Ch. 9 Flashcards
Trading Area
A geographical area containing the customers and potential customers of a particular retailer or group of retailers for specific goods and/or services.
Trading-Area Overlap
Where the same customers are served by both branches.
Geographic Information System (GIS)
Software that combines digitized mapping with key locational data to graphically depict trading-area characteristics such as population demographics, data on consumer purchases and listings of current, proposed and competitor locations.
Primary Trading Area
Encompasses 50-80% of a store’s customers; is the area closest to the store, and possesses the highest density of customers to population and the highest per capita sales.
Secondary Trading Area
Contains an additional 15-25% of a store’s customers, and is located outside the primary area where customers are more dispersed.
Fringe Trading Area
Includes all the remaining customers, who are more widely dispersed.
Destination Stores
Retail outlets with a trading area much larger than that of a competitor with a less unique appeal. It offers a better merchandise assortment in its product categories, promotes more extensively, and/or creates a stronger image.
Parasite Stores
Do not create their own traffic, and have no real trading areas of their own.
Analog Model
The simplest and most popular trading-area analysis model.
Regression Model
A model that uses a series of mathematical equations showing the association between potential store sales and several independent variables at each location (like population size, average income, etc.)
Gravity Model
A model based on the premise that people are drawn to stores that are closer and more attractive than competitors’ stores.
Reilly’s Law of Retail Gravitation
The traditional means of trading-area delineation.
Point of Indifference
The geographic breaking point between the two cities, at which consumers are indifferent to shopping at either.
Huff’s Law of Shopper Attraction
A formula that delineates trading areas on the basis of the product assortment (of the items desired by the customer) carried at various shopping locations, travel times from the shopper’s home to alternative locations, and the sensitivity of the kind of shopping to travel time.
Economic Base
An area’s industrial and commercial structure- the companies and industries that residents depend on to earn a living.
