Let’s agglomerate

I’ve never been to Macys

A few months ago I went to buy some perfume for my wife’s birthday. She had been dropping hints for a couple of weeks and so I thought I was on a safe bet. I set off for the Metro Centre, a shopping mall not far from where I live and went into Debenhams. The sales assistant was very helpful, took me over to the stand to sell me the perfume only to find that they had none of what I wanted in stock. She kindly suggested I try the House of Fraser and so off I went. They had what I wanted, I bought it and took it home. Satisfaction all round.

There are two points I wanted to make from this story. The first is that I went to a shopping mall as I knew I would have a lot of choice. If I was unable to get the perfume from one store there was always a good chance I could get it from another. The second is that one business is promoting another.

At first both of these things may seem counterintuitive. You would think to avoid competition shops would spread far apart so that they capture the local market and that they would never suggest you go somewhere else.

Yet this is why retail is agglomerated either in malls or in high streets. By coming together it is easier for the consumer to get what they want. They, in effect, only have to come to one location to satisfy their needs. By drawing customers to the mall, the businesses can then compete from a larger potential pool of business.

By recommending a competitor, Debenhams’ loss may have been House of Fraser’s gain yet overall the mall won the business and next time it could well work the other way around. By promoting each other’s business it ensures that the location is seen as a good place to shop which brings in more customers  and more potential business.

Counterintuitive it may be yet it makes absolute sense for businesses targeting the same customers to locate next to each other.

The reason I am thinking about this may be less obvious but it relates to my work on CyberPark, where I am trying to develop cyber related business across the region. Today the active and successful businesses in this sector are largely unknown to each other. This would seem to make sense when they are in competition but I have shown that agglomeration leads to capturing more business.

CyberPark will allow that agglomeration, leading to greater customer flows and improved collaboration between the businesses.

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