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Evaluating store location and department composition based on spatial heterogeneity in sales potential

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  • Hunneman, Auke
  • Bijmolt, Tammo H.A.
  • Elhorst, J. Paul

Abstract

In this paper, we extend a retail location evaluation model with the possibility to include the effect of department size adaptation at the store level. We relate department-level store sales to a store's competitive and demographic environment, thereby providing richer insights into the drivers of department sales than a model of just aggregate sales. Further, we accommodate heterogeneity in consumer characteristics over space by using zip code level data and unobserved spatial effects in department sales by including spatially autocorrelated error terms.

Suggested Citation

  • Hunneman, Auke & Bijmolt, Tammo H.A. & Elhorst, J. Paul, 2023. "Evaluating store location and department composition based on spatial heterogeneity in sales potential," Journal of Retailing and Consumer Services, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:joreco:v:73:y:2023:i:c:s0969698923001029
    DOI: 10.1016/j.jretconser.2023.103355
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