Intercounty retail leakage in Tennessee : a market area analysis

The concentration of retail trade in a few large metropolitan centers and subsequent outshopping from surrounding areas has been increasing in Tennessee over the past several years. Innovations in transportation and relatively inexpensive fuel prices have allowed residents of small towns to make frequent shopping trips to larger metropolitan centers where they can find a much larger variety of retail goods from which to choose.

Many approaches have been taken to study the phenomenon of outshopping. Some researchers have tried to explain the character and motivation of the frequent outshopper. Others have tried to gauge the degree to which outshopping has increased. Almost all suggest ways to stem the flow of outshopping. In this thesis, I address the question of whether retail concentration and outshopping activity are abnormal or simply natural market area adjustment to the character of a greatly extended spatial demand curve.

I have gauged the level of outshopping on a county basis over the ten year period from 1977-1987 and compared this level to the average for the entire state. The results of this analysis demonstrate that outshopping among Tennessee counties has been increasing over the past several years. I argue that outshopping is entirely consistent with central place theory and, furthermore, that this concentration of retail activity is a necessary step toward a more homogeneous spatial pattern of retail establishments.

Rather than gauge these market areas solely on the basis of the state average, I have divided them into groups of market potential. Using the graduated retail leakage index based on data from the Survey of Buying Power the counties were categorized according to their population and income level. These markets were then compared against the average for all other counties with similar market attributes. This procedure allows me determine the degree to which counties experiencing significant outshopping activity are underserved by existing retail businesses.

The result of this analysis, I believe, offers a more realistic methodology for judging the ability of these counties to retain retail sales. In addition, it also provides a method for determining the types of retail activities these counties are able to support.