Stated-Preference Examination of Location Choice Behavior of Small Retail Firms

Abstract

A stated-preference experiment was performed in Calgary, Alberta, Canada, to examine the nature of various influences on location decisions by various categories of small independent retail firms. A total of 287 completed observations were obtained. In each observation the respondent shop owner or manager was presented with a set of possible shop locations and asked to indicate the order of preference for those locations. These observations were used to estimate the parameter values for a range of alternative utility functions in logit models representing this choice behavior. The results indicate that all the included attributes have significant effects except for the driving time to the nearest electrical substation, which was included as an irrelevant variable to see if the method would indicate it was irrelevant. The results also indicate that the addition of one more competitor nearby is as onerous as an increase in rent of C$127 per month; a switch from a separate location on a minor road to a separate location on a major road is as desirable as a decrease in rent of C$388 per month; a switch from a separate location on a minor road to a mall is as desirable as a decrease in rent of C$665 per month; and an increase in parking charge of C$1 per hour for customers is as onerous as an increase in rent of almost C$200 per month. Some results are novel and others are broadly consistent with findings in other research, which is seen to add credence to the approach used.