12 Determinants Of Retail Trade Areas

Retailing is the activity of selling goods to the ultimate consumers. When final consumer products are sold to the households it is regarded as retailing. It includes all activities directly related to the sale of goods or services to the ultimate consumer for personal, non-business use.

Retailing consists primarily of buying the correct assortment of goods for the consumers to be served, making these goods available, and often convincing the consumer of the satisfactions to be obtained from them.

Retail trade includes establishments primarily engaged in selling merchandise to personal, household and farm users. Excluded from retail trade are places of business operated by institutions and open only to their own members or personnel, such as restaurants and bars operated by clubs, school-cafeterias, eating places operated by industrial and commercial enterprises for their own employees.

A person who is selling grocery products or stationery, for example, to the people who buy for personal consumption is engaged in retailing. Similarly, a farmer who sells vegetables at a roadside stand is also engaged in retailing. A retailer is a person who mainly operates his business for selling direct to the consumers. He sells primarily to the final consumers for non-business use.

American Marketing Association has defined a retailer as “a merchant or occasionally an agent, whose main business is selling directly to the ultimate consumer”.

So as per this definition the grocer and the farmer are retailers because they are directly selling their products to the final consumers for personal, non-business use.

Determinants of the Retail Trade Area

The determination of the trade area is important for the retailers. One of the first steps in any retail location study is to specify the potential market area. We may think of a trade area either as the total area from which a town secures any considerable portion of the trade, or as the area from which a town secures more than one half of the trade.

In the first sense, trade areas overlap while in the second, they are mutually exclusive. The main determinants of retail trade area are :

(i) density of the population of the town,

(ii) reputation of the town for quality and price,

(iii) kinds of retail stores,

(iv) assortment of goods offered for sale,

(v) distance,

(vi) communication and transport facilities,

(vii) time and expense of reaching the center,

(viii) square-footage on fashion-goods stores,

(ix) parking and other facilities,

(x) proximity to other large stores,

(xi) social and amusement attractions and

(xii) topographical and climatic conditions.

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