Why Do Certain Retail Stores Cluster Together?

Along with car dealerships, fast food stores, electronics retailers and others, it turns out there’s a reason why, despite being counter-intuitive, certain selective types of shops often clump together.

“I had mentioned that the Central Place Theory teaches us that people are willing to travel farther to consume higher ordered goods, which is why firms that sell these goods co-locate.  While one could make the argument that Walmart and Target, as places for one stop shopping, are in effect, higher order goods, the same argument could not be made for fast food and coffee shops.  Maybe coffee shops cluster together for the same reason as ice cream vendors on a beach.  Perhaps, in order to avoid leaving the commercial district (or beach), coffee shops locate in close proximity in order to compete over more of the local market share. “

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