Accounting for Temporal Demand Variations in Retail Location Models

This article develops and calibrates a spatial interaction model (SIM) incorporating additional temporal characteristics of consumer demand for the U.K. grocery market. SIMs have been routinely used by the retail sector for location modeling and revenue prediction and have a good record of success, especially in the supermarket/hypermarket sector. However, greater planning controls and a more competitive trading environment in recent years has forced retailers to look to new markets. This has meant a greater focus on the convenience market which creates new challenges for retail location models. In this article, we present a custom built SIM for the grocery market in West Yorkshire incorporating trading and consumer data provided by a major U.K. retailer. We show that this model works well for supermarkets and hypermarkets but poorly for convenience stores. We then build a series of new demand layers taking into account the spatial distributions of demand at the time of day that consumers are likely to use grocery stores. These new demand layers include workplace populations, university student populations and secondary school children. When these demand layers are added to the models, we see a very promising increase in the accuracy of the revenue forecasts.     

Building Spatial Choice Models from Aggregate Data

Abstract Choice model construction is usually based on information about a number of separate choice situations, for which all relevant quantities are known. This paper concerns the case where only higher level, aggregate information is available about the choice results and the prevailing conditions. We demonstrate the applicability of a generic inverse parameter estimation method in estimating a model for grocery store choice. We also propose some enhancements to standard spatial choice models and demonstrate their applicability.     

Principles of a Territorial Differentiation of Retail Prices

A system of territorial differentials in retail prices for consumer goods in the Soviet Union is considered essential as long as regional physical and other geographic differences produce cost differentials in production and transportation. It is suggested that the present system of three price zones be revised for individual food products to take fuller account of distance between producing and consuming areas.     

Beyond the Modern Supermarket: Geographical Approaches to the Analysis of Contemporary Australian Retail Restructuring

The recent development of new supermarket forms in Australia (Woolworths Metro and Coles Express) provides important insights into the changing geographical forms of grocery retailing and consumption in Australia. Using a multi‐layered approach designed to integrate three overlapping geographical processes relevant to this issue: urban socio‐economic restructuring, shifting spatial arenas of consumption and the corporate geographies of major retailers, the paper identifies the ways that these developments decentre traditionally dominant supermarket discourses. These new supermarket forms are important because they provide a vehicle for the nation’s two pre‐eminent supermarket chains to extend their retail reach, and effect a blurring of taken‐for‐granted retail categories. Although these developments are new and tentative, they presage wider changes in the emerging geographical structures of Australian grocery retailing, and the linkages between urban spaces and modes of consumption.     

From Big Noise to Big Data: Toward the Verification of Large Data sets for Understanding Regional Retail Flows

There has been much excitement among quantitative geographers about newly available data sets, characterized by high volume, velocity, and variety. This phenomenon is often labeled as “Big Data” and has contributed to methodological and empirical advances, particularly in the areas of visualization and analysis of social networks. However, a fourth v—veracity (or lack thereof)—has been conspicuously lacking from the literature. This article sets out to test the potential for verifying large data sets. It does this by cross‐comparing three unrelated estimates of retail flows—human movements from home locations to shopping centers—derived from the following geo‐coded sources: (1) a major mobile telephone service provider; (2) a commercial consumer survey; and (3) geotagged Twitter messages. Three spatial interaction models also provided estimates of flow: constrained and unconstrained versions of the “gravity model” and the recently developed “radiation model.” We found positive relationships between all data‐based and theoretical sources of estimated retail flows. Based on the analysis, the mobile telephone data fitted the modeled flows and consumer survey data closely, while flows obtained directly from the Twitter data diverged from other sources. The research highlights the importance of verification in flow data derived from new sources and demonstrates methods for achieving this.     

A Partitioning Model of Urban Retail Structure

A model based on renewal theory generates the number of retail establishments in a place as the outcome of a competitive partitioning process. The available market, measured for example by population or by existing retail sales, is shared among businesses until no market potential market remains. Competing businesses obtain different shares of the market, and the number of establishments is predicted as a discrete random variable. Several alternative formulations are presented of varying generality. One version is successfully tested, using GLIM, on ten business types (SIC two-digit classes) in 232 cities of New York State for 1977 and 1987. The model correctly predicts the form and the variance structure of the relationship between number of establishments and place size. It is shown how the model may be combined with models of city-size distributions to predict aggregate frequency distributions of retail establishments across urban systems.     

A Threshold-Satisfying Competitive Location Model

In this paper we consider a location model based on the threshold concept. We find the best location such that the probability of revenue falling short of the threshold is minimized. This objective is appropriate when a firm will not survive if its revenue falls below a known threshold. A new store is to be located. Demand is not deterministic but rather has a statistical distribution. We seek the location at which the probability that the revenue (expressed as market share attracted by the new store) is below a given threshold is minimized. The model is formulated and solved, and computational results are given.     

Problems in the Study of Domestic Commerce of the USSR

Greater attention to the study of the Soviet internal commerce is proposed, with particular emphasis on the geographical differences in retailing. The sources of marketable goods in any particular region are locally produced consumer goods, farm produce and forest products as well as goods shipped in from other parts of the USSR and from abroad. Regional economic-geographic factors affect both the volume and the structure of retail trade. Volume is affected by such factors as the size of population, income levels, regional prices, and the availability of retail outlets. Structure of retailing is affected by regional differences in production and consumption, income levels, ethnic preferences and seasonal changes.     

MODELING DYNAMIC INTERINDUSTRY REGIONAL GROWTH IN THE PRESENCE OF STRUCTURAL SHIFTS AND OUTLIERS*

ABSTRACT. Kraybill and Dorfman (1992) propose a model of intermediate and export demand which uses ordinary least-squares and linear systems techniques to produce a state-space representation of the time element of output change. Their model produces dynamic multipliers which trace the temporal path of regional growth, and has many advantages over previously employed time series methods. This study extends their methodology to accommodate structural shifts and outliers found in the least-squares relationship between industry and export output by using a recently-introduced technique–multiprocess mixture estimation. An application of the Kraybill-Dorfman method and the extensions proposed here to monthly time series data on Ohio employment is used to illustrate these issues.     

Cournot Retail Chains

In this paper a model of spatial Cournot competition among retail firms is devised and used to assess the effect of a variety of structural factors on retail prices and profits. The model illustrates the spatial chain of interaction that firms must anticipate to reach equilibrium when organized in chains or as independents. It shows the sensitivity of price to the location of stores, the number of stores per location, and transportation cost.     

NETWORK EQUILIBRIUM MODELS OF URBAN LOCATION AND TRAVEL CHOICES: A RETROSPECTIVE SURVEY*

ABSTRACT The origins and development of the network equilibrium problem are traced and interrelated. Two principal formulations are considered the network equilibrium problem with variable travel demand, and the combined model of trip distribution and traffic assignment. The relation of these models to subsequent developments concerning mode choice, residential location, estimation of origin-destination tables from link flows and stochastic route choice are then reviewed.     

A Note on the Geographic Interdependencies of Retail Market Areas

Central place theory describes an orderly hierarchy of places, with particular retail services developing for lower-ordered places as they reach a threshold. Yet it is likely that nearby areas could serve simultaneously as a source of demand and a source of competing supply for retail stores in a place. This paper contributes to the understanding of local economic development by modeling and estimating the geographic interdependence between a place and its neighboring areas. The simultaneous equation Tobit results suggest that such geographical interdependence exists for most retail industries, with spatial competition on the supply side being particularly important.     

REGIONAL VARIATIONS IN LABOR DEMAND ELASTICITY: EVIDENCE FROM U.S. COUNTIES

We use a large panel dataset covering the period 1988–2010 to estimate county specific own‐wage elasticity of labor demand in the U.S. for four highly aggregated industries: construction, finance/insurance/real‐estate/service, manufacturing, and retail trade. Our estimation of a random parameter panel data model yields significant evidence of spatial variations in wage elasticity of labor demand. We relate the spatial variation in elasticity to differences in county characteristics like industry specialization, industry competition, levels of natural amenity and urbanization. Using a regression discontinuity approach we also find that probusiness states have higher labor demand elasticity.     

Store Wars: Changing Retail Ownership in Beijing

Two U.S.-based economic geographers analyze recent changes in retailing activity in Beijing, focusing on changes in store ownership. More specifically, they investigate declines in state ownership in the retail sector since the early 1980s in conjunction with the rapid growth of the domestic private sector and foreign ownership. The paper outlines a new geography of successful (and not-so-successful) retailers that has emerged due to rationalization of the industry, marketization, globalization, as well as government policies at a variety of levels. Changes in store ownership provide insights into the complexity of China's transition, the evolving relations between state and capital, and the role of the local state in the country's economic reforms. Journal of Economic Literature, Classification Numbers: D23, L20, L81, O18. 2 figures, 3 tables, 1 appendix, 114 references.     

LEAST SQUARES ESTIMATES OF THE REGIONAL EMPLOYMENT MULTIPLIER: AN APPRAISAL*

Basically, we have attempted to show the following in the course of setting out the algebra of regression analysis of selected regional employment multiplier models: (1) When the basic features of the model are shaped by the assumption of an unlagged response of local employment to changes in export employment, the least squares estimates of the multipliers are highly sensitive to the export coefficients vector A, given the sample observation matrix X. In a completely disaggregated model such as Equation (21), the multipliers are solely determined by the export coefficients and thus are entirely independent of sample observations. However, this independence does not hold in the case of a partially disaggregated model. The identity relation is also destroyed when a lag relationship is introduced into a completely disaggregated model. (2) A simple lag model produces results bascially different from those obtained by an unlagged model if the overall differences between current and lagged observations are significant. (3) Given a matrix of sample observations on employment, it is possible to estimate the upper limits of a least-squares aggregate multiplier and its variance simply from knowledge of the export coefficients (4) The export coefficients vector has also an important bearing upon the correlation coefficient. The correlation is unity if and only if the export coefficients vector is proportional to the local employment coefficients vector, while it is zero if and only if the export coefficients vector is a vector all of whose elements are one. Also, the correlation coefficient is equal to one when a completely disaggregated model is used. There is finally the question of what these results mean in terms of the formulation of a multiplier model. First of all, in view of the crucial importance of the export coefficients and the difficulties of estimating them, most of the existing models do not seem to offer promising results. Furthermore, all the models examined here have made some simplifying assumption with respect to the constancy of the export coefficients. It remains highly uncertain whether these coefficients are reasonably stable over time. Of course, it would be theoretically more acceptable to relax the assumption of the invariance of export coefficients and to obtain such coefficients at different points of time for each industry. However, this would be accomplished only at the cost of increased difficulties of estimating larger numbers of export coefficients. In addition, there is some doubt as to the validity of the assumption that export employment is proportional to export sales. Since a lag relationship is important not only in terms of attempts to formulate multiplier models more realistically, but also in terms of its significant effect on the multiplier values obtained, the nature and the form of a lagged response and its estimation problems need to be investigated in depth. Finally, problems of least squares bias and efficiency, inference, and prediction which may arise in the context of various models presented here remain to be investigated. A detailed analysis of such problems must be the subject of further investigation.     

THE IMPACT OF STATE LAND-USECONTROLS ON RESIDENTIAL LAND VALUES

In this paper, we examine the effects of state land-use controls on the aggregate demand and supply of residential land. Previous studies have examined the effect of land-use regulation on housing prices using single-equation estimation. We estimate a three-equation intejurisdidional supply-demand model of land-use controls. Our results suggest that land-use regulations have a significant impact on both the demand and supply of residentid land as expected.     

A CONTEXTUAL ANALYSIS OF THE JOURNEY-TO-SHOP WITH PRICE UNCERTAINTY*

ABSTRACT In this paper we extend the contextual theory of demand to consider rational consumer behavior when the household must deal with some random fluctuation in the prices it faces. Prices at stores reflect “advertised specials,” which are potential cost reductions random across goods, and random in-store price changes, which can only be observed by visiting the store. Our theory of rational behavior includes: (1) calculation by the household of an ex ante plan for its planning period; (2) modification to take account of advertised specials; and (3) rational search behavior to take advantage of random fluctuations observable only on a given day. This theory utilizes an active cash balance as a buffer against random variations from planned daily expenditures, and reformulations of trip circuits to account for patterns of cost-minimizing search.     

浅析上海市大卖场的空间区位选择

以大型超市、仓储式商场组成的大卖场是上海近几年来迅速发展的一种新型业态。在经济全球化背景下,国外的各类商业零售业将大举进入,对中国的零售业市场带来了一定的冲击和新的机遇。本文以上海大卖场为着手点,在分析了大卖场布局的区位因子的基础上,研究了上海大卖场空间布局特征从而提出了合理布局大卖场的建议。     

A Micro-Econometric Store Choice Model Incorporating Multi- and Omni-Channel Shopping: The Case of Furniture Retailing in Germany

Online retailing and multi-/omni-channel shopping are gaining in importance. However, there is a significant lack of research focused on incorporating online shopping into models of spatial shopping behavior. The present study aims (1) to construct a store choice model which includes both physical and online stores as well as the opportunity for omni-channel shopping, and (2) to identify the main drivers of spatial shopping behavior given the availability of both channels. Based on a representative survey, this study employs a revealed-preference approach toward store choice and expenditures in furniture retailing. The statistical analysis is performed using a hurdle model approach, with the expenditures of individual consumers at (online or physical) furniture stores serving as the dependent variable. Results show that channel choice (online vs. offline) is mainly influenced by psychographic characteristics, place of residence, and age of the consumers. Store choice and expenditures are primarily explained by store features such as assortment size, omni-channel integration, and accessibility. This study demonstrates that e-shopping can be integrated into a store choice model and that both the modeling approach and the subsequent findings are of significance for retail companies and spatial planning.