A Comparison of Two Retail Spheres of Influence

Sphere of influence refers to the area surrounding a town, within which the town has a major social and economic influence.

Sphere of influence is always affected by the surrounding factors. Few of the most significant factors are the accessibility, the size and services of its neighbouring settlements and the level of competition from rival settlements.

Central place theory is that there is an ideal shape for the sphere of influence, as the distances from the central place to all points on the boundary are equal.

This theory suggests that there is a pattern in the number of towns, cities and villages (Central Places) and in the ways in which the central places provide goods and services for their surrounding area.

All the factors mentioned above may alter the range of a Central Place. Range is the maximum distance people will travel to purchase a good or obtain a service offered by a Central Place.

The sphere of influence of a high order retail shop and that of a low order retail shop will be totally different.

The reason is that the targeted customers of a high order retail shop is different from those of a low order retail shop.

High order retail shops sell goods which are purchased less frequently. Such shops need a large threshold population. They are usually located in the Central Business District (CBD). Their superior positioning grants them an immense flow of customers from the whole urban area. They are, for example, department stores, car centres and furniture shops.

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Low order retail shops sell goods which are bought frequently, usually they are required for daily needs. They are commonly located in residential areas. These shops usually target at the local community. Some good examples of low order retail shops are wet market, fast food shops or bakeries.

This geography coursework focuses on the comparison of the difference between the sphere of influence of a high order retail shop and that of a low order retail shop.

Hypotheses

In total, there are four hypotheses in this Geography Coursework. They are:

Hypothesis 1: High order retail shop will have a further sphere of influence than that of a low order retail shop.

Rationale: The number of high order retail shops than that of low order retail shops. High order retail shops are concentrated in CBDs like Tsim Sha Tsui, Central and Causeway Bay. There are numerous large shopping malls in these districts. People in the New Territories have to travel to town to obtain these products. Therefore, high order retail shop has a larger sphere of influence. A low order retail shop usually serves the people in the neighbourhood with their daily needs. As a result, its sphere of influence is predicted to be smaller than that of high order retail shop.

Hypothesis 2: More customers of a high order retail shop drive their cars to shop compared to the customers of low order retail shop.

Rationale: A low order retail shop targets at customers in the neighbourhood so as to be within easy reach of their customers – often within walking distance. There is no strong demand of using a car as a means of transport. Also, referring to the case of the low order retail shop (Wan Chai Market) that is chosen for the survey, it is believed that the majority of the consumers are housewives, domestic helpers and elderly people. They don’t have the skill of driving a car.

Unlike a low order retail shop, a high order retail shop serves a larger sphere of influence compared to that of a low order retail shop. The customers of a high order retail shop may come from places far off from the CBD. In this situation, the customers have the need to drive a car to have access to the CBD to do shopping.

Hypothesis 3: Customers of a high order retail shop purchase fewer goods than those of a low order retail shop.

Rationale: A low order retail shop (Wai Chai Market) sells a great variety of everyday goods. The prices of these goods are usually quite low. The customers can bargain and get cheap goods. As the price of each item is low, the quantity of items tends to be high. Therefore, people usually buy cheap goods in large quantities.

Customers of a high order retail shop buy goods fewer in number compared to the customers of a low order retail shop. The reason is that the products sold in high order shops are expensive. Customers might not be able to substantially reduce the price by bargaining. The prices of the goods stay high and the customers have to have serious consideration before deciding to buy the product. Hence, the number of goods bought in a high order retail shop is less than that of goods bought in a low order retail shop.

Hypothesis 4: Customers of a high order retail shop spend more money on each item and in total during each visit compared to those of a low order retail shop.

Rationale: The products sold in a high order retail shop are expensive because the cost has to include the high rent for locating the shop in CBD. Customers of a low order shop spend less money than the customers of a high order shop because the low order retail shop is commonly settled in a local community within the residents’ reach. Its rent is comparatively lower than that of a high order retail shop. The residents can buy the low order products anytime they want. The high frequency of visiting the shop makes the expenditure of each purchase low.

High order goods are more durable products by their nature and less frequently purchased. So the shop owner has to mark up the products with a higher margin in order to make a profit.

Methodology

In this geography course work, 75 interviewees are randomly selected to participate in this investigation voluntarily. There are 50 interviewees from the high order retail shop and 25 interviewees from the low order retail shop. It took 3 days for the completion of the entire survey.

Wan Chai Market is chosen to be the venue for conducting the survey. It is located at the corner of Wan Chai Road and Queen’s Road East, next to Ruttonjee Sanatorium. It is a typical example of low-order retail shop. Fresh seafood, vegetables and poultry are sold there. It appears as a red star on Map A.

It took 2 days (5th and 6th May 2001) to interview a total number of 50 interviewees there. Time of interview for the first day was 4p.m. to 6p.m., whilst the second day of interview was set in the morning during 8a.m. to 11a.m.

These two time periods are selected because these are the time when most housewives, elderly people and domestic helpers visit the Wan Chai Market. Four to six in the Saturday afternoon is after lunch and shopping time. Eight to eleven in the Sunday morning is the time after the elderly people have their morning exercise in the amusement park next to the Market and buy food from the Wan Chai Market on their way home.

Map A 264 Queen’s Road East, Wan Chai Market, Wan Chai.

Photos taken from Wan Chai Market

Mark & Spencer’s is the yellow star on Map B. It is one of the most prestigious department stores worldwide. The one where the interview took place at the junction of Queen’s Road Central and Pedder Street in Central. It is an ideal example of high order retail store.

It took 1 day (28th April 2001) and interviewed a total number of 25 inter-viewees outside the department store. Time of interview for that day was 4p.m. to 6p.m.

28th April 2001 was a Saturday. The customers are usually off-duty office workers in Central. They meet their family members and have lunch in Central. After that, the family will usually shop around in Central. Mark and Spencer’s may be one of focal point for shoppers.

Map B 28 Queen’s Road Central, Central Tower, Central.

Photo taken from Mark and Spencer’s

Data Description ; Analysis

Hypothesis 1

Data Description ; Analysis

Sphere of Influence of the High Order Retail Shop (Mark and Spencer’s) Radial Graph

Fig. A above is a radial graph explaining the distribution of the high order shoppers’ places of residence throughout Hong Kong. Among all the different transport means, bus is the most popular one.

8 customers reach Mark and Spencer’s by bus. 5 of them are within 5 kilometres of the shop. The other three are from Chai Wan, Kwai Chung and Yuen Long which are at least over 8 kilometres away from the shop.

There are 7 customers that travel to Mark and Spencer’s by Taxi. 6 of them are within 5 kilometres of Mark and Spencer’s. Only 1 customer from Chai Wan travels over 8 kilometres to the shop.

There are 4 customers that walk to Mark and Spencer’s. All of them live within 5 kilometres of the shop. There are 3 customers that get to Mark and Spencer’s by Mass Transit Railway (MTR). 2 of them are from Kowloon Peninsula (Valley Road Estate and King Kwong Street) and the other one is from Tsing Yi.

There are 2 customers coming from two different directions. They are Lam Tin and Happy Valley whose directions are NW and SE respectively. There is only 1 customer that comes by Ferry from Discovery Bay.

No customers travel to Mark and Spencer’s by tram.

From the information shown in Fig. A, the Northwest portion of the radial graph has the furthest sphere of influence. The furthest customer is from Yuen Long who lives 21.65 kilometres away from Mark and Spencer’s.

Out of 25 customers, 18 of its customers live within 5 kilometres of Mark and Spencer’s. 5 of its customers live between the distance of 5 to 10 kilometres. The remaining 2 live more than 10 kilometres away from the department store.

Sphere of Influence of the Low Order Retail Shop (Wan Chai Market) Radial Graph

Fig. B above illustrates the distribution of consumers’ population of Wan Chai Market. In this radial graph, it shows that most customers that live within 1 kilometre walk to the market. There are only 2 customers that walk to buy goods within the range of 1 kilometre and 2 kilometres. For the distance over 2 kilometres, only one customer living in Wong Chuk Hang Road walks to the shop to buy goods.

There are 12 customers that go to Wan Chai Market by private cars. 5 of them (41.6%) come from Happy Valley (Wong Ngai Chung Road, Tai Hang Road, Broadwood Road). 4 of them live within the Wan Chai District (Stubbs Road, Lockhat Road, Queen’s Road East). Among the remaining three customers, two of them live in the Mid-Level (MacDonnell Road, Kennedy Road). The last one lives in Pok Fu Lam (Bisney Road) which is over 4 kilometres away down the Southeast end of Wan Chai Market. There are 6 customers that take a bus to Wan Chai Market. In the Southeast direction, there are 3 customers that travel to Wan Chai Market by bus. Two of them live around east end of Jardine’s Lookout (Wilson Road and Village Road). In the Southwest direction, one customer from Ap Lei Chau travels to the Market by bus, too.

For MTR and tram, there is one customer uses each of these modes of transport. The customer who takes MTR live in Tin Hau, whilst the customer who takes tram live in Causeway Road.

There are no customers living over 3 kilometres in the Northeast direction. There is where the commercial area of Wan Chai (North of Hennessy Road) is located. As can be seen from on Map C on the right, the seafront area is where the Wan Chai Ferry Pier and the other public facilities like the Wan Chai Sports Ground are located. Because it is not a residential area, therefore no customers come from that direction.

The sphere of influence of Wan Chai Market is even weaker in the Southeast direction. The reason is that the sphere of influence is immensely decreased by Causeway Market which is located at the junction of Mercury Street and Electric Street, which is indicated on Map D on the left with an orange star showing its location.

On the Southwest direction, the sphere of influence is lengthened by 2 customers coming from Wong Chuk Hang and Ap Kei Chau. Both of them are over 4.5 kilometres away from Wan Chai. They are entirely from a different district. It is assumed that they come to buy food from Wan Chai Market due to the location of their working place. Both of them visit Wan Chai Market in a quite frequent manner. The customer from Wong Chuk Hang visits Wan Chai Market everyday as shown on Map E on the top right hand corner.

There is enough evidence to prove that the customer buys food from Wan Chai Market after working hours and travels home to prepare the dinner.

Among the 8 main directions, West and Northwest are the weakest of all.

Along the x-axis pointing to the West, 8 customers are from Kennedy Road. Only 1 customer drives a car to Wan Chai Market. This customer lives in the upper Kennedy Road that locates in Mid-Level. The distance between the Market and the place of residence of the customer is about 1.5 kilometre. The rest of them walk to Wan Chai Market. They all live in the Wan Chai bit of Kennedy Road which is within 1 kiometre of the market. The rest of the customers live within 1 kilometre from the Market.

The Northwest portion of the sphere of influence of Wan Chai Market is Admiralty and Central. They are the Central Business Districts of Hong Kong. They are not residential areas. Therefore, this direction has a weaker sphere of influence comparing to that of the other directions.

In conclusion, the sphere of influence of the High Order Retail Shop (Mark and Spencer’s) has a larger sphere of influence than that of the Low Order Retail Shop (Wan Chai Market). This result coincides with the hypothesis.

Hypothesis 2

Data Description

Figure D beside shows that 32% of customers reach Mark and Spencer’s by Bus. 28% of them get there by Taxi. 16% of the customers walk to there. The remaining 24% come to Mark and Spencer’s by either the Mass Transit Railway (MTR), driving a car or taking a ferry.

Figure E on the right shows that more than half of the customers walk to Wan Chai Market. About one-fourth of the customers drive a car to the market. 12% of the customers ride a bus to the market. The remain-ing 4% interviewees either take MTR or tram to reach Wan Chai Market.

All the data mentioned above is also described in Figure F below. The blue bar represents the percentage of customers taking a particular mode of transport to the high order shop. On the other hand, the red bar represents that of the low order shop.

Data Analysis

There is a higher percentage of customers travelling to low order retail shop by private car than that of high order retail shop. This contradicts hypothesis 2.

The reason why hypothesis 2 is rejected is because the choice of mode of transport is not solely dependent on the place of residence of the customers. The mode of transport is also affected by other surrounding factors. For example, another crucial factor is the time of the interview. The interview was carried out on a Saturday afternoon. Most of the interviewees were off-duty office workers as hypothesized. The place of residence therefore is not the dominant factor for the customers to pay a visit to that retail shop. Instead, the location of the previous destination of the interviewees is a more influential factor than the place of residence of the interviewees.

Another factor is that the accessibility to Central is very efficient. Almost all forms of public transport (MTR, buses, minibuses, ferries, trams, etc.) reach Central. It is not necessary for consumers to drive a car. Also, the parking fee is high in Central. People may not want to pay expensive parking fees.

Customers of the high order retail shop (Mark ; Spencer’s) can also enjoy the delivery service provided by the company, no matter how far they live. They do not need a car to carry their purchased goods home. On the other hand, the customers of the low order retail shop (Wan Chai Market) do not have this service provided. They need a car to transport the goods back home.

As a conclusion, there is 3 times more customers driving a car to shop in the low order retail shop than in a high order retail shop in percentage.