Do Product Types Affect the Attractiveness of Retail Agglomeration?

Abstract

Agglomeration has been defined as, the presence of a set of firms in a topographically defined unit, for example, in a building, on the street lane or block (Knoben & Oerlemans, 2006). Retail agglomeration can be defined analogous to this definition as a group of retail stores in close proximity, which cooperate and compete with each other simultaneously. Different types of retail agglomeration have been identified in literature. The classification is placed upon uniformity of agglomerations in relation to the way are organized and raised, finally resulting to what extent they are marketed and managed as assimilated entities (Teller, 2008). One such typology is evolved retail agglomeration format EAF, like the retail clusters in the business district, main streets or specific-city locations (Levy & Weitz, 2001). The ownership in such case is divided among various proprietors and the collaboration amongst other tenants (or occupants) and retailers to manage the agglomeration is absolutely intentional (Teller, 2008). Another type of retail agglomeration is created retail agglomeration formats CAF, which are planned consciously and managed centrally. Other than these two formats, the hybrid agglomeration format HAF, which include retail parks, where they are built consciously but not managed centrally (Teller, 2008). Retail agglomeration in high streets and shopping malls has been found useful to both consumers as well as firms. High street agglomeration offers exclusivity and visibility, whereas shopping mall agglomeration offers the benefits of higher footfalls, shared infrastructure and high impulse purchases. However empirical research on effect of retail agglomeration has been very limited in literature and only a handful of studies have attempted to find the reasons for agglomeration attractiveness. In a recent study by Teller & Reutterer, (2008) it has been identified that site related, tenant related and environment related factors affect retail agglomeration attractiveness. In another recent study conducted by Teller, Alexander, & Floh, (2015), it was found that, competition does not have a significant impact on store performance in an agglomeration, but cooperation affects performance positively. The effect of retail agglomeration on consumer buying behaviour has also been studied in the background of multipurpose shopping. Multipurpose shopping is the purchasing of products from more than one product variety or cluster on one shopping trip (Herman & Belinda, 2004). Empirical work, on how and when buyers choose to make a single or multipurpose shopping trip is very limited in literature. In addition to that the studies conducted to find agglomeration attractiveness has so far considered factors related to site, environment, tenants, cooperation and competition. To the best of my knowledge, the product attributes, such as product involvement, has not featured distinctively in any of the studies related to agglomeration attractiveness, making it an interesting area for investigation.