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Gravity Models
If you are considering a significant investment in a new retail development, or the improvement of an existing center, a gravity model will provide you with information that you will need to make an informed decision.
A gravity model can provide objective and accurate estimates of potential retail sales by taking into account nearby retail centers that would compete for sales with the new center and consumer expenditures in the market area. These estimates are based on probabilities associated with the size, type and quality of the new retail center, along with the types and locations of other retail stores in the area. Consumer factors are also taken into account, including income and expenditures, and the time it will take consumers to drive to the new retail center compared to nearby areas that offer similar goods.
Each gravity model constructed by CERC is customized to the specific factors of the area, considering regional factors such as income dispersion, consumer purchases outside of the region, and expenditures of local tourists. The key results from the model include the estimate of the change in the distribution of local expenditures among the various retail centers as a result of the proposed development. However, the model can also consider a net change in local purchases by consumers due to the relative increase in competitive pricing of goods relative to other retail options such as internet or phone sales.
A selection of clients include:
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