The theory also states that the distance a consumer is willing to travel to a

The theory also states that the distance a consumer

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The theory also states that the distance a consumer is willing to travel to a shopping center is proportional tothe size ofthe shopping centereventhough whenashopping centeris far the ‘‘consumer inertia’’ means the consumer will not want to travel (Converse, 1949). There is, therefore, a balance between how far a consumer will travel (i.e. the distance) and how large the shopping center is (i.e. floor space) (Clarkson et al., 1996). The land value theory states that there is a relationship between the number of retail locations and their proximity to the urban centers. The theory assumes that the ‘‘bid rent,’’ amount a retailer is willing to pay, depends on how close to the central business district the location is, where higher bid rents are found in the central city rings (Clarkson et al., 1996). Based on the bid rent pricing, the land value theory states that concentric rings or ‘‘retail nucleation’’ form around the city center. This in turn creates a distinction between regional, neighborhood and community business types (Garner, 1966). The principal of minimum differentiation theory emphasizes the way the retail outlets have been arranged in the shopping center. The theory states that with retailing, similar operating stores should cluster together to achieve a better performance. One drawback with the original theory is the many assumptions that were made, such as concerning number of competitors or pricing. Regardless of various critics, there has been a substantial amount of research done which supports the original theory of minimum differentiation that ‘‘sellers of the same or similar categories of merchandise tend to cluster together’’ and through this achieve higher success (Clarkson et al., 1996). Although formal methods of retail site location have been available since 1929 onwards, most retailers still rely upon their ‘‘intuition, guided by their ‘‘experience’’ and ‘‘common sense’’ (Saxena and AlHashemi, 2010). One of the simplest methods that can be put into play, according to Hernandez and Bennison (2000) is experience. In an extensive survey conducted by them in 1998 which encompassed more than 50,000 outlets, 96 per cent of respondents used ‘‘experience’’ in their methodology. The analogue method is similar to the ‘‘judgment approach,’’ where it employs ‘‘a systematic assessment of pertinent factors [...]’’ These factors can include the level of competition, demographics of trade area, parking, ease of access and the like (Meyer, 1988). While the analogue method has a certain degree of subjective judgment involved in it, the regression method is a ‘‘formal evaluative version of the analogue method [...] to determine the factors that account for successful sites (and) statistical regression analysis is used to determine the factors that are important and to assess a weight to each factor’’ (Meyer, 1988). Examples of how regression models have been developed around a number of determinants like competition, trade area composition, site accessibility, site demographics, etc. to estimate the potential turnover of a store (Clarkson et al., 1996). There have been certain
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