European Real Estate Society Annual Conference 2010
(ERES2010) Milan, Italy
Measurement of Retail Concentration and Variety in
Vertically-used Large-scale Retail Properties
Dr. Tony Shun-Te Yuo
Department of Real Estate and Built Environment
National Taipei University, Taiwan
Introduction
• Micro-scale location and allocation problems within retail properties
(Shopping Centres/Malls)
• Multi-unit large-scale retail property.
• Seeking the maximum retail agglomeration economies-enhance property
income value
• Optimizing the mall configuration, predicting shopping behaviours, and
allocating total floorspace according to the previously planned tenant mix
strategy
• However, some modern micro-scale location theory generated from the
observation of out-of-town shopping centres (horizontally-used) cannot
be used in some cases in Asia (vertically-used).
Principle 1: for shopping mall
• The floor plan configuration should allow maximum
number of customers pass the maximum number of shops
(Morgan and Walker, 1988)
• Using simple geometric configuration to achieve this goal
Principle 2: for shopping mall
• Dumbbell shaped or its extension to I, L, Y, X, Z. Anchor stores at the
mall ends and standard/smaller tenants along the single corridors that
connecting the anchors. (ULI, 1999; Fong, 2003; Carter and Vandell,
2005)
Standard/small stores
Anchor stores
Pedestrian flow plans
Anchor stores
Pedestrian flow plans
Anchor stores
Pedestrian flows
Principle 3: for shopping mall
• Dispersion of non-anchor stores of the same type. (Carter
and Haloupek, 2002)
• We agree with this observation, However...
“if stores of the same type…will be where transportation costs between the stores
are minimized.” (Carter and Haloupek, 2002)
Three principles
• The floor plan configuration should allow maximum
number of customers pass the maximum number of shops
(Morgan and Walker, 1988)
• Dumbbell shaped or its extension to I, L, Y, X, Z. Anchor
stores at the mall ends and standard/smaller tenants along
the single corridors that connecting the anchors. (ULI,
1999; Fong, 2003; Carter and Vandell, 2005)
• Dispersion of non-anchor stores of the same type. (Carter
and Haloupek, 2002)
Arguments
• Although:
– generally widely agreed by researchers for (suburban or out of town)
shopping centres.
• However,
– most of these principles were difficult applying to the cases in
Taiwan and other urban/metropolitan or city-based countries with
high population density, such as Hong Kong, Singapore Japan, and
China.
Arguments
• 1.Vertically-used retail property-against the mall
configuration derived from Anchor-store based gravity
model-need some other strategy to increase the space
efficiency.
• 2. Dispersion of non-anchor store (Carter and Haloupek,
2002) is not because of P-median- minimizing the total
distance, but maximizing the total spill-over effect.
And…
In
Vertically-used
retail
property.
It’s
departmentalization of non-anchor store of the same
type.
Scenario simulation
Located in dispersion
Example for Case A
Allocated in Departmentalization
Example of case B
Comparison of the two cases
Dispersion and departmentalization of
tenants for the same type
Hypotheses for empirical study
• H1: The lower the total floor levels, the larger single floor
area, and the less complex of pedestrian routes, retail
tenants of the same type has to be located in dispersion:
•
so as to stimulate shoppers circulation, and generate higher inter-store externalities
among tenants. The goal is to achieve the maximum rental values. In contrast to this
hypothesis, the opposite concept should also stands,
• H2: The higher the total floor levels, the smaller single floor
area, and the more complex of pedestrian routes, retail
tenants of the same type has to be located in
departmentalization:
•
so as to increase the vertical space usage efficiency. Reducing shopping costs
(Searching costs and comparison costs) of customers. The goal is also to achieve the
maximum rental values.
Measurement of departmentalization
The index measuring the degree of departmentalization of retail
categories (A5ij): measuring the departmentalization of retail
categories (more then 3 units) clustering within 5 metres in
each floor level:
A5ij 
f
i
ij
[6]
Fj
Where
A5ij: The index to measure the degree of same retail categories i
agglomerate within 5 metres in floor j
f ij : departmentalized floorspaces (5 metres) within floor j.
Fj
：Total floorspace for floor j
Measurement of spatial complexity
• In this paper we refined the index into a SpaceWeighted InterConnection Density (SWICD), so as
to measure the complexity under various scale of
space weighted. The measurement is defined as:
 Pi  Di 

SWICDi  
 S i 
• Where, SWICDi: is the space-weighted interconnection density of floor i; Di: is the total number of
links in floor i; Pi: is the total decision points in floor i;
and Si: is the size of floor i.
R2
Results
Table 1: multi-regression results of degree of departmentalization
β
SE
p
0.182
0.141
0.2050
Y=A5ij
α
VIF
Totalev
7.43E-02
0.016
0.0000***
2.366
SWICD
2.82E-03
0.002
0.0720*
1.425
Units
4.44E-04
0.000
0.0130**
2.528
R square
Adj r square
F test
Sample size
0.401
0.364
10.929***
53
Note: *:90% of significance, ** for 95% of significance, *** for 99% of significance
Table 3 Average degree of departmentalization on the 4 level (above and under)
Class
N
Average degree of
departmentalization
Sd
SE
Under 4 levels
8
0.1088
0.1052
Above 4 levels
46
0.7740
Total
54
0.6755
Means 95% range
Min
Max
0.1967
0.0000
0.2779
0.7057
0.8424
0.0755
1.0000
0.5878
0.7632
0.0000
1.0000
lower
upper
0.0372
0.0208
0.2300
0.0339
0.3214
0.0437
Conclusion
• This research agrees that these principles are suitable for a
planned shopping centre with no physical restriction in lot size
and shape, low total floor levels and simple geometrical
pedestrian flow.
• Nevertheless, the first principle is difficult to sustain, while the
case with characterises of multi-level, high complexity of
floor plans. The second principle also is not possible to
stand under a vertical structured building.
• The anchors would not be a simple “in the ends” location, but
have to find the locations for their original roles. That is to
enhance the total spillover customer drawing power to other
small tenants, but the locations for anchors may not be as
simple as in the ends of main corridors anymore.
Conclusion
• Cater and Haloupek (2002) suggested that, under P-median problem, nonanchor retail stores of the same type should located in dispersion, so as to
enjoy the minimized total distance from supply points to demand points.
• However, although agree with the dispersion concept in suburban shopping
centres, we argue that the main reason for this dispersion is not for
minimizing total distance but to enhance inter-store externalities of the whole
centre.
• It would be an opposite situation for the third principle,
• While:
 Vertical structure (more than 4 levels in total),
 Complexity for shoppers circulation is high,
• Centre managers has to reduce this complexity by departmentalizing the
stores of the same type to transform the floor plan into purposive zones.
• Hence the shoppers could identify the place without wayfinding difficulties.