Anchor-store quality in malls: an economic analysis.

Purpose – The aim of this study is to develop and empirically test a theoretical model of competition between anchor and non-anchor stores in a shopping mall. In doing so, the goals are to extend the literature on retail co-location to account for effects of anchor stores' quality levels, and to explain an observed pattern of choices of anchor-store quality levels made by mall developers. Design/methodology/approach – This study uses a game-theoretic approach to model the actions of mall developers, stores, and consumers in a competitive framework, then verifies the equilibrium predictions of this model using an empirical approach and a data set including all major malls in the US and Canada. Findings – The key finding of both the analytical and empirical models is that there exists a positive and concave (i.e. reverse U-shaped) relationship between anchor quality and mall size, i.e. that the highest-quality malls are typically found in the middle range of mall sizes. Research limitations/implications – This study introduces a relatively basic framework that could be expanded to incorporate a more flexible variety of contract types between mall developers and tenants, as well as additional sources of consumer utility associated with a single visit to a mall. Practical implications – This study provides mall developers with a basis for understanding the impact of anchor quality on competition between stores in a mall. Originality/value – This study addresses a gap in both the analytical and empirical literature on determinants of mall traffic and profit, specifically pertaining to how these variables are affected by anchor stores and their quality levels. [ABSTRACT FROM AUTHOR]