Retail propinquity: a location strategy for success?.

Abstract

Introduction and Objective: In the last decade, Bangkok has witnessed a phenomenal growth of clustered retail establishments selling same or similar goods and services. This phenomenon is termed by the study as ‘retail propinquity’.The work reports key motives for such location choice as compared to the opposite type, stand-alone format. Methods: This study employs triangulation methods in various phases. At the beginning, qualitative field survey or store count was conducted to identify the number of retail propinquities in Bangkok and each individual member stores. Then, expert and in-depth interviews of five retail products were completed to gain insight on possible drivers of the location choice and its outcomes. It followed by literature search on supported location decision models. Several economic and retail marketing decision theories have been explored to conceive the conceptual model for the study and its causal paths. The main methodology for this multivariate data analysis is the Structural Equation Modeling, using AMOS statistical package.Results: Six personality types were suggested by the analysis to be antecedences of the retailer’s location decision. The outcomes of this decision model are twofold. One is based on sales performance, while the other is measured through consumer perception. The two mediating factors in location decision model are factors relating to the location itself and the competitive environment of such location. The data collected from propinquitous group shows higher degree of success, expressed in terms of sales and consumer perception, than that from stores located otherwise. Conclusion: The retail propinquity phenomenon that has been growing rapidly in Thailand is indeed a survival strategy based on location or place marketing alone. The research also indicates that retail propinquity works better for shopping types of products than specialty services.