RETAIL ATMOSPHERE AND SALES

Retail Atmosphere and Sales



Retail Atmospherics

The demand by consumers for retail goods and services is a function of the attributes of the commodity, household income, and other factors such as home ownership status. For example, a home improvement store is likely to target a market with a housing stock that has lots of possibilities for repair, upgrades, and remodels. Both home-owning and renting populations might yield adequate density of demand, but the effective demand for goods and services by homeowners is much more likely to be attractive to this particular service. An electrical supplier would have a demand for services also, but for that business it could be some combination of over-the-counter sales (light fixtures) and more substantial electrical equipment sold to contractors and builders. A business with a traditional central market place location (in an older mixed use inner city neighborhood for example) might conceivably want to branch out its locations to catch the growth in the suburbs and even the outlying communities in the hinterland of that main market. In fact there are so many different ways to imagine the dynamics of retail site location that there is a real need for a general purpose simulation tool that might enable the estimation of the merit of various growth proposals (Achabal, 2002, 101). In all these cases, it is important to have an accurate estimate of the spatial distribution of effective demand as arising out of a combination of preferences, and disposable income.

Central place theory has long held that there is a hierarchy of goods, from frequently demanded inexpensive items to high-end expensive goods. There is both a higher spatial frequency of demand for (and provision of) the so-called lower-order goods, and a corresponding scarcity on the landscape of higher-order goods. Thus for every Mercedes or Lexus dealership in the city there might be numerous Ford and Toyota dealerships. The higher the order of goods provided, one assumes that there is a wider market scope required to provide sufficient demand to cover the operating costs of the business (the so-called threshold). Similarly, the higher-order goods, because of their relative scarcity on the landscape, require longer trip lengths; the break even calculation for the retailer is whether the spatial extent of the market required to cover costs is matched by a corresponding willingness of consumers to travel to the center for the goods (see the classic study by (Applebaum, 2006, 75)

Inexpensive 'low order goods' are sometimes sold in combinations with higher priced items from superstores that do not necessarily have a small range: they can in fact be attractive over a large distance, provided the assortment and price point allows the large agglomerated retailer to undercut the smaller more widely dispersed providers of retail services. This formula is used by Wal-Mart or other 'big box' retailers; they have a large assortment of goods, and price points that are competitive, and locations that in themselves act as a magnet for spatial interaction (Munroe, 2001). Customers travel to stores and therefore the spatial interaction ...