Fundamental characteristics and algorithms considering competitors – study on the optimal location of retail store

Many studies on the location of retail stores have been done in accordance with the ‘laws of retail gravitation’. They are, for example, Huff's formulation and the multiplicative competitive interaction model. These studies are mainly concerned with the measurement of the suction force. This paper proposes some fundamental characteristics and a practical algorithm to determine the optimal location which maximize the demand of the store. For this purpose, major assumptions are required as follows: (1) the store deals with the convenience goods, (2) the planning area is one or two dimensional, (3) the suction force is a monotonous decreasing function of the distance from the point of the customer to the store, (4) in case of considering competitors, there exists only one store. Under these conditions the total demand of the store is respectively formulated and the optimal location is discussed. And about 10 fundamental characteristics are clarified. We proposed a practical algorithm to obtain the optimal location. As a result of a numerical example, we show that the characteristics are quite reasonable.