Economic Viability and Central Places. Other Central-Place Hierarchies

The concepts of threshold and range are useful in predicting the likelihood of a retail outlet at a given location remaining in business. In general, retail outlets can remain profitable only if there is a sufficient number of customers—a threshold population—within the distance represented by the range of the good.

This condition helps to explain why high-order retail outlets are mostly located in large metropolitan areas. By contrast, retail activity in very small communities usually is limited to low-order items. A town of a thousand people will likely contain only a gas station, a small grocery store, a pharmacy, and perhaps a few other low-order retail outlets. Consumers wishing to buy electronic equipment, automobiles, boats, and other high-order items must travel to larger places to make these purchases.

In general, the size of a city's population is closely linked to the number of available retail outlets and the variety of items for sale there. Major metropolitan areas boast a wide variety of high-order and low-order retail opportunities. New York, Los Angeles, London, Paris, Rome, Hong Kong, and other global cities are renowned for their great variety of retail opportunities. The presence of low-order goods in small communities and high-order goods in large ones creates a hierarchy of central places.

Not only are many people willing to travel considerable distances to purchase high-order goods, but most will commit to a purchase only after considerable planning and comparison of different alternatives. Because so many people purchase high-order goods only after comparing alternatives, many businesses that specialize in the sale of high-order goods are located near one another to facilitate comparison shopping. As many as a dozen automobile dealers are clustered near one another in many cities. Several city blocks in Los Angeles and New York are devoted exclusively to the sale of jewelry.

Other Central-Place Hierarchies. The concept of central-place hierarchy has wide applicability. Shopping centers fit a central-place hierarchy quite effectively. At the low end of the hierarchy is the local convenience store. Convenience stores specialize in the quick sale of low-order items. Prices at convenience stores are generally higher than those for comparable goods at grocery stores or other retail outlets. Yet, people frequent convenience stores because of their easily accessible locations, speedy checkout times, late-night hours, and seven-day operation.

At the high end of the shopping-center hierarchy is the major interregional megamall. These major shopping malls contain several hundred stores and retail outlets, attracting millions of customers every year.

Many people visit large shopping malls with no intention of purchasing retail goods. Business offices, company headquarters, movie theaters, and the offices of physicians, dentists, insurance agents, attorneys, accountants, and other professionals are all maintained within these malls. Conventions, trade shows, and cultural events are sponsored by mall officials, drawing thousands of visitors. Houston's Galleria and Fashion Island in Newport Beach, California, are world-famous malls that draw customers from great distances.

The hierarchy of shopping opportunities is subject to frequent change. At one time, different types of goods — for example, clothing and pharmaceuticals—could be purchased only in separate retail outlets. Now, both are available in a "superstore." Supermarkets carry items as diverse as hardware, motor oil, clothing, books, and magazines.

K-mart and Wal-Mart now house pharmacies, grocery stores, and automotive departments. Some shopping centers are built around these "power centers," but a large majority of sales are concentrated in the superstores themselves.

The fast-food restaurant is at the bottom of a central- place hierarchy of restaurants. Fast-food restaurants draw most of their business from the local area. People seldom travel long distances to consume fast food, although the opening of a McDonald's restaurant in Moscow attracted worldwide attention.

More expensive and higher quality restaurants, on the other hand, attract customers from larger areas. At the top of such a hierarchy are the world-famous restaurants of Paris, which draw gourmets from all over the world. Indeed, travel agencies sponsor international tours of the most famous and renowned restaurants of Paris.