Ingrid Janssen Co-authors: Aloys Borgers & Harry Timmermans June 2010

1. Measuring Adaptive Behaviour in a Retail Planning Context;A Multi-Stakeholder Conjoint Measurement Experiment Ingrid Janssen Co-authors: Aloys Borgers & Harry Timmermans June 2010

2. Agenda • Introduction • Retail planning in the Netherlands • Multi-actor decision making • Approach • Online conjoint experiment • Multiple stakeholders • Choice modelling • Model specification • Results • Conclusion

3. Introduction Retail planning: Multi-Stakeholder decision making • Planning philosophy: From plan-driven to market-driven • Introduction “Nota Ruimte”: • Development planning • No strict rules for new out-of-town retail locations • Responsibility planning decisions delegated to local governments • Regional governments have a steering role • Dominant retail development industry

4. Introduction

5. Introduction Retail planning in the Netherlands: • Retail planning nowadays is a result of negotiations between multiple actors • Developers • Retailers • Local governments • To understand the behavioral aspects underlying (retail) planning decisions there is a need for multi-actor approaches. • Focus: adaptive behavior

6. Approach • Suitable approach: A conjoint experiment in combination with choice modelling • Experiment: deciding on the expansion of retail supply in an imaginary city. • Three stakeholders involved: developers, local governments, retailers. • How: conjoint analysis. • Alternatives are pre-specified • References: • Borgers & Timmermans (1993) -> household decisions • Hensher et. al. (2007) -> freight distribution decisions

7. Research objectives The aim of the experiment is… • …to understand the preferences of different stakeholder groups regarding the planning of out-of-town retail facilities. • …to measure adaptive behaviour between agents involved in retail planning, as one of the behavioural aspects.

8. Extended conjoined experiment Design choice task: • Decision problem: How to expand retail supply in the imaginary city “Shop City”? • Possible expansions: • Toys and Sporting Goods • Home Electronics and Media • Fashion • Restaurant • Characteristics “Shop City”: • Middle sized Dutch city • Market position non-daily retail supply “Shop City” is weak compared to other cities in region. • Accessibility of both peripheral is equal.

9. Extended conjoined experiment

10. Research approach (part II)

11. Data collection • Response

12. Model specification • Random utility theory • Each alternative i, has a utility (Ui). This utility consists of a structural (Vi) and a random (εi) component: (1) (2) where Xik represents characteristic k of alternative i and βk is the parameter for characteristic k. β0 is the utility of the “both retail plans are not acceptable”-option. • βk represent the main effects. However, interaction effects and adaptation effects have to be introduced.

13. Model specification • The formula for the structural utility can be extended: (3) where • β0 represents the utility of the “both alternatives are not acceptable” option • βk parameters measure the main effects • Өk parameters measure the interaction effects • αk parameters measure the adaptation effects

14. Multinimial Logit models were estimated using maximum likelihood procedures. Only parameters at the 5% significance level were included. For each stakeholder group (developer, retailer, planner) separate models were estimated. Model estimation

15. Estimated parameters MNL-model

16. Findings • All stakeholders do not prefer to locate fashion on a peripheral retail location. • Since X0 is significant but negative for all stakeholders, respondents are really willing to make a choice. • Different type of interaction variables are of significant importance. • Developer is most willing to adapt his preference to the opinion of other stakeholders. • The retailer is the least sensitive for the opinion of other stakeholders • Planners’ utility of the location of toys&sport on a furniture strip turns positive when both other stakeholders are in favour. • Goodness-of-fit (Rho2) is satisfying for developers and planners.

17. Conclusions • The experiment showed that adaptive behaviour in retail planning decision plays an important role. • By extending the traditional random utility model with parameters that measure adaptive behaviour, this behavioural aspect can be incorporated. • Applying Mixed Logit models will lead to even more valid models (the Rho2 will increase). • Further research: estimating for heterogeneity within each group of stakeholders based on respondent characteristics.