Citizens Oak Ridge

Letters Submitted to the Oak Ridge

City should not have to subsidise Target

To be published

To the Editor:

Can Crestpointe Compete ?

This statistical decision model will be of particular interest to the more scientifically oriented citizens in Oak Ridge. Its conclusions will be of interest to voters on the bond issue.

An internet search found a 1996 report by two university researchers examining the question:
"How Critical Is a Good Location to a Regional Shopping Center?" The research used data from 38 regions containing multiple shopping centers and the 'gravity model' of prior researchers who had identified the primary variables; sales, shopping center sizes in square feet, and distances to the customers. Other variables were considered and eliminated as insignificant. The multivariate regression analysis found that the sales attracted to a center were very strongly dependent on center size and very weakly dependent on distance from the customer. I quote the study's summary below:

"The goal of this paper is to empirically measure the consumer utility trade-off between store location (i.e. distance to a shopping center) and retail agglomeration (shopping area size) in regional shopping centers. Using the Lakshmanan and Hansen retail expenditure model, our findings reveal that the distance specification is of surprisingly little importance in explaining retail sales. Conversely, agglomeration economies were of significant importance in explaining consumer patronage at regional shopping centers. The implications of these results is that smaller regional shopping centers may be dominated by large super-regional shopping centers with the smaller one or two anchor regional shopping centers unable to compete with the larger, many anchored super-regional shopping centers."

The research paper describing a detailed and thorough statistical analysis is located at the website:

http://cbeweb-1.fullerton.edu/finance/journal/papers/pdf/past/vol12n03/v12p459.pdf

The more specific implication for Oak Ridge voters is that a closer but smaller Crestpoint center can be dominated by the Turkey Creek and West Town Mall super-regional shopping centers and be unable to compete with them. Oak Ridgers (and others) will still favor shopping in the larger area when variety and more comparison shopping opportunities are important to their purchase.

This model, with data on local and proposed shopping centers, could be used by statistical analysts to determine a more credible sales estimate for an Oak Ridge shopping center.

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Tim
Vote No on Crestpointe Bonds
Why? See http://www.citizensoakridge.com