MODELLING STORE LOCATION ON THEMATIC SHOPPING MALLS

Abstract

Research on shopping malls have explored on the behavioral (Hotelling, 1929; Miceli et al, 1998; Du, 2003; Tay, 2005) and comparative aspect (Po, 2004). Whilst research on the economic characteristics of shopping malls have covered on price discrimination in shopping center leasing (Benjamin, Boyle, and Sirmans, 1992), the nature of lease structure (Chun, 1996; Brueckner, 1993; Miceli and Sirmans, 1995), space allocation (Brueckner, 1993), the identification and scale of demand externalities (Pashigan and Gould, 1998) and in Singapore's context; travel and shopping patterns (Faishal 2003, Lee and Sim 1998). This paper shall improve on the theory of store location within thematic shopping centers based on the Alonso's bid-rent theory. The idea was first suggested in Carter and Vandall (2004) which developed a fully specified model based on the theory of bid-rent theory on location variables on shopping centers. In our research, we shall adopt the model and further develop it with our focus on thematic shopping centers. Our bid-rent model will be solved with by using determinants derived from an objective function of profit maximization in the presence of comparative, specialty and impulse shopping behavior. Several hypotheses are discussed about the relationship between rentals, size, distance and store types from the mall's thematic center. These hypotheses are tested and confirmed using data from a sample of 531 leases in two thematic shopping centers spanning a period of two years. Our results suggest that the bid-rent explanation is consistent and can be explained with our observed location patterns in thematic malls.