h e r exert a trade i n f l u e n c e which overlaps that of other a l t e r n a t e centres. The important questions i n planning the development of one of these centres would be i n regard to where the centre should be l o c a t e d , how l a r g e i t should be, and how i t should be s t r u c -tured i n terms of tenant mix to best s u i t the market which i t w i l l serve. In attempting to provide answers to such questions, R e i l l y ' s law has been a p p l i e d ( w i t h m o d i f i c a t i o n s ) to estimate trade areas of proposed shopping centres w i t h i n c i t i e s ( i n t r a -urban). As an example, given a proposed s i t e f o r a shopping centre, competing centres are noted, t h e i r p r o x i m i t y to the subject s i t e i s p l o t t e d , and t h e i r s i z e i s determined. Then, u s i n g the modi-f i e d g r a v i t y model, the breaking p o i n t s between the e x i s t i n g centres and the proposed centre are c a l c u l a t e d , and a p o t e n t i a l t r a d i n g area f o r the proposed centre I s d e l i n e a t e d . The p o p u l a t i o n w i t h i n the d e l i m i t e d area i s determined which provides the b a s i s f o r c a l c u l a t i n g the p o t e n t i a l r e t a i l expenditure of t h i s area, and u l t i m a t e l y , the p r o p o r t i o n of t h i s p o t e n t i a l which i s l i k e l y to accrue to the new centre i n s a l e s . The m o d i f i c a t i o n s a p p l i e d to R e i l l y ' s law i n v o l v e changes i n the f a c t o r s chosen as measures of a t t r a c t i v e and r e s i s t a n t f o r c e s . The square footage of r e t a i l space has been s u b s t i t u t e d f o r p o p u l a t i o n , and d r i v i n g times s u b s t i t u t e d f o r p h y s i c a l d i s -tance i n m i l e s . I t can be argued t h a t square footage of space i s a good measure of a t t r a c t i v e power s i n c e i t r e a l l y represents the number of items c a r r i e d by the c e n t r e , and t h i s i s what mainly 151 a t t r a c t s the consumer. That i s , i t i s the breadth and depth of the product assortment o f f e r e d at a p a r t i c u l a r centre which i s the a t t r a c t i o n of t h a t centre - and the square footage i s a r e p r e s e n t a t i v e measure of that a t t r a c t i v e power since breadth and depth of s e l e c t i o n are roughly c o r r e l a t e d to the s i z e of the centre; the l a r g e r the centre, the gre a t e r the s e l e c t i o n . P r e -sumably, the g r e a t e r number of items c a r r i e d by a p a r t i c u l a r shopping centre, the g r e a t e r i s the consumer's expectation t h a t a shopping t r i p to that centre w i l l be s u c c e s s f u l . I t i s thus assumed t h a t the consumer's degree of expectation or r e l a t i v e s u b j e c t i v e p r o b a b i l i t y of ach i e v i n g s a t i s f a c t i o n i s d i r e c t l y p r o p o r t i o n a l to t h e number of items o f f e r e d . But s i n c e i t i s d i f f i c u l t to measure the number of items, i t i s assumed th a t square footage of s e l l i n g area can be s u b s t i t u t e d as an approximately r e p r e s e n t a t i v e measure of a t t r a c t i v e power. S i m i l a r l y i t can be argued t h a t r e s i s t a n t f o r c e s are present which l e s s e n the l i k e l i h o o d of a consumer v i s i t i n g the shopping centre. The e f f o r t , time, d i s t a n c e to t r a v e l , and cost i n v o l v e d i n making the t r i p are perceived by the consumer as de-t r a c t i v e aspects of v i s i t i n g the centre. The l i k e l i h o o d that a consumer w i l l make the t r i p i s n e g a t i v e l y i n f l u e n c e d by these r e s i s t a n t f a c t o r s , or i n other words, i n v e r s e l y p r o p o r t i o n a l to these " c o s t s " as perceived by the consumer. I t can be argued t h a t as dis t a n c e from the centre i n -creases, the l i k e l i h o o d of the consumer v i s i t i n g the centre d e c l i n e s even more r a p i d l y i n view of h i s pe r c e p t i o n of the r i s i n g " c o s t s " of making the t r i p ("costs" i n t h i s context r e f e r to any and a l l costs perceived by the consumer i n c l u d i n g money, 152 time, e f f o r t , and i r r i t a t i o n s ) . This f a c e t of consumer behaviour i s described i n g r a v i m e t r i c models by an exponential f u n c t i o n which i s intended to account f o r the observation t h a t the l i k e l i h o o d of the consumer v i s i t i n g the centre d e c l i n e s i n some in v e r s e pro-p o r t i o n to the costs i n v o l v e d i n making the t r i p . That the expo-n e n t i a l values chosen f o r use i n most g r a v i m e t r i c models have a value h i g h e r than one i s i n d i c a t i v e of the observation that the l i k e l i h o o d of a shopping v i s i t d e c l i n e s at a f a s t e r r a t e than the r a t e at which costs of making t h a t t r i p i n c r e a s e . Bach a d d i t i o n a l increment i n cost produces a correspondingly g r e a t e r negative e f f e c t on the l i k e l i h o o d t h a t the consumer w i l l make the t r i p . Distance has been s u b s t i t u t e d as a proxy v a r i a b l e f o r c o s t s , but i t i s not r e a l l y the p h y s i c a l d i s t a n c e which i s r e l e -vant i n the contemporary c o n g e s t e d - t r a f f i c scene, but r a t h e r d i s -tance as measured i n time u n i t s . Time-distance i s thought to be a r e p r e s e n t a t i v e measure of the r e s i s t a n t f o r c e s (or costs) nega-t i v e l y i n f l u e n c i n g the consumer's d e c i s i o n to undertake the shopping t r i p . S u b s t i t u t i n g t r a v e l time and stor e area i n t o R e i l l y * s law enables the a n a l y s t to determine breaking p o i n t s between cent r e s , and by j o i n i n g these p o i n t s , the trade area can then be d e l i n e a t e d . There are s e v e r a l drawbacks to t h i s approach. The law defi n e s the breaking p o i n t as that p o i n t at which r e t a i l trade i s e q u a l l y d i v i d e d between the two ce n t r e s . In e f f e c t t h i s i s the p o i n t where the l i k e l i h o o d or p r o b a b i l i t y of a consumer choosing e i t h e r centre i s 0.5. To terminate a centre's r e t a i l trade area a t the breaking p o i n t i s to exclude those consumers whose p r o b a b i l i t y 153 of v i s i t i n g the subject centre I s l e s s than 0.5. I t appears un-reasonable to d e l i m i t the t r a d i n g area at the breaking p o i n t . Furthermore the model seems to assume th a t shoppers only choose between the two a l t e r n a t i v e centres nearest to t h e i r p lace of r e s i d e n c e . In f a c t , consumers normally do have a much broader l a t i t u d e of choice and do not r e s t r i c t themselves to only two a l t e r n a t i v e c e n t r e s , but i n s t e a d choose from among se v e r a l a l t e r -n a t i v e s according to v a r i o u s a t t r a c t i v e and r e s i s t a n t f a c t o r s . Huff has questioned the assumption t h a t the exponent of the d i s t a n c e f a c t o r which R e i l l y had o r i g i n a l l y estimated as 2.0 f o r i n t e r - u r b a n trade movements should a l s o apply to i n t r a - u r b a n trade movements. He f i n d s t h i s p a r t i c u l a r l y questionable i n view of R e i l l y ' s e m p i r i c a l f i n d i n g s which showed a broad range of 25 values f o r t h i s parameter. Furthermore he notes t h a t other s t u d i e s (mentioned i n the preceding s e c t i o n ) have shown th a t the d i s t a n c e exponent has ranged from 1.5 to over 3 depending on the type of t r i p , the geographical s e t t i n g , and the r e l a t i v e s i z e s 26 of competing centres. Huff's Model In view of the l i m i t a t i o n s of the g r a v i m e t r i c models discussed above, Huff developed and t e s t e d a model which he b e l i e v e d overcame some of these l i m i t a t i o n s . In h i s words: The model provides a t e n t a t i v e o p e r a t i o n a l b a s i s f o r understanding and determining the r e t a i l trade area of a shopping centre. The 3 B. L. Huff, "A Note on the L i m i t a t i o n s i n Intra-Urban G r a v i t y Models," Land Economics, February, 1961, pp. 64 - 66. 26 I b i d . , p. 65. 154 r e t a i l trade area of an e x i s t i n g or proposed shopping centre can he a s c e r t a i n e d by: (1) d i v i d i n g the surrounding area i n t o small s t a t i s t i c a l u n i t s ; (2) c a l c u l a t i n g the pro-b a b i l i t y of consumers from each of these u n i t s going to a p a r t i c u l a r shopping centre; and (3) drawing l i n e s connecting a l l s t a t i s -t i c a l u n i t s having l i k e p r o b a b i l i t i e s . A r e t a i l trade area i s thus not a f i x e d l i n e c i r c u m s c r i b i n g a shopping centre, but r a t h e r a s e r i e s of zonal p r o b a b i l i t y c o n t o u r s . 2 ' Huff's model i s a p r o b a b i l i s t i c model of i n t r a - u r b a n r e t a i l trade t r a n s a c t i o n s and i s termed a " p r o b a b i l i s t i c model of 28 consumer s p a t i a l behaviour." I t i s r e l a t e d to a s e r i e s of models a l l known as g r a v i m e t r i c models. This p a r t i c u l a r model uses d i s t a n c e i n time u n i t s and s t o r e area as i t s major v a r i a b l e s and i n c l u d e s an exponential parameter, the value of which must be estimated from e m p i r i c a l d a t a . The values of t h i s parameter appear to vary s i g n i f i c a n t l y depending upon the type of shopping t r i p being considered by the consumer. The type of shopping t r i p i s i n t u r n determined by the p a r t i c u l a r type of merchandise sought by the consumer. Huff's model i s b a s i c a l l y formulated as a t h e o r e t i c a l a b s t r a c t i o n of the f a c t o r s governing consumer s p a t i a l behaviour. I t i s designed i n such a way that the r e l a t i o n s h i p s between these f a c t o r s produce a p r o b a b i l i t y estimate of expected consumer be-h a v i o u r i f the f a c t o r s are given c e r t a i n v a l u e s . The p r o b a b i l i t y t h a t a consumer w i l l make a p a r t i c u l a r s p a t i a l choice i s dependent upon h i s perception of the u t i l i t y of making that choice, w i t h 27 D. L. Huff, Determination of Intra-Urban R e t a i l Trade Areas, U n i v e r s i t y of C a l i f o r n i a , Graduate School of Business Administra-t i o n , Los Angeles, 1962, p. 5. 2 8 I b i d . , pp. 4 - 5. 155 u t i l i t y i n t h i s sense p r i m a r i l y intended as a s u b j e c t i v e measure of the amount of s a t i s f a c t i o n derived compared wi t h the cost of d e r i v i n g i t . The g r e a t e r the u t i l i t y of a c e r t a i n choice, the g r e a t e r the p r o b a b i l i t y t h a t that p a r t i c u l a r choice w i l l be made. A l l t h i s says b a s i c a l l y i s what was s a i d e a r l i e r i n con-n e c t i o n w i t h R e i l l y ' s g r a v i t y model: th a t a p a r t i c u l a r shopping f a c i l i t y w i l l a t t r a c t customers according to the a t t r a c t i o n s o f f e r e d by that f a c i l i t y weighed against the costs of v i s i t i n g t h a t f a c i l i t y ; t h a t i s , the consumer w i l l choose a p a r t i c u l a r a l t e r n a t i v e according to a s u b j e c t i v e b e n e f i t - c o s t a n a l y s i s of t h a t a l t e r n a t i v e . Huff b e l i e v e s t h a t the primary f a c t o r s which determine the p r o b a b i l i t y of a d e c i s i o n to shop a t a f a c i l i t y are the s i z e of the shopping centre and the d i s t a n c e i n time u n i t s from the consumer's t r a v e l base to t h a t centre. The distance f a c t o r i s c o n d i t i o n a l on an exponential parameter, lambda. The p r o b a b i l i t y t h a t a consumer a t / w i l l go to a p a r t i c u l a r r e t a i l f a c i l i t y j i s defined i n the model; The parameter 3\ i s to be estimated e m p i r i c a l l y to r e f l e c t the e f f e c t of t r a v e l time on v a r i o u s kinds of shopping t r i p s , s i n c e as p r e v i o u s l y mentioned, Huff d i d not b e l i e v e t h i s value should be 2 i n every case. The number of consumers at a given place i expected to shop at a p a r t i c u l a r j i s p r o p o r t i o n a l to the number of consumers at i and to the p r o b a b i l i t y t h a t a consumer at < w i l l s e l e c t j f o r shopping. 156 E (C i )j - Pr ty x C; where E {Gi)j - the expected number of consumers at L choosing a shopping f a c i l i t y J ; and C i = the numher of consumers a t i . E s t i m a t i o n of a s a l e s volume p o t e n t i a l f o r a proposed shopping centre i s accomplished w i t h the use of Huff's model by proceding through the f o l l o w i n g s e q u e n t i a l steps ( a l l of which Huff has i n c l u d e d i n a computer program f o r ease and speed of 29 computation): Step 1) Determine the p r o b a b i l i t y of shoppers p a t r o n i z i n g the proposed centre by the f o l l o w i n g equation: Tij - ml n where P t j = the p r o b a b i l i t y P of a consumer o r i g i n a t i n g a t a given p o i n t i shopping at a p a r t i c u l a r r e t a i l l o c a t i o n j' \ Sj - the s i z e of the r e t a i l l o c a t i o n j ( i n square f e e t ) ; T£j = the distance T (expressed i n terms of p h y s i c a l d i s t a n c e or time-distance) separating i and j ; J*. = a parameter which i s to be estimated e m p i r i c a l l y to r e f l e c t the s e n s i t i v i t y of v a r i o u s kinds of shopping t r i p s to d i s t a n c e (the parameter i s e i t h e r d erived through a search procedure based on data c o l l e c t e d f o r the proposed l o c a t i o n , or i s simply s p e c i f i e d based on previous f i n d i n g s ) ; m - number of r e t a i l l o c a t i o n s . D. L. Huff, A Programmed S o l u t i o n f o r E s t i m a t i n g R e t a i l Sales  P o t e n t i a l s , Centre f o r Regional S t u d i e s , Lawrence, Kansas, 1966. 157 Step 2) Estimate the number of expected consumers p a t r o n i z i n g j from a p a r t i c u l a r I : E// = Tij x C< where T$ij = the expected number of consumers C at i who w i l l shop at j : Step 3) C a l c u l a t e the expected annual s a l e s from each I : ktj = E z y x B<-* where A^ y = the expected annual s a l e s A o r i g i n a t i n g a t i and terminating at j ; and = the average annual amount B spent by consumers at i f o r each c l a s s of goods K • Step 4) C a l c u l a t e the t o t a l expected number of consumers from a l l p o i n t s i p a t r o n i z i n g j : TEj = ? B/7 t-i where TEj = t o t a l expected number of consumers from a l l p o i n t s i shopping at j ; w = number of s t a t i s t i c a l areas U / «2 z * 3 ) ; Step 5) C a l c u l a t e t o t a l expected volume of s a l e s from a l l c a t j : m TA / = 71 Ai) where TAj = t o t a l expected volume of s a l e s from a l l of the 1 areas te r m i n a t i n g at y Step 6) The f i r s t run of the above steps r e q u i r e s that an assumption be made as to the s i z e of the proposed f a c i l i t y . This assumed s i z e i s then used i n the 158 c a l c u l a t i o n i n step ( 1 ) , which of course governs the c a l c u l a t e d r e s u l t s of the next f o u r steps. The r e s u l t obtained from step (5) i s ther e f o r e the volume p o t e n t i a l estimate a s s o c i a t e d w i t h an assumed (given) s i z e of the proposed f a c i l i t y . But, l o c a t i o n a n a l y s i s should pro-v i d e g u i d e l i n e s regarding what s i z e the proposed f a c i l i t y should be o p t i m a l l y . To accomplish t h i s g o a l , the f o l l o w i n g steps are necessary: re-run the f i r s t f i v e steps u s i n g a d i f f e r e n t , i n c r e m e n t a l l y l a r g e r s i z e assumption up to a given maximum. These r e - c a l c u l a t i o n s w i l l provide s a l e s volume estimates f o r each Incrementally l a r g e r f a c i l i t y s i z e . Step 7) The margin on s a l e s , operating expenses and operating p r o f i t (expressed as a percentage of s a l e s ) are assumed to be a f u n c t i o n of a r e t a i l f a c i l i t y ' s s i z e . G e n e r a l l y , the l a r g e r the s i z e of the f a c i l i t y , the l a r g e r w i l l be i t s opera-t i n g p r o f i t percentage because of economies of s c a l e . However, a p o i n t i s f i n a l l y reached where diseconomies of s c a l e come i n t o e f f e c t t h a t tend to ^ 0 reduce the operating p r o f i t percentage. The p r e c i s e r e l a t i o n s h i p between the operating p r o f i t and the v a r i o u s s i z e s of a f a c i l i t y must be determined e m p i r i c a l l y , the r e s u l t being an operating p r o f i t per-centage associated w i t h each p o s s i b l e s i z e . The pro-cedure i s then to c a l c u l a t e the net operating p r o f i t a s s o c i a t e d w i t h each of the assumed s i z e l e v e l s s p e c i -f i e d i n step (1) by m u l t i p l y i n g the expected sales volume estimate f o r each s i z e by the operating p r o f i t I b i d . , p. 10 1 5 9 percentage (expressed as a percentage of s a l e s ) f o r each s i z e . The r e s u l t i s an operating p r o f i t estimate f o r each assumed s i z e . The f i n a l step i s to s i n g l e out the l a r g e s t operating p r o f i t from the s p e c i f i e d s i z e l e v e l s f o r the proposed f a c i l i t y . The r e s u l t i s the optimum s i z e f o r the f a c i l i t y . Although at f i r s t glance the s e q u e n t i a l method described above appears to have considerable appeal, i t w i l l be shown l a t e r that considerable d i f f i c u l t i e s are evident i n applying t h i s approach, d i f f i c u l t i e s which shed doubt on the a b i l i t y of t h i s method to produce a v a l i d estimate of both the optimum s i z e f o r the proposed f a c i l i t y , and a l s o the corresponding p o t e n t i a l s a l e s volume which could be expected f o r t h a t p a r t i c u l a r optimum s i z e . But before d i s c u s s i n g the adequacy of t h i s model, and before a n a l y z i n g the d i f f i c u l t i e s encountered i n applying p r o b a b i l i s t i c models of t h i s type the d i s c u s s i o n turns to a b r i e f l o o k at a p r o b a b i l i s t i c model s i m i l a r to Huff's which was presented f o r the use of c i v i c planning agencies i n d e a l i n g w i t h r e t a i l planning p o l i c y and problems. Lakshmanan and Hansen Lakshmanan and Hansen have produced a model which they f e e l provides a means of measuring r e t a i l market p o t e n t i a l . E s s e n t i a l l y the same as Huff's model, i t i s intended as an a i d to planning d e c i s i o n s e s p e c i a l l y those of l o c a l government planning boards. As such i t s emphasis i s not so much on d e l i n e a t i n g the trade area of a p a r t i c u l a r centre as i t i s on p r e d i c t i n g the sa l e s volume p o t e n t i a l f o r proposed r e t a i l f a c i l i t i e s , or the market p o t e n t i a l t h a t e x i s t s f o r new centres i n a given area where 160 competitive f a c i l i t i e s a lready e x i s t . I t i s a l s o used to p r e d i c t f u t u r e r e t a i l f l o o r space requirements based on expected p a t t e r n s of p o p u l a t i o n and income growth i n the f u t u r e . The model begins w i t h the premise th a t the s i z e and number of r e t a i l establishments i n an area i s a f u n c t i o n of the number of consumers, or more a p p r o p r i a t e l y , t h e i r purchasing power. The present f o r m u l a t i o n a s s e r t s t h a t the l o c a t i o n or s a l e s p o t e n t i a l of a r e t a i l centre i s not to be yiewed as a f u n c t i o n of the purchasing power of an a r b i t r a r y s p a t i a l s l i c e of the r e g i o n . More r e a l i s t i c a l l y , i t d e s c r i b e s a s i t u a t i o n of overlapping competition between shopping centres and develops a,mathematlcal frame-work f o r measuring i t . E s s e n t i a l l y , the model s t a t e s t h a t the s a l e s p o t e n t i a l f o r a r e t a i l f a c i l i t y i s d i r e c t l y r e l a t e d to i t s s i z e . F u r t h e r , t h i s s a l e s p o t e n t i a l i s d i r e c t l y r e l a t e d to i t s p r o x i m i t y to a number of consumers and t h e i r income l e v e l . F i n a l l y , the s a l e s p o t e n t i a l of a centre i s r e l a t e d to how i t i s disposed to competing r e t a i l f a c i l i t i e s . These r e l a t i o n s h i p s are expressed i n the mathematical form of the f a m i l i a r g r a v i t y framework: Sij = Q T. R. Lakshmanan and ¥. G. Hansen, "A R e t a i l Market P o t e n t i a l Model," Journal of the American I n s t i t u t e of P l a n n e r s , Volume 31, September, 1965, p. 135. 161 where S ij - consumer r e t a i l expenditures of the p o p u l a t i o n i n zone i spent a t l o c a t i o n j 0i = t o t a l consumer r e t a i l expendi-t u r e s of the p o p u l a t i o n i n zone L ; ¥J = the s i z e of the r e t a i l a c t i v i t y i n l o c a t i o n j ; A- = an exponent a p p l i e d to the d i s -tance v a r i a b l e . The above model a s s e r t s t h a t the r e t a i l centre at j A) i n d i r e c t p r o p o r t i o n to the consumer expenditures, O i , B) i n d i r e c t p r o p o r t i o n to i t s s i z e P j , C) i n i n v e r s e p r o p o r t i o n to distance to the consumers (dcj X ), and D) i n inv e r s e p r o p o r t i o n to competition The t o t a l s a l e s i n r e t a i l centre F/ i s expressed: The s i m i l a r i t y to Huff's model i s evident. Without d i s c l o s i n g the e m p i r i c a l t e s t r e s u l t s , Lakshmanan and Hansen stat e d that the model showed a good f i t between model-generated annual s a l e s and a c t u a l annual s a l e s i n the Baltimore r e g i o n . a t t r a c t s consumer d o l l a r s (S i j ) where Sj - t o t a l r e t a i l s a l e s i n r e t a i l centre P j . 162 Lakshmanan and Hansen approach the question of the optimum s i z e f o r the proposed centre somewhat d i f f e r e n t l y from Huff. They "believed that a l o c a t i o n a l d e c i s i o n i s made by a developer when a minimum expected r e t u r n i s estimated at a par-t i c u l a r l o c a t i o n r e l a t i v e to r e t u r n s a v a i l a b l e at known a l t e r n a -t i v e l o c a t i o n s . A c e r t a i n minimum i s considered necessary by developers before the d e c i s i o n to l o c a t e i s made. Lakshmanan and Hansen d e f i n e t h i s minimum i n terms of annual sales per square f o o t . Using f i g u r e s derived from an Urban Land I n s t i t u t e p u b l i c a -32 t i o n , the study assumed that new shopping goods f a c i l i t i e s were v i a b l e when the s a l e s per square f o o t obtained from the model run were at l e a s t $50 - $ 5 5 . ^ When the model i n d i c a t e d that s a l e s of l e s s than $50 per square f o o t would be achieved at a proposed l o c a t i o n , the s i z e - l e v e l assumed f o r the centre was reduced and the model re-run u n t i l s a l e s per square f o o t exceeded the accept-able defined minimum. This method i s contrasted to t h a t of Huff where optimum s i z e was chosen by s e l e c t i n g the s i z e at which the operati n g p r o f i t would be maximized. As was stated p r e v i o u s l y , the model was intended p r i -m a r i l y as a t o o l to a i d i n the development of planning o b j e c t i v e s i n an urban area - e s p e c i a l l y the r e t a i l requirements of that area. To achieve an estimate of the r e t a i l f a c i l i t i e s r e q u i r e d to adequately serve a p a r t i c u l a r area, the f o l l o w i n g r a t i o n a l e was suggested: 32 The D o l l a r s and Cents of Shopping Centres: 1969, Urban Land I n s t i t u t e , Washington, D.C., 19o9. 33 Lakshmanan and Hansen, op. c i t . , p. 139. 1 6 3 f i r s t the s a l e s per square f o o t of shopping centres...(were estimated by the model and) were aggregated by t r a n s p o r t a t i o n d i s t r i c t s . The u n d e r l y i n g assumption i s t h a t i f a group of shopping centres i n a t r a n s p o r t a t i o n d i s t r i c t achieve very h i g h s a l e s per square f o o t (say over $ 7 5 ) , consumers i n these and surrounding d i s t r i c t s are p o o r l y served. High s a l e s per square f o o t i n such areas would r e s u l t e i t h e r i n an increase i n the s i z e of the centres, or i n the development 34 of new s t o r e s nearby to serve the consumers. The u n d e r l y i n g p e r s p e c t i v e stressed by the authors of t h i s model i s t h a t i t i s a t o o l by which the t o t a l aggregated r e t a i l expenditures of a r e g i o n are a l l o c a t e d among the set of r e t a i l f a c i l i t i e s assumed f o r c o n s i d e r a t i o n . I f a new proposed centre i s to be considered, s a l e s are r e - a l l o c a t e d amongst the e x i s t i n g f a c i l i t i e s and the proposed development under considera-t i o n , p r o v i d i n g an estimate of i t s expected share of the t o t a l a v a i l a b l e expenditure. I f i t s expected s a l e s (under a given s i z e -l e v e l assumption) are below the acceptable minimum, the s i z e i s a l t e r e d and the programme re-r u n . I f the s i z e i s too s m a l l , then a l l f a c i l i t i e s would obt a i n such h i g h s a l e s per square f o o t t h a t new competing f a c i l i t i e s would l i k e l y be developed nearby. I f the s i z e were too l a r g e , the r e s u l t i n g s a l e s per square f o o t would be so low as to discourage the development of such a f a c i l i t y . Therefore, the s i z e of the new proposed f a c i l i t y i s a l t e r e d i n successive runs of the model u n t i l the r e s u l t a n t s a l e s per square f o o t f a l l s w i t h i n the optimum range (optimum i n the sense of being h i g h enough to permit a p r o f i t a b l e o p e r a t i o n , but not too h i g h so as to i n d i c a t e the t h r e a t of new competitive f a c i l i t i e s moving i n to capture a share of the excess demand). 34 I b i d p. 1 3 9 . 164 Several a d d i t i o n a l assumptions are i m p l i c i t i n the model described above. F i r s t , the model i s run w i t h e x i s t i n g centres as the only i n p u t s . I f the r e s u l t i n g s a l e s per square f o o t estimates are much above the minimum f e a s i b l e l e v e l i t i s assumed t h a t con-sumers are under-served and the e x i s t i n g f a c i l i t i e s are crowded. The excess expenditure i s then determineds; i t i s then d i v i d e d by the minimum per square f o o t f i g u r e to provide an estimate of the number of square f e e t of new r e t a i l f a c i l i t i e s which are required to serve the consumers of that r e g i o n ; the f i n a l step i s to then a l l o c a t e that required space to a new proposed l o c a t i o n or l o c a t i o n s , and then r e - a l l o c a t e the t o t a l r e t a i l expenditure amongst a l l centres. Because the chosen l o c a t i o n occupies a s p e c i f i c geographical l o c a t i o n , the e f f e c t of distance w i l l modify the expectation of a l l excess s a l e s accruing to t h a t l o c a t i o n . Therefore, successive approximations of the s i z e of the new f a c i l i t y are run through the programme to a r r i v e at the s i z e f o r the centre i n that l o c a t i o n which w i l l a t t r a c t a s u f f i c i e n t s a l es volume per square f o o t . I f the proposed l o c a t i o n i s a "poor" one ( i n the sense t h a t the area i s already adequately served by r e t a i l f a c i l i t i e s ) , no assumed s i z e w i l l be s u f f i c i e n t to generate adequate s a l e s to permit s a t i s f a c t o r y s a l e s per square f o o t . On the other hand, i f the area i s under-serviced, the model w i l l supposedly provide (through a process of successive approxima-t i o n s ) an estimate of the s i z e of the proposed f a c i l i t y which w i l l provide i t w i t h an adequate s a l e s p o t e n t i a l . In summary, the d e c i s i o n to b u i l d a centre on the proposed s i t e w i l l depend on the model's a b i l i t y to determine a f e a s i b l e s i z e f o r the f a c i l i t y which w i l l permit the model to a l l o c a t e an adequate s a l e s p o t e n t i a l to i t . 165 Although t h i s model i s intended f o r a somewhat d i f f e r e n t a p p l i c a t i o n than Huff's model, i t employs the same mathematical formula. In t h i s sense i t s u f f e r s from the same problems and l i m i t a t i o n s as does Huff's.model, namely, problems i n v o l v i n g the v a r i a b l e s and parameters of the p r o b a b i l i t y formula. I t i s t h i s s ubject to which the remainder of t h i s chapter i s p r i m a r i l y con-cerned. L i m i t a t i o n s of the P r o b a b i l i t y Models The p r o b a b i l i s t i c method d i f f e r s from the d e t e r m i n i s t i c (defined trade area) method i n one e s s e n t i a l r e s p e c t . The deter-m i n i s t i c method o u t l i n e s the trade area boundary and the enclosed p o p u l a t i o n , and then estimates the percentage of t h a t p o p u l a t i o n which i s expected to p a t r o n i z e the centre by applying a subjec-t i v e l y estimated market share percentage f a c t o r . The p r o b a b i l i s t i c approach, however, avoids p h y s i c a l l y d e f i n i n g the trade area and i n s t e a d estimates the l i k e l y t o t a l patronage by assuming lower p r o b a b i l i t i e s of patronage as d i s t a n c e from the centre i n c r e a s e s . The danger i n u s i n g p r o b a b i l i t y models i s to assume t h a t because the model i s expressed i n an apparently r i g o r o u s mathematical formula, the r e s u l t s w i l l be more accurate and pre-c i s e than those estimated s u b j e c t i v e l y . But i f the formula embodies gross proxy v a r i a b l e s and i m p r e c i s e l y defined exponents, the assumption t h a t the model can generate r e l i a b l y accurate p r e d i c t i o n s of behaviour a l l on i t s own i s erroneous and some-what n a i v e . Yet students of l o c a t i o n a n a l y s i s , impressed by the apparent p r e c i s i o n of mathematical formulae, o f t e n f a l l i n t o the t r a p of p l a c i n g complete confidence i n t h e i r supposedly "objec-t i v e " p r e d i c t i o n s . The f o l l o w i n g d i s c u s s i o n i l l u s t r a t e s t h i s p o i n t . 166 In a study conducted i n Vancouver to determine the p o t e n t i a l s a l e s volume f o r a proposed r e g i o n a l shopping centre i n t h i s c i t y , J v a r i o u s p r o b a b i l i t i e s of patronage were assigned according to both d i s t a n c e from the centre and the type of mer-chandise sought. These estimates were adapted from the r e s u l t s 36 of I r a Lowry's study i n P i t t s b u r g h which provided e m p i r i c a l l y d e r i v e d p r o b a b i l i t i e s of consumers t r a v e l l i n g v a r i o u s d i s t a n c e s to purchase v a r i o u s types of goods and s e r v i c e s . I t was assumed t h a t lowry's r e s u l t s could be a p p l i e d to other trade areas, and any d i f f e r e n c e s i n the trade area c o n d i t i o n s could be recognized by a d j u s t i n g Lowry's p r o b a b i l i t y estimates. L o c a l access and competitive f a c t o r s f o r example could be accounted f o r by a d j u s t i n g the p r o b a b i l i t i e s . Markoff's adjusted p r o b a b i l i t y estimates are shown i n Table I . L a t e r i n the study, Markoff c r i t i c i z e s some aspects of a study conducted by a p r i v a t e c o n s u l t i n g f i r m , e s p e c i a l l y the market share values assigned by the f i r m : Thus i f a f i g u r e of 15 per cent were chosen re p r e s e n t i n g the drawing power f o r some type of good or s e r v i c e w i t h i n the primary area of i n f l u e n c e the inf e r e n c e i s that t h i s centre w i l l draw 15 per cent e q u a l l y from a l l sectors w i t h i n the primary area, whether one block or three m i l e s d i s t a n t . L i t t l e or no j u s t i f i c a -t i o n i s provided f o r the f o l l o w i n g values.^' 35 P. G. Markoff, An A p p l i c a t i o n of a P r o b a b i l i s t i c Method f o r Store L o c a t i o n , unpublished B. Comm. graduating essay, U n i v e r s i t y of B.C., 1 $ 6 8 . 3 6 I . S. Lowry, "Location Parameters i n the P i t t s b u r g h Market," Regional Science A s s o c i a t i o n Papers, Volume X, 1963, pp. 147 - 163. Markoff, op. c l t . , p. 76. 167 TABLE I P r o b a b i l i t i e s of Patronage by Distance and Type of Merchandise Merchandise Types 0-2 Pood .50 Household Operation .50 Appliances .30 Other F u r n i t u r e , Equipt. .30 C l o t h i n g A5 T r a n s p o r t a t i o n .15 Medical Care .70 Personal Care .65 Recreation .12 Reading .20 Smoking and A l c o h o l .AO 2-4 4-6 6-8 8-12 .30 .20 .10 .02 .30 .20 .10 .02 .20 .10 .05 .02 .20 .10 .10 .02 .35 .30 .10 .05 .10 .05 .02 .01 .30 .20 .10 .05 .35 .25 .15 .05 .08 .05 .02 .01 .15 .10 .05 .02 .30 .15 .05 .02 Source: P.G. Markoff, An A p p l i c a t i o n of a P r o b a b i l i s t i c Method f o r Store L o c a t i o n , p. 72. 168 Markoff apparently intends to c r i t i c i z e the f a c t that t h i s f i r m was not r e c o g n i z i n g t h a t the percentage drawing power f a c t o r v a r i e s w i t h d i s t a n c e , which on the surface appears to be a v a l i d c r i t i c i s m . Yet, I t i s l i k e l y t h a t the p r i v a t e f i r m d i d indeed recognize t h i s f a c t , but merely averaged the values f o r d i f f e r e n t goods over d i f f e r e n t d i s t a n c e s i n t o an average drawing power f o r the whole area. What i s p a r t i c u l a r l y i n t e r e s t i n g to note however i s that Markoff contends that " l i t t l e or no j u s t i f i c a t i o n " i s provided f o r the ehoice of 15 per cent as the value of the drawing power percentage f a c t o r , which i s a v a l i d c r i t i c i s m s ince no evidence i s presented which says t h i s value could not be 20 per cent or 27 per cent or any other v a l u e . And y e t , Markoff's own study provides c e r t a i n l y no b e t t e r j u s t i f i c a t i o n f o r the choice of the p r o b a b i l i t y values shown i n Table I except to say that they are "adjusted" (no j u s t i f y i n g evidence c i t e d ) values based on Lowry's P i t t s b u r g h r e s u l t s , which i n themselves cannot w i t h any degree of confidence be a p p l i e d to any trade area other than P i t t s b u r g h u n t i l f u r t h e r research determines t h e i r v a l i d i t y i n other l o c a t i o n s . Thus Markoff i s c r i t i c i z i n g the p r i v a t e research f i r m f o r e x a c t l y t h a t which i s the major l i m i t a t i o n of h i s own study: t h a t there i s no r e a l , proven j u s t i f i c a t i o n f o r choosing any one p a r t i c u l a r value, or sets of p a r t i c u l a r v a l u e s , as the " c o r r e c t " values to use. Markoff i m p l i e s that h i s own study I s more o b j e c t i v e than the other study because he employs p r o b a b i l i t y values r a t h e r than an estimated drawing power percentage f a c t o r -but h i s p r o b a b i l i t y values are a l s o merely estimates. C e r t a i n l y they were derived w i t h some attempt at o b j e c t i v i t y , but t h e i r d e r i v a t i o n occurred i n P i t t s b u r g h based on the behaviour p a t t e r n s 169 and i n f l u e n c e s p r e v a l e n t i n t h a t l o c a t i o n . To assume that the r e s u l t s derived i n one e m p i r i c a l s i t u a t i o n are v a l i d i n another e m p i r i c a l s i t u a t i o n i s somewhat presumptuous e s p e c i a l l y s i n c e the t h e o r e t i c a l explanation f o r the behaviour i s sketchy at best. I t appears l o g i c a l t h a t the p r o b a b i l i t i e s derived i n a p a r t i c u l a r e m p i r i c a l s i t u a t i o n are to a l a r g e extent p e c u l i a r to t h a t s i t u a -t i o n , and s t i l l only estimates. To apply p r o b a b i l i t y values (or exponential values f o r t h a t matter) to s i t u a t i o n s other than the ones from which they were derived r e q u i r e s t h a t they be adjusted s u b j e c t i v e l y to account f o r d i f f e r e n t circumstances and i n f l u e n c e s i n the new s i t u a t i o n , which r e i t e r a t e s and r e i n f o r c e s the contention t h a t a t the present s t a t e of the a r t of model development, the use of s u b j e c t i v e judgment cannot be avoided. This i s not meant to imply t h a t s u b j e c t i v e judgment i s a k i n to a plague which should be avoided at a l l c o s t s , f o r i n f a c t experienced a n a l y s t s are o f t e n capable of s u b j e c t i v e l y a d j u s t i n g the data w i t h good r e s u l t s . What i t does say i s t h a t the p r o b a b i l i s t i c models discussed i n t h i s chapter r e q u i r e s u b j e c t i v e i n t e r p r e t a t i o n i f they are to be at a l l u s e f u l . This does not mean that the models should be d i s -carded f o r being inadequate to the task of p r o v i d i n g c o n s i s t e n t l y accurate, p r e c i s e p r e d i c t i o n s a l l on t h e i r own. C e r t a i n l y they are not p e r f e c t , but the c o m p l e x i t i e s of consumer s p a t i a l be-h a v i o u r are such that i t may w e l l prove to be an impossible task to b u i l d the p e r f e c t model. In the meantime, i t should be recognized that the p r e s e n t l y a v a i l a b l e p r o b a b i l i s t i c models, when a p p l i e d i n conjunction w i t h s u b j e c t i v e Judgment and experience, are u s e f u l a n a l y t i c a l t o o l s f o r s a l e s volume est i m a t i n g i n s p i t e of t h e i r l i m i t a t i o n s . The task remains to f u r t h e r extend and 170 r e f i n e the models to improve t h e i r d e s c r i p t i v e and p r e d i c t i v e c a p a b i l i t i e s . This w i l l r e q u i r e t h a t the models more e x p l i c i t l y recognize the determinants of consumer s p a t i a l behaviour, e i t h e r through expanding the number of v a r i a b l e s i n the formula, or through r e - s t r u c t u r i n g the parameters. To r e t u r n to the subject of Huff's model, Huff e m p i r i -c a l l y t e s t e d h i s model i n a suburban Los Angeles community to determine the exponential d i s t a n c e parameter values f o r h i s model, The procedural steps In t h i s e m p i r i c a l t e s t are expressed by Huff: 1. Assume a p a r t i c u l a r value of /N. which i s g r e a t e r than u n i t y . Correspondingly, s u b s t i t u t e the appropriate values f o r each of the appropriate a l p h a b e t i c characters noted i n the model and c a l -c u l a t e the expected p r o b a b i l i t i e s . 2. Compare the expected p r o b a b i l i t i e s w i t h the a c t u a l r e l a t i v e f requencies (of patronage) obtained from the survey data and c a l c u l a t e a c o r r e l a t i o n c o e f f i c i e n t . 3. Continue to s u b s t i t u t e Incremental values f o r u n t i l the h i g h e s t cor-r e l a t i o n c o e f f i c i e n t i s obtained which w i l l represent the optimum value of the parameter.3° Huff's e m p i r i c a l study obtained data samples from three neighbourhoods and fourteen planned shopping centres, w i t h the f o l l o w i n g r e s u l t s : 1. For the commodity " c l o t h i n g , " the three neighbourhoods produced lambda values of 2.655, 2.889 and 3.690. 2. For " f u r n i t u r e , " the three neighbour-hoods produced lambda values of 2.115, 2.542, and 3.247.39 38 39 Huff, Determination of Intra-Urban R e t a i l Trade Areas, p. 23. I b i d . , p. 27. 171 Huff commented on the r e s u l t s of h i s t e s t : the expected behaviour derived from the model corresponds q u i t e c l o s e l y to the a c t u a l behaviour observed from the survey f i n d i n g s . However, contrary to what was expected, the estimates of lambda v a r i e d from neighbourhood to neighbourhood -the i n v e s t i g a t i o n was designed i n such a manner as to t e s t the hypothesis t h a t lambda was p r i m a r i l y a f u n c t i o n of the type of shopping t r i p . Each of the three sample neighbourhoods were s e l e c t e d on the b a s i s of t h e i r homogeneity, and i t was t h e r e f o r e expected t h a t lambda would be approximately the same f o r each neighbourhood w i t h respect to a given type of shopping t r i p , i . e . , c l o t h i n g and f u r n i t u r e . 4 0 Huff employed a s t a t i s t i c a l technique to determine whether or not v a r i a t i o n s i n the exponential v a l u e s obtained from the model were due to sample v a r i a t i o n , and having s a t i s f i e d him-s e l f t h a t such v a r i a t i o n s were indeed a r e s u l t of sample v a r i a t i o n , he c a l c u l a t e d a mean value of lambda f o r each of c l o t h i n g and 41 f u r n i t u r e , 3.191 and 2.723 r e s p e c t i v e l y . Huff concluded: Despite the l a c k of co n c l u s i v e s t a t i s -t i c a l evidence t h a t the mean lambda estimates are v a l i d r e p r e s e n t a t i o n s of the c l o t h i n g and f u r n i t u r e parameters, they do i n d i c a t e t h a t a consumer's s p a t i a l behaviour i s a f u n c t i o n of the type of shopping t r i p . For example, the mean estimates f o r shopping t r i p s i n v o l v i n g c l o t h i n g purchases i s h i g h e r than the mean value estimated f o r f u r n i t u r e purchases, which confirms the observation t h a t consumers are not w i l l i n g to t r a v e l as f a r f o r c l o t h i n g as they are f o r f u r n i t u r e purchases. 2 40 I b i d . , pp. 26 - 28. 4 1 I b i d . , p. 29. 42 I b i d . , p. 31. 172 In one study which te s t e d Huff's model, negative c o e f f i c i e n t s of determination were reported i n some cases. Those who are accustomed to d e a l i n g w i t h c o e f f i c i e n t s of determination p as used i n r e g r e s s i o n a n a l y s i s know t h a t R i s never negative. But i f the sum of squared d e v i a t i o n s of estimated behaviour from a c t u a l behaviour i s greater than the sum of squared d e v i a t i o n s 2 of random behaviour from a c t u a l behaviour, R w i l l be negative. 2 In some cases, negative values of R occurred over the whole range 44 of lambda v a l u e s . In other words, the c o r r e l a t i o n between model p r e d i c t i o n s and a c t u a l behaviour was found to be negative i n some cases. Wiginton concluded that i n some cases the model d i d not f i t the data as w e l l as p u r e l y random behaviour. That i s , p r e d i c t e d behaviour deviated from a c t u a l behaviour more than randon behaviour would have deviated from the a c t u a l . The model p r e d i c t e d behaviour whose r e l a t i o n s h i p to a c t u a l behaviour was worse than a p u r e l y random p a t t e r n . Wiginton b e l i e v e d that t h i s could only be the case when the model misrepresented the f a c t o r s which a c t u a l l y determine behaviour, which l e d him to b e l i e v e that the model must be i n c o r r e c t i n some very fundamental way, and p o s s i b l y should be r e j e c t e d i n i t s present form. Wiginton a l s o re-ran Huff's data on a computer programme seleoted to t e s t Huff's model i n Vancouver. A sub-routine of t h i s programme produced graphs showing the behaviour of the c o r r e l a t i o n c o e f f i c i e n t (R) with incremental changes i n the value of lambda 43 3. C. Wiginton, An E m p i r i c a l Test of a P r o b a b i l i s t i c Model of  Consumer S p a t i a l Behaviour, unpublished MBA, t h e s i s . U n i v e r s i t y ; of B.C., 1966. 44 I b i d . , p. 109. 45 I b i d . , pp. 108 - 110. 173 46 over the range f o r lambda of 0.5 to 4.5. While Huff presented the optimum value of lambda f o r which the c o r r e l a t i o n c o e f f i c i e n t was maximized, he d i d not s t r e s s whether or not there was a range of lambda values a l l e x h i b i t i n g h i g h c o e f f i c i e n t s of c o r r e l a t i o n ; r a t h e r , he merely chose the p a r t i c u l a r lambda value which e x h i b i -ted the h i g h e s t corresponding R. However, Wiginton found t h a t when he reproduced Huff's r e s u l t s , "the model produced c o n s i s t e n t l y 47 h i g h values of R over a very wide range of values f o r lambda." He concluded that not only d i d Huff's t e s t s f o r s i g n i f i c a n c e of p a r t i c u l a r lambda values seem questionable, but a l s o the model was r e l a t i v e l y i n s e n s i t i v e to values of lambda over a very wide range sin c e the c o e f f i c i e n t s of c o r r e l a t i o n i n many cases remained above 0.9 w h i l e lambda ranged between 2.0 and 4.0. Wiginton f e l t t h a t t h i s r e s u l t meant t h a t i n the model almost any value of lambda over a wide range would p r e d i c t about as w e l l as any other value, a c o n c l u s i o n which he b e l i e v e d r a i s e d s e r i o u s questions about the value of the model. Wiginton was unable to detect any d l s c e r n a b l e trends i n the c l u s t e r s of maximum lambda and R p a i r s generated from h i s data and observed that although maximum R values tended to increase w i t h i n c r e a s i n g lambda values, the s c a t t e r i n g of generated values was so broad t h a t f i t t i n g a curve or s t r a i g h t l i n e to the r e s u l t s , or 48 even d e t e c t i n g a c e n t r a l tendency, was v i r t u a l l y i m p o s s i b l e . He concluded t h a t the r e s u l t s of h i s t e s t were: 46 I b i d . , p. 115. 4 7 IMi«» P. 1 ]-5. 48 I b i d . , p. 130. 174 so d i f f u s e as to not l e n d any support to the hypothesis ( t h a t the value of the parameter i s a f u n c t i o n of the type of shopping t r i p ) . 4 9 Perhaps more important, he could not f i n d s u f f i c i e n t evidence to support the choice of any one absolute value of lambda f o r a p a r t i c u l a r type of shopping t r i p . The lambda values were too d i f f u s e (at h i g h l e v e l s of R) to permit choosing any p a r t i c u l a r value with confidence. I t would appear t h a t the attempt to a b s t r a c t the primary determinants of consumer behaviour i n t o a formula has r e s u l t e d i n a choice of v a r i a b l e s and parameters which are too gross In scope. The f a c t o r s and parameters and t h e i r s t r u c t u r e d r e l a t i o n s h i p i n the formula are too s i m p l i f i e d and too broadly defined to ade-quately represent the complex i n f l u e n c e s on consumer s p a t i a l behaviour. C a l i b r a t i o n of the model i n d i f f e r e n t areas, under d i f f e r e n t circumstances, and w i t h d i f f e r e n t i n p u t s produces more of t e n than not d i f f e r e n t exponential parameter values which the model does not e x p l a i n : t h a t i s , the exponential d i s t a n c e para-meter i s a " c a t c h - a l l " parameter designed to give r e c o g n i t i o n to the multitude of f a c t o r s and i n f l u e n c e s not otherwise contained i n the model. E s s e n t i a l l y the exponential value can be a l t e r e d to produce v a s t l y d i f f e r e n t r e s u l t s w i t h the formula, even though the s i z e and d i s t a n c e f a c t o r s may remain constant. The exponent i s b a s i c a l l y a c o n d i t i o n a l or contingency parameter through which a l l the consumer patronage v a r i a b l e s not included i n the formula can a l t e r the r e s u l t s produced by those v a r i a b l e s which are i n the formula. Therefore, a l l the s i g n i f i c a n t unrecognized, ignored, 4 9 I b i d . , p. 133. 175 and " l e f t - o v e r " l o c a t i o n v a r i a b l e s can supposedly be given recog-n i t i o n through t h i s parameter. But the exponential values are e m p i r i c a l l y d e r i v e d , and theory has not developed to the p o i n t where i t can p r e d i c t what the c o r r e c t numerical value f o r t h i s exponent w i l l be i n a s p e c i f i c s i t u a t i o n , i n a p a r t i c u l a r geo-g r a p h i c a l l o c a t i o n , w i t h the s p e c i f i c circumstances p r e v a l e n t i n that l o c a t i o n . I t appears that to improve the p r e c i s i o n and p r e d i c t i v e a b i l i t y of the model, the unrecognized and ignored v a r i a b l e s which might i n f l u e n c e consumer s p a t i a l behaviour must be given g r e a t e r r e c o g n i t i o n i n the model. Two avenues appear to o f f e r the best p o s s i b i l i t i e s . The f i r s t i n v o l v e s t h e i r e x p l i c i t r e c o g n i t i o n through the v e h i c l e of the exponents; th a t i s , they would be s p e c i f i c a l l y i n cluded i n the mathematical c o n s t r u c t i o n of the exponential parameters. The second avenue would i n v o l v e t h e i r i n c l u s i o n i n the formula as v a r i a b l e s along w i t h the v a r i a b l e s of time-distance and s t o r e area to create some s o r t of weighted f u n c t i o n which could p r e d i c t the p r o b a b i l i t y of shopping. Since the concern of t h i s s e c t i o n of the t h e s i s i s not to examine methods of model c o n s t r u c t i o n but rather to examine the f a c t o r s and i n t e r r e l a t i o n s h i p s i n such models, no attempt w i l l be made to s p e c i f y which of the two avenues mentioned above o f f e r s the best approach. Rather, the i n t e n t i o n i s to I l l u s t r a t e how the many f a c t o r s and r e l a t i o n s h i p s enumerated i n Chapter IV as the primary determinants i n f l u e n c i n g consumer s p a t i a l behaviour are not e x p l i c i t l y and adequately accounted f o r , or recognized, i n the mathematical f o r m u l a t i o n of the model. The contention here i s t h a t i f they were, the model might be more capable of producing more accurate p r e d i c t i o n s . 176 The model does not seem to he able to account f o r changes In consumer behaviour r e s u l t i n g from changes i n the l e v e l of un-c e r t a i n t y faced by the consumer when ev a l u a t i n g a l t e r n a t i v e s and making d e c i s i o n s . I t may be r e c a l l e d that the model developed from the reasoning t h a t consumers form a s u b j e c t i v e p r o b a b i l i t y estimate of success regarding a p a r t i c u l a r s t o r e f o r p a r t i c u l a r items, and t h a t the a t t r a c t i n g power of t h a t s t o r e could be represented by the proxy v a r i a b l e store area. However, t h i s would be modified by r e s i s t a n t f a c t o r s , represented by the proxy v a r i a b l e d i s t a n c e , to produce a l i k e l i h o o d of shopping. But, i f the s u b j e c t i v e proba-b i l i t y estimates were based on b e t t e r knowledge, and were thus more c e r t a i n , the d i s t a n c e f a c t o r would have a r e l a t i v e l y l e s s e r i n -f l u e n c e on the consumer's l i k e l i h o o d of shopping, since the con-sumer's gr e a t e r expectation of a c h i e v i n g success at a p a r t i c u l a r s t o r e would render the distance f a c t o r r e l a t i v e l y l e s s important; the consumer would t r a v e l f u r t h e r i f h i s perceived l i k e l i h o o d of a c h i e v i n g success was h i g h e r . Consumers who are more knowledgeable regarding the a v a i l a b l e product mix o f f e r e d at a s t o r e w i l l not be as a f f e c t e d by the nuisance f a c t o r d i s t a n c e as would those who were l e s s knowledgeable. The centre's a d v e r t i s i n g program can be i n s t r u m e n t a l i n l e s s e n i n g the u n c e r t a i n t y f a c i n g the consumer. A well-executed a d v e r t i s i n g programme could s i g n i f i c a n t l y a l t e r the r e l a t i o n s h i p between a t t r a c t i o n and r e s i s t a n c e f a c t o r s to the p o i n t where Huff's model (which does not e x p l i c i t l y consider the degree of u n c e r t a i n t y or l a c k of i t f a c i n g the consumer) would have to recognize v a r i o u s exponential parameter values f o r each l e v e l of u n c e r t a i n t y . D i f f i c u l t as i t i s to estimate rough parameter values anyway, i t would appear to be a r a t h e r monumental task to a s c e r t a i n v a r i a t i o n s 177 i n these values according to v a r i a t i o n s i n u n c e r t a i n t y . The d i s t a n c e exponent i s f u r t h e r modified by the f o l l o w i n g c o n s i d e r a t i o n s , a l l of which tend to l e s s e n the cer-t a i n t y with which any one p a r t i c u l a r absolute value f o r the exponential parameter can be chosen: 1) Product s u b s t i t u t a b i l i t y - i f the p a r t i c u l a r shopping good sought by the consumer i s one f o r which the consumer i s un-w i l l i n g to s u b s t i t u t e other, s i m i l a r goods ( i n other words, t h i s good has a c e r t a i n uniqueness); and i f the consumer i s u n c e r t a i n as to h i s l i k e l y success i n f i n d i n g t h a t s p e c i f i c good at:a par-t i c u l a r r e t a i l f a c i l i t y , then he w i l l d e s i r e a broader s e l e c t i o n of goods of t h i s general t y p e , and w i l l show a corresponding w i l l i n g -ness to t r a v e l f a r t h e r to obta i n such goods. The exponential parameter i n t h i s case would be a l t e r e d by such a c o n s i d e r a t i o n . Furthermore, the degree of s u b s t i t u t a b i l i t y depends on a m u l t i -tude of f a c t o r s i n c l u d i n g e s t a b l i s h e d brand preferences; a d v e r t i s -i n g and promotion a f f e c t i n g the consumer; income and s o c i a l c l a s s of the consumer, e t c . That these v a r i a b l e s d i f f e r from area to area f o r the same general type of good renders the problem of d e f i n i n g absolute exponential values f o r the dis t a n c e parameter d i f f i c u l t a t l e a s t . 2) P r i c e comparison - i f the opportunity e x i s t s f o r b e t t e r p r i c e comparison at a f a c i l i t y which o f f e r s a broader s e l e c t i o n of the general type of good sought a f t e r , the consumer w i l l l i k e l y be w i l l i n g to t r a v e l f u r t h e r to achieve p r i c e savings. The e f f e c t i s modified by the socio-economic c l a s s of the con-sumer, the number of l o c a t i o n s o f f e r i n g price-comparison shopping i n c l o s e p r o x i m i t y to the place of resid e n c e , e t c . , a l l of which 178 tend to modify the distance exponent f o r the p a r t i c u l a r shopping item. The degree of m o d i f i c a t i o n i n the parameter depends on the r e l a t i v e strength of such modifying i n f l u e n c e s i n the geograph-i c a l area under study. 3) Absolute p r i c e - products which have a r e l a t i v e l y h i g h p r i c e i n r e l a t i o n to the consumer's income are u s u a l l y more c a r e f u l l y s e l e c t e d by the consumer. He f i n d s i t worthwhile (since the expenditure i s r e l a t i v e l y high) to shop around f o r broader s e l e c t i o n both i n s t y l e s and q u a l i t i e s as w e l l as p r i c e . The con-sumers w i l l be w i l l i n g to t r a v e l f a r t h e r i n p u r s u i t of such items i n order to assure themselves that they have purchased w i s e l y and have received the most s u i t a b l e item ( i n terms of personal t a s t e s and preferences) f o r the r e l a t i v e l y l a r g e monetary o u t l a y . Any f a c i l i t y which o f f e r s a wider s e l e c t i o n w i l l be more l i k e l y to s a t i s f y the consumer who expects t h a t the wider s e l e c t i o n w i l l p r ovide him w i t h a b e t t e r choice f o r t h i s r e l a t i v e l y important (to him) purchase. 4) S o c i a l l y s i g n i f i c a n t purchases - c e r t a i n goods pro-v i d e a degree of s a t i s f a c t i o n to the consumer r e l a t e d to the s o c i a l s t a t u s associated w i t h such items. C l o t h i n g , f o r example, i s s o c i a l l y important to most consumers to the extent t h a t they are w i l l i n g t o t r a v e l f a r t h e r to f i n d broader s e l e c t i o n i n s t y l e , q u a l i t y , p r i c e , and p r e s t i g e v a l u e . The g r e a t e r the s o c i a l s i g n i f i c a n c e of such items to the consumer, the more important they w i l l be to him, and the more w i l l i n g he w i l l be to go more out of h i s way t o achieve a s a t i s f a c t o r y purchase. Again, s o c i a l s t a t u s , income s t a t u s , age l e v e l , store image, a l t e r n a t i v e f a c i l i t i e s a v a i l a b l e , and a d v e r t i s i n g can a l l a f f e c t the l i k e l i h o o d of a p a r t i c u l a r consumer i n a p a r t i c u l a r geographical area shopping 179 at a p a r t i c u l a r r e t a i l o u t l e t . The d i s t a n c e exponent would have t o he modified to account f o r these v a r i a t i o n s i n consumer motiva-t i o n and behaviour, and the m o d i f i c a t i o n s would have to be d i f f e r e n t according to the weight t h a t each i n f l u e n c i n g f a c t o r c a r r i e s i n each area f o r each c l a s s of consumer. In summary, the distance exponent v a r i e s according t o : the type of merchandise sought; the degree to which c e r t a i n goods are important to the consumer; the importance to the consumer o f s e l e c t i o n , q u a l i t y , p r i c i n g , and depth of merchandise o f f e r e d ; the degree of s e l e c t i v i t y i n the purchase d e c i s i o n ; the s o c i a l s i g n i -f i c a n c e attached to c e r t a i n types of merchandise; consumer w i l l i n g -ness to accept s u b s t i t u t e merchandise; p s y c h o l o g i c a l blocks caused by v a r i o u s geographical c o n s i d e r a t i o n s ; road c a p a c i t i e s , t r a f f i c congestion, and c o n d i t i o n s of a c c e s s i b i l i t y ; the a v a i l a b i l i t y , p r o x i m i t y , q u a l i t y and e f f e c t i v e n e s s of competing r e t a i l e s t a b l i s h -ments; and a l l other a t t r a c t i v e aspects of the subject l o c a t i o n . The extent to which the above f a c t o r s modify the e f f e c t of distance (distance exponent) d i f f e r s according to f a m i l y s i z e s , age group-i n g s , income s t a t u s , and s o c i a l s t a t u s of the consumers i n the area. Furthermore, as c i t e d p r e v i o u s l y , i t appears t h a t the two v a r i a b l e s i n Huff's model ( s t o r e area and d i s t a n c e ) may be i n s u f f i c i e n t i n themselves as proxy v a r i a b l e s to permit the model to a c c u r a t e l y p r e d i c t consumer behaviour. We have mentioned the f a c t o r s which modify the e f f e c t of d i s t a n c e , and i t i s academic whether these f a c t o r s should be recognized i n the form of v a r i a b l e s or through the expansion of the exponential parameter. But store s i z e as a proxy v a r i a b l e (with no modifying exponent) 180 may not be adequate to represent other aspects of a t t r a c t i o n such as: s i z e s of the i n d i v i d u a l stores i n the centre; a t t r a c t i v e design and l a y o u t ; v a r i e t y i n tenant-types; merchandise mix, breadth of s e l e c t i o n , range of c o l o u r s , q u a l i t i e s , s t y l e s , and s i z e s ; competitive or market-oriented or unique p r i c i n g p o l i c i e s ; the image p r o j e c t e d by the centre; i t s r e p u t a t i o n ; the a v a i l a b i l i t y or l a c k of f r e e p a r k i n g ; amenities and community f a c i l i t i e s ; appropriateness of the hours of business; and the e f f e c t i v e n e s s of the promotional programme. Furthermore, the importance and e f f e c t of each of these f a c t o r s d i f f e r s according to the s i z e of f a m i l y , age group, income s t a t u s , and s o c i a l s t a t u s of the con-sumers i n the area. This suggests t h a t e i t h e r other f a c t o r s of a t t r a c t i o n could be i n c l u d e d , or an exponent modifying the store area proxy v a r i a b l e could be i n c l u d e d . The major problem w i t h g r a v i m e t r i c models i s that they attempt to p r e d i c t average behaviour, and i n doing so, they tend to de-emphasize those i n f l u e n c e s which can a f f e c t i n d i v i d u a l d e c i s i o n making. As a general premise I t may be quite true that s t o r e area and distance would produce an accurate p r e d i c t i o n of consumer behaviour i f a l l other t h i n g s were equal, which of course they never are. D i f f e r e n t i n t e r f e r i n g Influences exert themselves i n v a r y i n g degrees on i n d i v i d u a l consumers, a f f e c t i n g t h e i r d e c i s i o n s , and d i s t o r t i n g the simple store s i z e - d i s t a n c e r e l a t i o n s h i p . These other f a c t o r s are b a s i c a l l y a d d i t i o n a l f a c t o r s of a t t r a c t i o n and r e s i s t a n c e as perceived by the consumer which modify the r e l a t i v e Importance and b a s i c r e l a t i o n s h i p of the proxy v a r i a b l e s In Huff's model. 181 The v a r i o u s f a c t o r s which i n f l u e n c e a consumer's choice f o r shopping must be combined i n t o some s o r t of weighted f u n c t i o n which can recognize t h e i r r e l a t i v e importance i n the consumer de-cision-making process, and which can th e r e f o r e b e t t e r p r e d i c t the p r o b a b i l i t y of consumer choice. Huff h i m s e l f recognized t h a t h i s model was not i n f a l l i b l e . He concluded t h a t : mathematical models are not i n f a l l i b l e . They are, by n e c e s s i t y , s i m p l i f i e d con-s t r u c t s of some aspect of r e a l i t y . I t i s impossible f o r such con s t r u c t s to i n c l u d e a l l the p o s s i b l e f a c t o r s that may have a bearing on a p a r t i c u l a r problem. Therefore d e c i s i o n makers should be aware th a t there are v a r i a b l e s other than those s p e c i f i e d i n the model th a t a f f e c t the s a l e s of a r e t a i l f i r m . The r e p u t a t i o n of a f i r m , the newness of the s t o r e , the merchandise t h a t i t c a r r i e s , the s e r v i c e s i t o f f e r s , e t c . , are but a few examples of a d d i t i o n a l v a r i a b l e s - human judgment pl a y s an Important r o l e i n a r r i v i n g at an adjusted s a l e s estimate.50 I n f a c t at the present l e v e l of knowledge i n model developments of t h i s type, i t appears t h a t human judgment i s not only important, i t i s e s s e n t i a l . This i n i t s e l f i s not n e c e s s a r i l y a bad t h i n g , but the goal of research should be to develop t o o l s of s u f f i c i e n t p r e c i s i o n such t h a t the n e c e s s i t y f o r s u b j e c t i v e judgment w i l l be minimized. When ev a l u a t i n g the models discussed above, i t seems important to keep i n mind that although the use of analogy (to Newton's o r i g i n a l formula) i n developing a model may be a t t r a c t i v e , f l e x i b i l i t y must be maintained or the approach becomes dogmatic. Quite p o s s i b l y there may be a p o i n t at which r e f e r r i n g back to the Huff, A Programmed S o l u t i o n f o r E s t i m a t i n g R e t a i l Sales  P o t e n t i a l s , p. 3. 182 o r i g i n a l analogy can r e t a r d progress, i t t h i s p o i n t , s e r i o u s con-s i d e r a t i o n should he given to the question of whether the o r i g i n a l analogy should he de-emphasized i n favour of other, more f r u i t f u l approaches. In the case of g r a v i t y models of human i n t e r a c t i o n which are based on laws i n p h y s i c a l s c i e n c e , a fundamental d i f f i c u l t y a r i s e s from the analogy between molecules and people: the human being as an i n d i v i d u a l can make d e c i s i o n s w i t h respect to h i s behaviour whereas the molecule cannot. This does not n e c e s s a r i l y imply t h a t the behaviour of l a r g e numbers of i n d i v i d u a l s cannot be aggregately described w i t h some mathematical u n i f o r m i t y , but i f t h a t mathematical d e s c r i p t i o n of aggregated behaviour cannot t o l e r a t e the myriad i n f l u e n c e s producing v a r i a t i o n s i n i n d i v i d u a l d e c i s i o n s , then the v a l i d i t y of such mathematical d e s c r i p t i o n s as p r e d i c t i v e t o o l s i s i n doubt. I t appears t h a t at some p o i n t aggregative averages cannot adequately describe behaviour. This i s the p o i n t where the power of i n d i v i d u a l dec!sion-making w i t h a l l the c o m p l e x i t i e s a f f e c t i n g t h a t d e c i s i o n can c r i t i c a l l y a f f e c t what the formulas are t r y i n g to measure. In e f f e c t t h i s c a s t s doubt on whether b a s i c and s i m p l i f i e d mathematical opera-t i o n s are l e g i t i m a t e procedures i n models of human behaviour. A. p a r t i c u l a r formula may i n general represent the b a s i c p e r s p e c t i v e about which general c l a s s e s of causal f a c t o r s are important ( f o r example a t t r a c t i o n and r e s i s t a n c e ) but t o o - s i m p l i f i e d a formula which s u b s t i t u t e s simply proxy v a r i a b l e s to represent the general c l a s s ( f o r example di s t a n c e f o r r e s i s t a n c e ) i s i n a l l l i k e l i h o o d too simple to adequately represent the necessary com p l e x i t i e s governing a behaviour. I t w i l l not adequately cope w i t h the 183 co m p l e x i t i e s of r e a l i t y . In t h i s case, the p r e d i c t i v e value of such a formula must he questioned. Summary Many assumptions are made i n marketing about the f a c t o r s which i n f l u e n c e consumer s p a t i a l behaviour. Models are intended to e x p l i c i t l y c l a r i f y some of these f a c t o r s and t h e i r i n t e r -r e l a t i o n s h i p s i n order that behaviour can be b e t t e r understood and the number of assumptions and general statements reduced. Many such models f o l l o w the i d e a t h a t the p r o b a b i l i t y of consumer a c t i o n i s a d i r e c t f u n c t i o n of the a t t r a c t i v e f a c t o r s of a l o c a -t i o n , and an Inverse f u n c t i o n of the r e s i s t a n c e or cost f a c t o r s i n v o l v e d i n responding to t h a t a t t r a c t i o n . The models discussed above attempted to i n c l u d e from among those f a c t o r s mentioned i n Chapter IV only those whieh were considered necessary to b u i l d a model of s u f f i c i e n t p r e d i c t i v e a b i l i t y . In a general sense, models are meant to be representa-t i o n s of observed r e a l i t y . They attempt to a b s t r a c t c e r t a i n p r o p e r t i e s of a r e l a t i o n s h i p and then s t r u c t u r e them to represent t h a t r e l a t i o n s h i p . However, the data i n p u t s which are abstracted i n the model are r a r e l y as e x a c t l y r e l a t e d as the model must assume. To t h i s degree, model r e s u l t s must oft e n be regarded as approximations of r e a l i t y i n s o f a r as they o f t e n are expressed i n c l e a r l y defined a b s t r a c t i o n s of not so c l e a r l y defined r e a l i t y i n order that some workable formula can be achieved. As a r e s u l t , models are of t e n o v e r s i m p l i f i c a t i o n s of r e a l i t y , a c o n d i t i o n which i s ofte n necessary i f any a b s t r a c t i o n i s to be attempted at a l l . In t h i s sense, the a b s t r a c t i o n process of n e c e s s i t y 184 ignores or n e g lects some of the c o n d i t i o n a l aspects of r e a l i t y i n order that some r e l a t i o n s h i p s may he c l a r i f i e d i n t h e i r simplest form. I f such a "pure" r e l a t i o n s h i p does not e x i s t i n r e a l i t y due to c o n d i t i o n a l i n f l u e n c e s , and i f such c o n d i t i o n a l i n f l u e n c e s normally a f f e c t these r e l a t i o n s h i p s i n a manner f a r d i f f e r e n t than i m p l i e d i n the model, then the model must he a l t e r e d to account f o r these c o n d i t i o n a l f a c t o r s , otherwise i t i s not r e p r e s e n t a t i v e of the determining f a c t o r s . I f , however, the model d e s c r i p t i o n of a r e l a t i o n s h i p " f i t s ' 1 w e l l w i t h r e a l i t y by i s o l a t -i n g key v a r i a b l e s and parameters which f u n c t i o n as described i n the model except f o r minor c o n d i t i o n a l i n f l u e n c e s , then these c o n d i t i o n a l I n f l u e n c e s can be recognized but l e f t out, only to the extent that i n doing so, the r e s u l t a n t a b s t r a c t i o n of r e a l i t y s t i l l bears c l o s e resemblance to the primary f a c t o r s In r e a l i t y and does not s u f f e r a l o s s of c r e d i b i l i t y as a r e s u l t of neglected co n t i n g e n c i e s . But from the preceding d i s c u s s i o n , i t would appear tha t f u r t h e r research i s required to extend and r e f i n e the models, e i t h e r through expanding the number of v a r i a b l e s i n the formulae or through r e s t r u c t u r i n g the parameters, i n order to improve the p r e d i c t i v e c a p a b i l i t i e s of such models. 185 CHAPTER VII CONCLUSIONS Restatement of the Problem As stated i n Chapter I , the problem to which t h i s t h e s i s was addressed i n v o l v e d that p a r t of r e t a i l l o c a t i o n a n a l y s i s which i s concerned w i t h e s t i m a t i n g the s a l e s volume p o t e n t i a l f o r a •si-proposed shopping centre. The a v a i l a b l e l i t e r a t u r e on the subject focuses on d i f f e r e n t aspects of the problem, sometimes d e s c r i b i n g techniques f o r s a l e s volume e s t i m a t i n g , sometimes d e s c r i b i n g s p e c i f i c research e f f o r t s designed to d e f i n e more a c c u r a t e l y the c r i t i c a l v a r i a b l e s and r e l a t i o n s h i p s governing consumer patronage behaviour, and sometimes d e s c r i b i n g t h e o r e t i c a l models of those f a c t o r s and r e l a t i o n s h i p s which are considered adequate to a c c u r a t e l y p r e d i c t both consumer patronage behaviour and the corresponding s a l e s volume p o t e n t i a l f o r a new r e t a i l o u t l e t . But the theory behind s a l e s volume est i m a t i n g appeared somewhat d i s j o i n t e d , since the methods and models emphasized d i f f e r e n t approaches and f a c t o r s , and ignored or inadequately accounted f o r o t h e r s . Furthermore, i t was apparent t h a t p r e d i c t i v e accuracy was f a r from s a t i s f a c t o r y w i t h the p r e s e n t l y a v a i l a b l e t o o l s of a n a l y s i s , since s a l e s volume estimates appeared to be prone to wide e r r o r s , or at l e a s t wide v a r i a t i o n s depending on the methods of a n a l y s i s employed. I t was f e l t t h a t the problem revolved around the v a r i o u s arguments, assumptions, concepts, f a c t o r s , and r e l a t i o n s h i p s inherent or missing i n each model or method. # Many other f a c t o r s ( i n c l u d i n g r e t u r n on Investment c r i t e r i a and l o c a l p o l i t i c a l c o n s t r a i n t s ) which w i l l have a bearing on the choice of a s i t e and the u l t i m a t e development d e c i s i o n were not considered i n t h i s t h e s i s . 186 H o p e f u l l y , by examining the determinants of consumer patronage behaviour i n the context of the p r a c t i s e d methods and t h e o r e t i c a l models, the t h e s i s could: h i g h l i g h t the complexities and problems involved i n sales volume e s t i m a t i n g ; i l l u s t r a t e the complex inter-dependencies of the many v a r i a b l e s and present a more complete p i c t u r e of a l l the f a c t o r s Involved; and focus on the reasons behind the apparent inadequacies or l i m i t a t i o n s of the p r a c t i s e d methods and t h e o r e t i c a l models f o r s a l e s volume estimat-i n g . More s p e c i f i c a l l y , the purpose of the t h e s i s was t o : 1) discus s the v a l i d i t y and l i m i t a t i o n s of the many arguments, assumptions, concepts, f a c t o r s , and r e l a t i o n s h i p s deemed to be important f o r l o c a t i o n a l s a l e s volume a n a l y s i s , and i n so doing, suggest the " b u i l d i n g b l o c k s " or "raw m a t e r i a l s " which should be considered and included i n the development of procedures and models to a i d i n sa l e s volume e s t i m a t i n g . 2) d i s c u s s and analyze the various techniques and models employed i n shopping centre volume estimating i n order to a) determine how adequately and to what extent they recognize and in c o r p o r a t e the above f a c t o r s and r e l a t i o n -s h i p s , and b) evaluate t h e i r a b i l i t y to produce theo-r e t i c a l l y sound, r e l i a b l e , accurate p r e d i c t i o n s . 3) attempt to t i e these v a r i o u s concepts, f a c t o r s , techniques and models i n t o a more comprehensive overview of the pro-blems faced i n estimating p o t e n t i a l s a les volumes, thereby h i g h l i g h t i n g areas where f u r t h e r research i s required to r e f i n e and improve the techniques of p r e d i c t i o n . 187 Summary and Conclusions To p r e d i c t the expected s a l e s volume which a new centre w i l l l i k e l y achieve r e q u i r e s a s c e r t a i n i n g how many consumers w i l l spend a s p e c i f i e d p o r t i o n of t h e i r income at that centre. I t i s therefore necessary to understand the determinants of consumer patronage behaviour, or how consumers react to the va r i o u s f a c -t o r s a f f e c t i n g consumer motivation i n the s e l e c t i o n of a r e t a i l f a c i l i t y i n which to purchase the va r i o u s goods they r e q u i r e . I t i s a l s o necessary to be able t o s p e c i f y , q u a n t i t a t i v e l y , how such behaviour w i l l be manifested i n a c e r t a i n area i n regard to a p a r t i c u l a r r e t a i l f a c i l i t y . Shopping behaviour i s governed by the consumer's per-s p e c t i v e towards c e r t a i n b e n e f i t and cost f a c t o r s : what s a t i s -f a c t i o n can be achieved at what cost i n money, time and e f f o r t . A r e t a i l f a c i l i t y exerts an a t t r a c t i v e i n f l u e n c e which diminishes as distance from the centre i n c r e a s e s , a r e s u l t of the f a c t that t r a v e l costs (money, time, e f f o r t , and inconvenience) increase w i t h d i s t a n c e . The problem of a s c e r t a i n i n g expected consumer patronage then b o i l s down to ass e s s i n g the costs t h a t consumers w i l l s u s t a i n to respond to c e r t a i n a t t r a c t i o n s . For the sake of a n a l y s i s , these costs are normally represented by distance i n p h y s i c a l or t i m e - u n i t s . But as con-tended i n Chapter IV, the e f f e c t of distance on shopping behaviour v a r i e s according t o : the type of merchandise sought; the degree to which c e r t a i n goods are important to the consumer; the impor-tance to the consumer of s e l e c t i o n , q u a l i t y , p r i c i n g , and depth of merchandise o f f e r e d ; the degree of s e l e c t i v i t y i n the purchase d e c i s i o n ; the s o c i a l s i g n i f i c a n c e attached to c e r t a i n kinds of 188 merchandise; consumer w i l l i n g n e s s to accept s u b s t i t u t e merchandise; p s y c h o l o g i c a l and geographical b a r r i e r s ; road c a p a c i t i e s , t r a f f i c congestion and c o n d i t i o n s of a c c e s s i b i l i t y ; and the a v a i l a b i l i t y , p r o x i m i t y , q u a l i t y and e f f e c t i v e n e s s of competing r e t a i l e s t a b l i s h -ments. The extent to which the above f a c t o r s modify the e f f e c t of dis t a n c e d i f f e r s according to f a m i l y s i z e , age groupings, income st a t u s and s o c i a l s t a t u s of the consumers i n any p a r t i c u l a r area. I g a i n as suggested i n Chapter IV, the a t t r a c t i v e i n -fluence of a r e t a i l f a c i l i t y v a r i e s according t o : the s i z e of the centre and the s i z e s of various s t o r e s i n the centre; a t t r a c t i v e design and l a y o u t ; v a r i e t y i n tenant-types; merchandise mix, breadth of s e l e c t i o n , range of c o l o u r s , s i z e s , q u a l i t i e s , and s t y l e s ; com-p e t i t i v e or market-oriented or unique p r i c i n g p o l i c i e s ; the image and r e p u t a t i o n of the centre; the a v a i l a b i l i t y or laek of f r e e p a r k i n g ; amenities and community f a c i l i t i e s ; hours of business; and the e f f e c t i v e n e s s of the promotional programme. The importance and e f f e c t of these f a c t o r s v a r i e s i n t u r n according to the s i z e of f a m i l y , age group, income s t a t u s , and s o c i a l status of the con-sumers i n the area. The p r a c t i s e d methods and t h e o r e t i c a l models were then examined to determine how adequately the preceding f a c t o r s and i n t e r r e l a t i o n s h i p s were recognized or q u a n t i f i e d i n them, and to what extent these methods and models were capable of generating r e l i a b l e , accurate p r e d i c t i o n s . The Market Share, Vacuum C a l c u l a t i o n , and Analog techniques were examined and i t was observed that while the methods attempted to recognize the determinants of consumer be-haviour suggested above and sought to account f o r them i n the 189 a n a l y t i c a l techniques of estimating the drawing power of a pro-posed centre, the determinants and t h e i r i n t e r r e l a t i o n s h i p s were i m p r e c i s e l y , s u b j e c t i v e l y , and inadequately q u a n t i f i e d . Problems and l i m i t a t i o n s were evident i n several areas: i n the considerable r e l i a n c e on s u b j e c t i v e judgment; i n estimating the s a l e s volume captured by competing r e t a i l o u t l e t s ; i n estimating the trade area boundary or the l i m i t of e f f e c t i v e a t t r a c t i o n exerted by a par-t i c u l a r f a c i l i t y ; and i n guessing the market share which t h a t centre would l i k e l y achieve i n a given area. In view of the excessive r e l i a n c e on s u b j e c t i v e assumptions and Judgments, and since the determinants of behaviour are a r b i t r a r i l y and inadequately q u a n t i f i e d , i t was concluded that there was considerable doubt as to the a b i l i t y of these methods to generate r e l i a b l e , accurate, and c o n s i s t e n t p r e d i c t i o n s based on t h e o r e t i c a l l y sound measurements. The examination of R e i l l y * s law concluded w i t h the observations t h a t : the law was not appropriate to i n t r a - u r b a n s e t t i n g s where competitive i n f l u e n c e s are numerous and overlapping; there i s l i t t l e j u s t i f i c a t i o n f o r h i s choice of 2 as the value of the distance exponent; the proxy v a r i a b l e s p o p u l a t i o n and distance may not be s u f f i c i e n t l y r e p r e s e n t a t i v e as causal v a r i a b l e s to describe and p r e d i c t consumer patronage behaviour c o n s i s t e n t l y . I t appeared t h a t other f a c t o r s which a f f e c t consumer patronage behaviour were not given adequate r e c o g n i t i o n i n a formula which considered only the proxy v a r i a b l e s s i z e and d i s t a n c e ; and the model contains l i t t l e t h e o r e t i c a l content and cannot e x p l a i n observed r e g u l a r i t i e s . The d i s t i n c t c o n t r i b u t i o n of the p r o b a b i l i t y models i s t h e i r p r o b a b i l i s t i c n o t i o n whereby the i d e a of a f i x e d l i n e 190 c i r c u m s c r i b i n g a centre (trade area boundary) i s replaced by a s e r i e s of p r o b a b i l i t y contours. But a f t e r examining the pro-b a b i l i t y models, i t appeared that the attempt to abstract the primary determinants of consumer behaviour i n t o a formula had r e s u l t e d i n a choice of v a r i a b l e s and parameters which were too gross i n scope to permit accurate p r e d i c t i o n s . The exponential d i s t a n c e parameter performed the f u n c t i o n of a " c a t c h - a l l " para-meter through which the multitude of i n f l u e n c e s and f a c t o r s not otherwise contained i n the model could exert t h e i r i n f l u e n c e . Determining a s a t i s f a c t o r y value or values f o r t h i s parameter was a complex problem because the t h e o r e t i c a l explanation of i t s con-s t r u c t i o n was r e s t r i c t e d to the e f f e c t that the type of merchan-d i s e sought had on the d i s t a n c e v a r i a b l e . Other f a c t o r s and i n -f l u e n c e s which caused the exponent to vary were suggested (these f a c t o r s are l i s t e d e a r l i e r i n t h i s concluding s e c t i o n ) . The proxy v a r i a b l e f o r a t t r a c t i o n was a l s o c r i t i c i z e d and other f a c t o r s which vary the weighting of t h i s v a r i a b l e were suggested (again, these are l i s t e d e a r l i e r i n t h i s concluding s e c t i o n ) . The d i s c u s s i o n concluded w i t h the observation that the p r e s e n t l y a v a i l a b l e p r o b a b i l i s t i c models r e q u i r e s u b j e c t i v e i n t e r -p r e t a t i o n i f they are to be at a l l u s e f u l . But the models, when ap p l i e d i n conjunction w i t h s u b j e c t i v e judgment and experience, can be u s e f u l a n a l y t i c a l t o o l s i n s p i t e of t h e i r l i m i t a t i o n s . The task remains to f u r t h e r r e f i n e and extend the models to improve t h e i r d e s c r i p t i v e and p r e d i c t i v e c a p a b i l i t i e s . This w i l l r e q u i r e that the models more e x p l i c i t l y recognize the determinants of consumer s p a t i a l behaviour. I t i s suggested here that i f the f a c t o r s mentioned above were more e x p l i c i t l y recognized i n the 191 formulae, e i t h e r through expanding the numher of v a r i a b l e s i n the formulae, or through r e - s t r u c t u r i n g the parameters, the d e s c r i p t i v e and p r e d i c t i v e c a p a b i l i t i e s of these models might be improved. In summary, there remains a great need f o r more b a s i c research and a gr e a t e r coherence of theory to s p e c i f y the " b u i l d i n g b l o c k s " f o r a more comprehensive model of consumer s p a t i a l behaviour which would be capable of d e s c r i p t i o n and pre-d i c t i o n at a l e s s aggregative, more microscopic l e v e l . BIBLIOGRAPHY BOOKS Applebaum, W. P a t t e r n s of Food D i s t r i b u t i o n In the M e t r o p o l i s . ChicagoT Super Market I n s t i t u t e , 1966. Store L o c a t i o n Strategy Cases. Reading, Massachusetts. 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