The Geography of Partial-market Exits: Adopting geospatial and econometric methods to analyze U.S. department closures in 2017

Authors: Connor Reed*, University of North Texas
Topics: Business Geography, Economic Geography, Quantitative Methods
Keywords: retail geography, business geography, spatial econometrics, regional science, market analysis
Session Type: Paper
Day: 4/4/2019
Start / End Time: 8:00 AM / 9:40 AM
Room: Stones Throw 3 - Mica, Marriott, Lobby Level
Presentation File: No File Uploaded

Many factors have prompted the adoption of partial-market exit strategies in retail as a means of reducing cost and minimizing risk. These mass closures have become more frequent in recent years. Marketers and economists have offered explanations for these closures linked to the rise of e-commerce and general changes in consumer taste. The research here marks an attempt to apply geospatial and econometric methods to better understand what factors explain the spatial variation of these closures across the United States. Specifically, the analysis examines the store networks of Sears, J.C. Penney and Macy’s- large, established department stores that, collectively, announced over 100 closures at the beginning of 2017. By treating each store as a unit of observation, and a closure as a limited dependent variable, this analysis will attempt to quantify the relationship between place-specific factors and retail closures using spatial Probit modeling. This application of modeling marks a deviation from traditional analyses in retail geography which, up until the early 2000s, have focused almost entirely on store development and growth. Powerful outputs from the model will not only contribute to the limited body of work already done on retail closures, but may also provide critical insight for businesses and communities about what demographic and geographic attributes underlie the landscape of these department store closures.

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