Journal of Marketing and Management, 4 (1), 21-30, May 2013 21
Shopping Centers, Retail location, and Trade Area: The Case of Shopping Centers in
Albania
Rejla BOZDO, Marsela THANASI, Vjollca HYSI PhD
University of Tirana, Albania reilabozdo@yahoo.com
; marsithanasi@yahoo.com
; vhysi@hotmail.com
Abstract
Defining the location and the catchment area is a very important element in developing the business of a shopping center. Catchment area analysis in retail industry calculates the trade area population and studies the accessibilities to the potential shopping mall. The basic types of trading area analysis models are: Reilly's Law of Retail Gravitation, Converse’s Revision and Breaking-Point Model, Huff’s Model of Trade Area Attraction and Christaller’s Central
Place Theory. Customer’s decision on choosing a shopping center depends on tenant mix, attraction of the shopping center, marketing communications, location, accessibility, etc. By using Reilly's Law of Retail Gravitation and Breaking-Point Model, we will calculate the trade area for specific shopping centers in Albania. The main finding in this paper is the fact that two shopping centers, QTU and TEG, part of the same business group, even though located in two extreme points of the city of Tirana, are defined as competitors because they have overlapping catchment area.
Key Words: shopping center, retail, trade area, marketing strategy, Albania.

Journal of Marketing and Management, 4 (1), 21-30, May 2013 22
Literature Review
The shopping center as a retail concept
According to ICSC (International Council of Shopping Centers), “a shopping center is group of retail and other commercial establishments that is planned, developed, owned and managed as a single property, typically with on-site parking provided. The center’s size and orientation are generally determined by the market characteristics of the trade area served by the center”. The term “shopping center” has been used since the early 1950s. Nowadays, shopping centers have become an integral part of the economic and social fabric of their communities. They are there to fulfill customer needs and also to provide employment for the area where they are located. Usually, the shopping centers have different tenant mix under one roof and fulfill different needs at the same place. The conglomeration effectiveness can gather a lot of footfall with different functional shopping needs to the center and then generate other emotional shopping needs for people at each shopping time – in this way one store supports another store. In order to create the emotional connection and to better serve the customers, shopping centers support the store units also with entertainment options such as kid’s area, resting corners, WIFI for people who need to navigate in internet, etc. Form the location point of view there are three categories of shopping centers: downtown shopping center, community shopping center and suburban shopping center. Retail development is closely linked to economic and social progress in a community. (Tegner, 2009).

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Reilly's Law of Retail Gravitation and Converse’s revision of Reilly’s Law
As defined by Bennett (1995), a trading area is “a geographical area containing the customers of a particular firm or group of firms for specific goods or services”. The primary types of trading area models that can be used to analyze store location potential and trading area are: analog, regression and gravity. Gravity Models have played an important role in retail location considerations and literature since the early ‘30s. A Gravity Model is based on the assumption that a certain radius or group of customers within a radius are drawn to stores in a particular area on the basis of several variables such as distance between markets, distance to market, relative market population, etc. The most common and used Gravity Models are:
Reilly's Law of Retail Gravitation, Converse’s Revision and Breaking-Point Model, Huff’s
Model of Trade Area Attraction and Christaller’s Central Place Theory.
Reilly's Law of Retail Gravitation has been widely used for defining the location and the trade areas of a shopping center. Wagner (2001) mentioned selecting the optimal location for retail business presents a constitutive investment decision. Other elements of the marketing mix may be easily imitated by the competitor, while the location decision can be considered as a critical factor for specific project to be successful. Bucklin (1971) pointed out that
Reilly's Law of Retail Gravitation is a theoretical means of trade area definition. It is based on the premise that that people are attracted to larger places to do their shopping, but the time and distance they must travel influence their willingness to shop in a given city. In other words, people are more likely to travel shorter distances when possible. Additionally, customers are more likely to shop in larger communities, as they provide a greater

Journal of Marketing and Management, 4 (1), 21-30, May 2013 24 opportunity for goods and services. Reilly's Law provides a mathematical formula that can be used to calculate hard numbers relating the distance people will travel.
Converse’s revision of Reilly’s Law
(Converse, 1949), known as the Breaking-Point Model, extended Reilly’s law by defining the breaking-point of trade between the two cities. A customer residing at the location of this trade breaking-point would be indifferent to trade area and would be equally attracted form both locations or 50% probably of shopping at each of the two cities in question for non specialty foods.
Shopping Centers In Albania
Retail history and market overview
Albania has been running a planned economy since the early 1990’s. According to the socialist doctrine, a socialist economy is one in which do exist only two forms of ownership: state and collective ownership. As a result, during this period, domestic trade was severely constricted and in many areas simply banned (Fforde 1993).The government ordered that all trade and business operations of “bourgeois” tradesmen be abolished; only small merchants retailing goods not controlled by the state could exist (Charles and Hoa 1996). Under the government planning system, the state assigned regular production targets in terms of quantity for various state-owned plants and directly provided these plants with capital

Journal of Marketing and Management, 4 (1), 21-30, May 2013 25 resources and current inputs in order for them to meet those targets. After 1990’s, Albania entered the new era of free trade economy. Individuals and families started to develop private business, generally based in trading. For a long time, retailing was focused on small stores in neighborhoods. The concept of shopping centers started its rapid development in Albania only after 15 years of pluralism and free trade economy. Today there are several shopping centers in Albania. The first entering the market is QTU and ETC, during 2005-2006. From location point of view QTU is a suburban shopping center, located on 6 km near the capital of Albania, Tirana, along the main highway. ETC is a typical downtown shopping center, located in the heart of Tirana. The advantage of being one of the first shopping centers entering this market made QTU well-known through all the country without spending much in advertising. This shopping center was very simple in terms of architecture, design and look, but being the first organized retail location, it became a reference for everyone. Casa
Italia and Kristal Center entered the shopping centers market during 2008-2009. Another shopping center that is classified as very differentiated in terms of architecture and design is
Citypark Albania, located on the main highway of Tirana and Durres, 12 km away from
Tirana. While Coin was opened during 2010 and it is a typical downtown shopping center targeting high-end customers. There are other small shopping centers in Tirana, such as:
“Twin Towers”, “Condor” and “Olympia”. The last shopping center built in Albania and opened in November 2011, is TEG (Tirana East Gate), located 4 km near Tirana between the
City of Tirana and the City of Elbasan.

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Application of Reilly’s Law in the case of shopping centers located in between Tirana and Durres in Albania.
Reilly’s Law of retail gravitation states that larger cities will have larger spheres of influence than smaller ones. According to Reilly’s Law, people travel more to reach a larger city. The law presumes the geography of the area is flat without any rivers, roads or mountains to alter a consumer's decision of where to travel to buy goods.
The Law of Retail Gravitation, allows us to draw trade area boundaries around cities using the distance between the cities and the population of each city. Reilly found out that the larger a city, the larger a trade area it would have and thus it would draw from a larger hinterland around the city. Two cities of equal size have a trade area boundary midway between the two cities. When cities are of unequal size, the boundary lies closer to the smaller city, giving the larger city a larger trade area.
In Albania, there are two shopping centers located on the highway between the two main cities, Tirana and Durres: Citypark and QTU, respectively located on the 12 th
km and on the
6 th
km of the highway away from Tirana. In their communication strategy both shopping centers are targeting customers from both cities, Tirana and Durres. (Figure 1: The map for the three cities taken into consideration in this study: Tirana, Durres and Elbasan).

Journal of Marketing and Management, 4 (1), 21-30, May 2013 27
Figure 1
The distance between the two cities, Tirana and Durres, is 39.1 km. (Figure 2)
Figure 2: The map between Tirana and Durres
The Breaking Point would be = 39.1 km/1+ 266,823/765,813= 39.1 km/1+ 0.59 = 39.1 km/1.59 = 24.59 km from the city of Tirana. (Figure 3). In retail terminology this trade area is referred as “catchment area” for the shopping center. This means that inhabitants in this distance tend to travel toward the shopping centers of Tirana rather than toward the shopping centers of Durres.
Figure 3: The BP for Tirana and Durres
Reilly’s Law gives us an explanation why both shopping centers do not have customers from the city of Durres. Located 6 km and 12 km away from Tirana, both shopping centers trade

Journal of Marketing and Management, 4 (1), 21-30, May 2013 28 area is the city of Tirana. From this prospective, if Citypark and QTU will offer the same tenant mix and service to customers, QTU will be more preferred because of the fact that customers will have to travel less. Citypark should have a high level of attraction and offer different retail product in order to be competitive. Tirana East Gate shopping center is located
4 km near Tirana, between the city of Tirana and the city of Elbasan.
Figure 4: The map between Tirana and Elbasan
The distance between the two cities is 56.6 km. The Breaking Point between Tirana and
Elbasan would be = 56.6 km/1+ 292,957/765,813= 56.6 km/1+ 0.383 = 56.6 km/1.383 =
40.92 km from the city of Tirana.
Figure 5: The BP for Tirana and Elbasan

Journal of Marketing and Management, 4 (1), 21-30, May 2013 29
This means that inhabitants in the distance of 40.92 km tend to travel toward the shopping centers of Tirana rather than toward the shopping centers of Elbasan.
To calculate the trade area population, the shopping centers in each city should count the population located in the distance calculated with the formula of the Breaking Point. This figure represents the market potential for the shopping centers. When there are many roads to access the shopping centers, this distance is generally considered as a radius.
Conclusions
Reilly’s Law helps managers of shopping centers to define the trade area (catchment area) of each shopping center, the number of potential customers within the trade area and the competitors. The calculation of Breaking Point between Tirana and Durres shows that inhabitants up to the distance of 24.59 km away from Tirana will be attracted to visit a shopping center that makes them travel towards the city of Tirana. The calculation of
Breaking Point between Tirana and Elbasan shows that inhabitants from the city of Tirana up to the distance of 40.92 km away from Tirana will be attracted to visit a shopping center that makes them travel towards the city of Tirana. Tirana plays an important role for the three shopping centers analyzed in this study, because of the large number of population in it.
Taking into consideration the actual location of Citypark (12 km), QTU (6 km) and TEG (4 km), we can say that these shopping centers are competing for more or less, the same catchment area and potential customers. While QTU and TEG are part of the same group of business (Balfin Group), they have overlapping trade area. Differentiated marketing

Journal of Marketing and Management, 4 (1), 21-30, May 2013 30 strategies and different tenant mix should be implemented in order to prevent cannibalization of each shopping center and create attraction for customers.
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