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Analysisof ShoppingCenter
A Probabilistic
TradeAreast
By DAVID L. HUFF*
town in the vicinity of the breaking 57 percent, and the remaining 43 per
point approximately in direct proportion cent would be the proportion attracted
to the populations of the two cities and to city B.
in inverse proportion to the square of Since Reilly's study was published in
the distances from the two cities to the 1929, a number of empirical studies have
intermediate town. The mathematical been conducted using his model. Most
expression of Reilly's hypothesis is as noteworthy of these have been the stud
follows: ies carried out by P. D. Converse for
various communities in Illinois.2
Ba Pa ) Db)2 In 1947, the Curtis Publishing Com
Bb Pb (Da pany made a significant adaptation of
Reilly's formula to determine the break
where Ba = the proportion of the trade ing point between two cities." Such a
from the intermediate city
attracted by city A; boundary line, i.e., where Ba = Bb, or
Bb= the proportion of the trade point of equilibrium, represents the
from the intermediate city point up to which one city exercises a
attractedby city B; dominant trading influence and beyond
Pa = the population of city A; which another city dominates. Another
Pb = the population of city B; way of defining it would be that the
Da = the distance from the inter breaking point represents the .5 proba
mediate town to city A; and, bility position between two cities. The
Db = the distance from the inter mathematical version of this adaptation
mediate town to city B. is indicated below:
Ba 30
(100,000 2P.D. Converse, "Retail Trade Areas in Illinois"
Bb 200,000 )2 = 1.125
(Urbana, Illinois: University of Illinois Bulletin,
Business Studies No. 4, 1946).
The percentage of the population of 8Frank Strohkarck and Katherine Phelps, "The
Mechanics of Constructing a Market Area Map,"
town x attracted to city A would thus be Journal of Marketing, April 1948, pp. 49396.
SHOPPING CENTER TRADE AREAS 83
The derivation of this model from The modified version of Reilly's for
Reilly's original formula is as follows: mulation as developed by the Curtis Pub
lishing Company has also been used ex
(i) Since Ba = Bb tensively to estimate trading areas of
proposed shopping centers within cities.'
Generally, the square footage of each
(ii) Then (PaDb• retail center is substituted for popula
Pb Da  1
tion and the travel time between retail
centers is substituted for physical dis
tance, i.e., miles. Again, to illustrate
(iii) And Db Pb the use as well as the mechanics of oper
Da Pa
ating the model, consider the following
example: Assume that a group of in
vestors are contemplating financing the
Db _ Pb
(v) Therefore Dab  Db  construction of a proposed shopping
center within a particular section of a
city. The site for the facility has been
chosen and the number as well as the
(vi) And
Dab
Dab I
D Pa
proximity and size of competing centers
Db 1 Pb has been determined. By using the mod

ified gravity model, the breaking points
Dab from the proposed cented to each of the
(vii) Thus = Db existing centers are calculated. The hy
J Pa pothetical data used, as well as the re
Pb sults of such computations are shown in
Table I. These results are also mapped
to delineate the potential trading area
To illustrate the operation of this of the
proposed facility as shown in Fig
formulation, let us assume that the popu ure I.
lation of cities A and B are 400,000 and
TABLE IHYPOTHETICALDATA USED IN
200,000 respectively. Furthermore, let DELINEATING TRADINGAREA OF PROPOSED
us assume that the distance separating CENTER
SHOPPING
these two cities by the most direct route Sq. Footage Travel Breaking Point
Shopping of Selling Time From Shopping
is 80 miles. By substituting these data in Center Space From A Center to A
the formula, we find that the breaking A 200,000 0 0
B 100,000 15 6.2
point from city B is: C 150,000 20 9.3
D 50,000 10 3.3
E 300,000 25 13.8
80
Bb = = 33.3 miles
400,000
1+ 200,000
Such a delineation is usually superim facility varies from zone to zone. For
posed over a census tract map as illus example, suppose that an analyst consid
trated in Figure 1 to determine the num ers using the breaking point formula to
ber of persons within the confines of delimit the trading area of a proposed
the trading area. This information is shopping center located in an area which
then used as a basis for determining the includes a preponderance of socalled
purchasing power potential of such a light industries and noncompeting com
region and, as a consequence, the po plementary commercial activities. Since
tential sales and profitability of a shop such a trading area would be determined
ping center. solely on the basis of calculating the
breaking points between competing cen
ters, the resulting evidence is likely to
FIGURE 1HYPOTHETICAL TRADE AREA MAP OF A be highly distorted. On the other hand,
PROPOSED SHOPPING CENTER if the analyst had conducted a crosssec
tion analysis of residential areas and
tried to determine the proportion of
c households that were likely to patronize
the proposed center as well as compet
ing centers, the resulting trading area
would probably be considerably differ
ent and much more realistic. The situa
tion just described applies particularly
to cases where the breaking point for
mula has been used to delineate the trad
ing area of the central business district.
 TRADE AREA BOUNDARY Second, the vast majority of market
O COMPETING SHOPPING CENTERS analysts who have used the gravity model
e PROPOSED SHOPPING CENTER
to delineate intraurban retail trade areas
have naively assumed that the exponent
2 which Reilly had originally estimated
for intraurban trade movements would
Limitations of Gravity Models
possess the same value within urban
Despite the contribution that the grav areas. Such an assumption appears ques
ity model has made to retail trade area tionable. Studies have shown that the
analysis, there are a number of limita exponent has ranged from 1.5 to over 3,
tions associated with its use." First, the depending on the trip type being ana
calculation of breaking points to deli lyzed as well as the geographical setting
mit a retail trade area conveys an im involved."
pression that a trading area is a fixed
boundary circumscribing the market po
tential of a retail facility.
Sufficient empirical evidence is avail 6 David L. Huff, "A Note on the Limitations of
able, however, to indicate quite clearly IntraUrban Gravity Models," Land Economics,
that a trading area represents a series February 1961, pp. 6466.
6See, for example, Gerald A. P. Carrothers,"An
of radial zones in which the proportion Historical Review of Gravity and Potential Models
of Human Interaction," Journal of American In
of consumers patronizing a given retail stitutes of Planners, vol. 22, No. 2, 1956.
SHOPPING CENTER TRADE AREAS 85
Finally, the gravity model possesses to discover and specify only a few rele
very little theoretical content. That is, vant variables that will enable predic
it does not reveal why observed regulari tions to be made reasonably well and
ties occur as they do. Throughout its consistently.
thirtythree year history, the model has Empirical evidence suggests that two
been used primarily as a tool and, as a variables exert such an influence on a
consequence, little has been done in the consumer's choice of a shopping center
way of examining the behavioral impli that they may be the only variables need
cations associated with its use. ed to predict such behavior according
to the criterion cited above." These two
Purpose and Scope of this Study variables include: (1) the number of
In view of these limitations this study items of the kind a consumer desires that
are carried by various shopping centers;
attempts to develop an improved formu
lation for delineating trade areas of pro and, (2) the travel time that is involved
in getting from a consumer's travel base
posed shopping centers. The analysis
will utilize the conceptual properties of to alternative shopping centers.
the gravity model but its focus will be Impact of Merchandise Offerings. A
on the consumer rather than on the re large number of consumer shopping de
tail firm per se. Since the consumer is cisions are made under conditions of
really the primary object of any trade uncertainty, i.e., a consumer does not
area analysis, an explicit understanding know in advance whether a particular
is needed not only of the factors affect shopping center will definitely fulfill a
ing his choice of a shopping center but specified purchase desire. However, a
also of the choice process itself which consumer does have an a priori knowl
gives rise to observable spatial behavior.' edge of the probability that various shop
It is felt that once these conditions are ping centers might satisfy his shopping
known, considerably greater insights will demands. Such a probability is based,
have been achieved concerning the dy for the most part, on the number of
namic characteristicsof retail trade areas. items of the kind that he desires and
Furthermore, knowledge of such condi feels are carried by various shopping
tions should make it possible to prepare centers. Presumably, the greater the
more reliable estimates of intraurban number of items carried by such centers,
retail trade areas. the greater is the consumer's expecta
tion that his shopping trip will be suc
Measuring a Shopping Center's Utility cessful.' Therefore, consumers will show
The utility of a shopping center to
a consumer is based upon a host of dif
ferent factors. Any attempt to measure
the relative intensity or weight of all
7Spatial Behavior will be used throughout this
of these factors would be doomed to fail study to refer to the observable courses of action
ure. Furthermore, the difficulty would that consumers take with respect to their choice
of a shopping center. A shopping center will
become compounded if an attempt was refer to complementary and competing agglomera
tions of retail firms which are geographically con
made to ascertain the variations among tained. A shopping center, according to this defi
such weights that would inevitably exist nition, may be either planned or unplanned.
from consumer to consumer. Conse A. P. Carrothers, op. cit.
9SGerald
William J. Baumol and Edward A. Ide, "Variety
quently, what is desired in this study is in Retailing," Management Science, October 1956.
86 LAND ECONOMICS
6. Calculate the number of households 7. Determine the annual average per house
within each of the statistical units. Then, hold incomes of each of the statistical
units. Compare such figures to corres
multiply each of these figures by their
ponding annual household budget ex
appropriate probability values to deter penditure figures in order to determine
mine the expected number of consumers the average expected amounts spend by
(expressed in households) who will pa such families on various classes of prod
tronize the shopping center in question ucts, e.g., clothing and furniture. Esti
for a particular product purchase. That mate annual sales for the shopping cen
ter under investigation by multiplying
is, each of the product budget figures by
expected number of consumers from each
statistical unit who are expected to pa
Si tronize the shopping center in question.
Then, sum these individual estimates to
Tu arrive at a total annual sales potential
E (Cl) = Ci (For all i's) by product class for the selected shop
n ? ping center. Such a sales potential can
Sj( be expressed in terms of the basic model
j=I Tij as follows:
Si
where E (CU)= the expected number of
consumers from each of
the ith statistical units go Tij
ing to a particular shop E (Au)  Ci Bik (For all i's)
ping center j; and n Sj
Ci = the number of consum S
ers in the ith statistical j=I \ Tij
unit.
trips that are likely to be made to a pro hood patronizing the proposed center
posed shopping center in a given time has been calculated from the model to
period. The basic model would be modi be .80. In addition, let us imagine that
fied to provide such an estimate as fol there are 1000 households within this
lows: particular neighborhood. Finally, let us
assume that statistics indicate that, on the
Si average, consumers make two shopping
trips per month for clothing purchases.
Tij The expected number of shopping trips
E (Sam) = Ci Sm (For all i's) from neighborhood i to the proposed
center j per month would thus be:
j=I ($Ti)
E (StUm)= (.80) (1000) (2)
where E (SiQm)= the expected number of
shopping trips from E (Sijm)= 1600
neighborhood i to shop
ping center j for a given
product purchase in a It is possible to carry the preceding
given time period m;
and, operation a step further to determine the
Sm= the average number of expected sales of a given product class
shopping trips S that from a particular neighborhood within
consumers make with a specified period of time. Again, if
respect to a given pro we know the annual amount budgeted by
duct purchase within a
given time period m. consumers of a particular income stra
tum (Bik) for a given product class and,
As an illustration, suppose the devel
if AS indicates the annual number of
opers of a proposed shopping center are
interested in determining the expected shopping trips made for such goods;
then, would indicate the amount
number of clothing shopping trips that Ba,/AS
consumers from a particular neighbor spent per shopping trip; and,
(Ba,/AS)
hood are likely to make to such a center (Sm) would indicate the amount spent
within a given time period of less than
per month. Let us assume that the prob one year. The model would now appear
ability of consumers from this neighbor as:
Sj
E (Dim) =
jn
n
I TO c*
Ci Bi,
AS
Sm (For all i's)
j \I TiJ
90 LAND ECONOMICS