Declining Retail Establishments: The Case of Century III Mall
Transcription
Declining Retail Establishments: The Case of Century III Mall
Indiana University of Pennsylvania Knowledge Repository @ IUP Theses and Dissertations 8-2015 Declining Retail Establishments: The Case of Century III Mall Joseph J. Tokosh Indiana University of Pennsylvania Follow this and additional works at: http://knowledge.library.iup.edu/etd Recommended Citation Tokosh, Joseph J., "Declining Retail Establishments: The Case of Century III Mall" (2015). Theses and Dissertations. Paper 1288. This Thesis is brought to you for free and open access by Knowledge Repository @ IUP. It has been accepted for inclusion in Theses and Dissertations by an authorized administrator of Knowledge Repository @ IUP. For more information, please contact [email protected]. DECLINING RETAIL ESTABLISHMENTS: THE CASE OF CENTURY III MALL A Thesis Submitted to the School of Graduate Studies and Research in Partial Fulfillment of the Requirements for the Degree Master of Science Joseph J. Tokosh Indiana University of Pennsylvania August 2015 Indiana University of Pennsylvania School of Graduate Studies and Research Department of Geography and Regional Planning We hereby approve the thesis of Joseph J. Tokosh Candidate for the degree of Master of Science John E. Benhart, Jr. Ph.D., Advisor Professor and Chair of Geography & Regional Planning Donald D. Buckwalter, Ph.D. Professor of Geography & Regional Planning Joseph W. Bencloski, Ph.D. Professor Emeritus of Geography & Regional Planning ACCEPTED Randy L. Martin, PhD Dean School of Graduate Studies and Research ii Title: Declining Retail Establishments: The Case of Century III Mall Author: Joseph J. Tokosh Thesis Chairman: Dr. John E. Benhart Jr. Thesis Committee Members: Dr. Joseph W. Bencloski Dr. Donald D. Buckwalter This study will investigate the relationships between declining occupancy rates at Century III Mall, located in West Mifflin, Pa, and the socioeconomic status of the communities that service the mall. The service area of the mall will be determined through various trade area analysis techniques. A statistical analysis of the neighborhoods that make up the malls service area will indicate which socioeconomic elements are probable predictors of the mall’s decline. iii ACKNOWLEDGEMENTS I would like to thank the Geography and Regional Planning faculty and staff for contributions made to this thesis. In particular, Dr. John Benhart, Dr. Donald Buckwalter and Dr. Joseph Bencloski for their help in formulating a thesis topic and working with me throughout the process. Also, I would like to thank the Shoe Department at Century III Mall. If I hadn’t been offered a part time job 5 years ago, the spark for this type of research would have never taken place. A special thanks to The Directory of Major Malls, for making mall data available and to the Dead Malls website for support and cooperation during this research. Further acknowledgements go to the Geography and Regional Planning class of 2015 Graduate cohort, especially Tony Harris, who provided feedback, distractions, and support throughout this process. Lastly, my girlfriend Aleah, who has been supportive and inspiring during the completion of this thesis. iv TABLE OF CONTENTS Chapter Page INTRODUCTION .................................................................................................................1 I REVIEW OF THE RELATED LITERATURE ............................................7 Deindustrialization and Economic Ramifications .........................................7 Neighborhood Decline and Poverty ...............................................................7 Trade Area Analysis ......................................................................................13 Shopping Behavior and Competition .............................................................17 II METHODS ....................................................................................................22 Technique 1- Customer Spotting ...................................................................22 Technique 2 – Trend Surface Mapping .........................................................26 Technique 3 – Construction of Theissen Polygons........................................28 Final Service Area Evaluation .......................................................................29 Variable Identification ...................................................................................31 Difference of Means and Difference of Proportions Tests ............................35 Interpretation of Results .................................................................................37 III RESEARCH DISCUSSION AND SUMMARY ...........................................43 Summary ........................................................................................................43 Economic Restructuring Revisited ................................................................46 Prospective Research .....................................................................................48 REFERENCES ......................................................................................................................51 APPENDICES .......................................................................................................................57 Appendix A - Spearman’s Correlation Results ..............................................57 Appendix B - Store Data for Century III Mall...............................................58 v LIST OF TABLES Table Page 1 Anchor Store History of Century III Mall .................................................................6 2 Survey Data Results ...................................................................................................22 3 Variables Used in Difference of Means and Difference of Proportions Tests .......................................................................................................37 4 Difference of Means and Difference of Proportions Tests 1990 Results ........................................................................................................................38 5 Difference of Means and Difference of Proportions Tests 2000 Results ........................................................................................................................38 6 Difference of Means and Difference of Proportions Tests 2010 Results ........................................................................................................................38 7 Difference of Means and Difference of Proportions Test Descriptive Analysis ..................................................................................................39 8 National Mean Housing Values .................................................................................41 9 Spearman’s Correlation Results.................................................................................58 10 Store Data for Century III Mall .................................................................................59 vi LIST OF FIGURES Figure Page 1 Commons area of the mall in 1993 ............................................................................1 2 Richard Simmons in Century III Mall in 1994 ..........................................................2 3 Pep rally in Century III Mall in 1996.........................................................................2 4 Parking garage of Century III Mall in 2012...............................................................3 5 Middle area of Century III Mall in 2010 ...................................................................3 6 Slag dump in Century III ...........................................................................................4 7 Occupancy rate of Century III Mall 2005-2015 ........................................................5 8 Theissen polygon construction process .....................................................................15 9 Competition analysis as defined by Horton (1986) ...................................................17 10 Distribution of mall shoppers as whole numbers .......................................................23 11 Distribution of mall shoppers as a percentage ...........................................................23 12 Primary service area of Century III Mall ...................................................................25 13 Secondary service area of Century III Mall ...............................................................25 14 Centroid map used in trend surface analysis..............................................................27 15 Customers per households map .................................................................................27 16 Theissen polygon construction ..................................................................................28 17 Final service area of Century III Mall........................................................................30 18 Significant regions for difference of means and difference of proportions results......................................................................................................36 vii INTRODUCTION The 1970’s brought with it a demand for a new type of retail model, a multi-stop, multipurpose facility that shoppers can patronize in a single trip (O’Kelly 1981). Century III Mall fit this model perfectly. This gargantuan 100 million dollar shopping complex contained 170 charter tenets at its opening, in 1979. A vast number of retail shops, mixed with eateries and services made Century III an attractive destination for shoppers living in Pittsburgh and its suburbs because of its prime location in West Mifflin, PA, less than 30 minutes from the city center. During the 1990s Century III’s hallways were bustling with activity. A large number of retail stores attracted a steady customer flow, especially during holiday seasons when the mall was swarming with patrons. Furthermore, events such as pep rallies, concerts and talent shows were a constant presence during the 1990s (Figures 1, 2 and 3). Figure 1. Commons area of the mall in 1993 (https://www.flickr.com/photos/c3nostalgia/3925371788/). 1 Figure 2. Richard Simmons in Century III Mall in 1994 (https://www.flickr.com/groups/c3nostalgia/pool/c3nostalgia). Figure 3. Pep rally in Century III Mall in 1996 (https://www.flickr.com/photos/c3nostalgia/4148204255/in/pool-c3nostalgia). 2 Though this mall triumphed in the 1980s and 1990s, its current circumstance is a different story. Whole sections of the parking garage are blocked off from general public (Figure 4). It is not unusual to see more employees in the stores than customers (Figure 5). Many stores have closed or have moved over the last decade. What is causing this mall’s steep decline? This study hypothesizes that the neighborhoods that Century III serves (i.e., its service area) are going through a socioeconomic decline, which is in turn triggering the mall’s decline. Figure 4. Parking garage of Century III Mall in 2012 (www.tubecityonline.com ). Figure 5. Middle area of Century III Mall in 2010 (http://image.frompo.com). 3 Century III Mall is a three floor enclosed shopping mall located in West Mifflin, PA, a southern suburb of Pittsburgh. When Century III opened in 1979, it was the largest enclosed shopping mall in the greater Pittsburgh area, and the third largest in the world, with 1.2 million square feet of retail space. Upon opening in 1979 the mall was owned and operated by the Edward J. DeBartolo Corporation. After 1996, ownership of Century III Mall changed hands with first Simon Property Group (1996-2013) and then Moon Beam Capital Investments LLC (2013-present). Collaboration between the original owners and the Pittsburgh based U.S. Steel Corporation in the 1970’s led to the mall’s development. The mall was constructed on top of a slag (steel waste product) dump in a former industrial area of the U.S. Steel Company. Rail cars transported this waste material from the mills of Pittsburgh to the West Mifflin site, until eventually the slag pile grew to become an artificial mountain (Figure 6). The surface eventually became large enough to support a shopping mall as well as other satellite stores. The Century III Mall site was one of the first large scale brownfield developments in the United States. Figure 6. Slag dump in Century III (http://www.atlasservices.com/projects.html). 4 Figure 7. Occupancy rate of Century III Mall 2005-2015 (Directory of Major Malls). For its first 20 years the mall thrived. At its opening Century III had over 200 retail stores, eateries and services. In 2015, Century III has declined to the point that it only has 90 establishments and a 38% occupancy rate. A possible explanation of Century III’s decline can be attributed to a large scale retail development in Homestead, PA in 1999 that has since expanded. South Hills Village Mall less than five miles to the west of Century III, underwent a major renovation as well. Other factors such as the worsening economy and retailer bankruptcies could have also led to the mall’s decline. In 2003 the mall was 20% vacant, and by 2006 it was 30% vacant. Currently the mall is nearly 60% vacant (Figure 7). Numerous specialty stores and well known retail chains such as Sears, KB Toys, Steve and Barry’s, Macy’s Furniture, Old Navy, Ritz Camera, Charlotte Ruess, Aeropostale, American Eagle, Body Central, Vitamin World, Express, Dollar Tree, The Disney Store, Radio Shack, Payless and Lady Footlocker have closed or moved out. The food court is down to just four eateries after the departure of Subway, 5 Manchu Wok, Orange Julius, Flamers, and Mrs. Fields. Some sections of the mall have been completely blocked off from the general public. Nearly 200,000 square feet of retail space has been blocked off since 2004. Three anchor stores remain at Century III: Macy’s, JCPenney and Dick’s Sporting goods (Table 1). Table 1. Anchor Store History of Century III Mall Anchor History: [4] Gimbels – Eventually Separated into TJ Maxx and Marshalls Montgomery Ward – later became Horne's Horne's – later became Lazarus Lazarus – later became Kaufmann's Furniture Kaufmann's Furniture – later became Macy's Furniture Gallery Kaufmann's – now Macy's TJ Maxx/TJ Maxx 'n More – later became Steve & Barry's Marshalls – later became Wickes Furniture Wickes Furniture – now Dick's Sporting Goods Macy's Furniture Gallery – closed January 2009 Steve & Barry's – closed January 2009 Sears – closed December 2014 Some researchers cite socioeconomic decline in the surrounding areas as having an adverse impact on the health of malls (Parlette and Cowen 2011; Anderson 2011; Berlant 2011). Parlette and Cowen (2011), in particular, discuss how the waning core retail function of shopping malls can be attributed to population decline, an increase in the elderly population and lack of retail engagement. Competition (Burns and Warren 1995), crime (Krivo and Peterson 2000) and income (Quercia and Galster 2000; Crane 1991) have all been identified as key indicators of socioeconomic deterioration which can be related to decline in retail performance. 6 CHAPTER I REVIEW OF THE RELATED LITERATURE Deindustrialization, and the socioeconomic ramifications that follow, have a profound impact on the lives of the workers and citizens who live in areas where it is occurring (Iversen and Cusack 2000; Perry 1987). Socioeconomic impacts of deindustrialization have been found to affect retail establishments, such as Century III Mall, because of the economic impact this process imposes on its customer base. Deindustrialization has been found to be related to neighborhood decline. Increases in poverty and unemployment have been termed as being a result of deindustrialization (Strait 2001; Cevik 2003). Deindustrialization and Economic Ramifications America’s basic industrial sector has been waning since the 1960s. The share of manufacturing and industrial employment in the United States has declined continuously from the 1960s into the 21st century (Kollmeyer 2009). This phenomenon is known as deindustrialization (Hill and Negrey 1987; Rawthorn and Ramaswamy 1997). A process of social and economic change follows deindustrialization. Early research in this area by Fuchs (1968) and Baumol (1967) suggest that deindustrialization is not necessarily undesirable, but it is a natural consequence of the dynamic industry-fueled economy we once lived in. There are researchers, backed by the evidence of modern day city socioeconomic status, who argue that deindustrialization causes economic uncertainty (Iverson and Cusack 2000). Specifically, Pittsburgh saw a revolutionary social (Rosenberg 1999) and economic (Perry 1987) change following its deindustrialization process. The identity of many communities along the Ohio, Monongahela, and Allegheny Rivers were tied to the steel industry, as well as other associated industries. There was a drastic physical change in the appearance of these 7 communities as the manufacturing facilities were closed down and eventually demolished (Rosenberg 1999). In addition to the social change, economic change has occurred as well. Kortiz (1991), studied deindustrialization in two heartland cities: Pittsburgh, Pennsylvania and Buffalo, New York. Kortiz, analyzes the two cities separately claiming that this type of research must account for different sequencing in the destructuring and restructuring processes that follow deindustrialization. Buffalo experienced destructuring without any attempt at restructuring, because of its ability to wait for elites to wield whatever power they have on such restructuring tasks. Pittsburgh, on the other hand, experienced destructuring and restructuring almost simultaneously. Pittsburgh’s situation is evident of the resiliency in capitalists’ institutions and at the same time, the overall difficulty of the task (Kortiz 1991). Deindustrialization has occurred at many locations in the United States. Hill and Negrey (1987), examined the question of whether the United States as a whole was experiencing deindustrialization. They found that the Great Lakes region, defined by the eight states that border the lakes, was experiencing deindustrialization, moreso than any other region in their study. This region, of which Pittsburgh is a part, experienced manufacturing decreases, a shrinking share of the nation’s industrial employment, and lack of compensation for job loss in manufacturing since 1979. Pittsburgh’s economic revival has been the topic of much literature since the beginning of the 1990s (Deitrick 1999; Sbragia 1990; Clark 1989; Beauregard, Lawless and Deitrick 1992). Industrial regions faced many challenges restructuring their economies in the 1990s. Deitrick (1999), analyzed economic restructuring in Pittsburgh’s economy during the post-industrial period of the 1980s and 1990s. Success in the revitalization process during the mid to late 1980s was due to the incorporation of new nonprofit and community organizations into the city’s 8 planning efforts. The success of this model faded by the 1990s, because of a lack of longevity, and lack of support for the tax increases required (Deitrick 1999). Beauregard et.al (1992), conducted a comparative study of the economic revitalization processes occurring in two postindustrial cities: Pittsburgh, PA and Sheffield, England. The purpose of their study was to develop lessons for policy makers currently undertaking tasks such as regional or economic development, in similar cities. Similar to Deitrick’s 1999 study, this study identifies weaknesses in Pittsburgh’s post-industrial revitalization process by identifying weaknesses in publiccommunity organizations the city included in its planning processes. This study found that identifying national, or even global trends in capital and following suit is a better strategy for cities to attempt revitalization, as opposed to Pittsburgh’s swift, quick handed revitalization efforts (Beauregard, Lawless, and Deitrick, 1992). The consequences of economic restructuring in older industrial communities have been associated with interrelated phenomena that includes: a weak labor force, extreme poverty, high school dropout rates and welfare dependency (Haller 2005). Other ramifications on neighborhoods as a result of economic restructuring include boosts in unemployment (Figura 2003), and increases in gang activity and elevated crime (Hagedorn 1991). In areas, like Pittsburgh, where industrial organization was highly centralized, unions secured living wages for large numbers of workers with low educational attainment. With deindustrialization comes the disappearance of industry jobs which causes the circulation of capital within these older working class communities to diminish. A decrease in capital, in turn, impacts the local businesses, neighborhoods, public services and property values (Haller 2005). Redeveloping former industrial sites (i.e., brownfields) is necessary, but it may not be a sufficient precursor to economic restoration and job creation. Brownfield redevelopment is 9 complicated due to site location in weak land markets and around distressed neighborhoods. Therefore, successful redevelopment and job creation requires substantial government investment (Howland 2007). Pittsburgh’s South Side saw a change relatively quickly in the aftermath of deindustrialization. A transitional time period, resulting from the loss of the steel industry, brought commercial development to this neighborhood (Benhart and Benhart 2000). This type of transitional shift provides a period of economic stability until the wage inequality becomes too great. Century III Mall in West Mifflin, and Nine Mile Run in Pittsburgh are other examples of brownfield redevelopments (De Sousa 2008). It has been suggested that these types of economic recovery efforts bring with them little fiscal enhancement. Higher paying jobs of the steel industry are replaced by lower paying jobs and increases in part time employment in the lower wage trade and service sector (Beeson and Tannery 2004). Beeson et al. (2001) report an increase in wage inequality in communities where the steel industry was once dominant. Interindustry employment shifts are regularly cited as a likely source of unemployment, poverty and wage inequality (Katz and Murphy 1992; Bound and Freeman 1992; Bluestone and Harrison 1988). Changes in the job market and wage earnings in the Pittsburgh region have had a direct impact on the status of its neighborhoods and suburbs as they may provide insights into the socioeconomic circumstances in the neighborhoods that make up Century III Mall’s market area, and their impacts on the mall’s performance. 10 Neighborhood Decline and Poverty Socioeconomic variables such as race, income, poverty rate, education, gender, housing situation and population have been identified by many authors as important factors in neighborhood decline. (Crane 1991; Quercia and Galster 2000; Shulz, Zenk, Israel, Mentz and Galea 2008; Silverman Yin and Patterson 2012; Owens 2012; Ding and Knaap 2012) Crane (1991), found that race and living inside or outside of the city were descriptive variables of school dropout rates and teen child bearing. As the percentage of black and Hispanic people increase in a neighborhood, the likelihood of a youth developing a social problem increases. Furthermore, Crane found that there is a correlation between living in the city and the rise in probability that one of these social issues will occur. Other scholars have studied the social and physical environments of neighborhoods in Detroit, Michigan (Shulz, Zenk, Israel, Mentz and Galea 2008). The studies found a correlation between percent African American and high levels of social and physical stress. They also found that percent poverty and percent Latino were positively associated with physical stress while neighborhood stability was positively associated with social stress. At the individual level it was found that whites had higher perceived levels of social and physical stress compared to other races of the same block group when controlling for age, gender and occupation variables. In addition to socioeconomic exploration, the benefits of studying stress levels of neighborhoods include the identification of the limits on liberal urban policies (Imbroscio 2011), environmental contributions of pregnancy disparities (Miranda, Maxson and Edwards 2009), and qualitative environmental health research (Scammel 2010). Other research in neighborhood change include identifying where neighborhood socioeconomic elements may be declining. Quercia and Galster (2000), cite several theories of 11 neighborhood change that imply the existence of origins of socioeconomic decline and identify six mechanisms for generating these origins. These mechanisms are the values attitudes and behavior of individuals; the variation in crime and delinquency rates; forms of decision making; a tolerance of neighborhood residence based on the actions of the neighbors; neo-classical economics and contagion models, which also deals with neighborhood tolerance. The establishment of these inceptions, has led to other research on the empirical exploration of neighborhoods (Glaster, Quercia), crime (Krivo and Peterson 2000) and property values (Ding and Knaap 2002). Silverman, Yin and Patterson (2012) studied the residential vacancy patterns of Buffalo, New York. Multiple regression models were used to identify significant relationships between vacancy patterns and the socioeconomic characteristics of the neighborhoods. The results show that the percent of vacancies increase in census tracts with high poverty rates, high renter/rental assistance, and long term vacancies. Also, the percent of abandoned rental properties is present in census tracts with high concentrations of African Americans, elevated poverty rates and commercial addresses. The authors conclude that these relationships are unique to older core cities that are experiencing population and job loss (Silverman, Yin and Patterson 2012). Research on neighborhood decline transitions into trade area analysis. Century III’s trade area contains neighborhoods that are going through socioeconomic decline, similar to what is covered in neighborhood change studies. Therefore understanding the literature on trade area analysis is important to this study. 12 Trade Area Analysis An important component of shopping mall research involves methods of identifying retail trade areas. A trade area is a geographic area from which a retail establishment receives most of its business. Identifying where a majority of the customer base is located is important to understanding what is causing a mall’s decline. The classic method for determining trade areas, called customer spotting, is defined in William Applebaum’s article Methods for Determining Store Trade Areas, Market Penetration, and Potential Sales (1966). Customer spotting involves surveying in-store shoppers to obtain their addresses and shopping patterns. These addresses are then plotted on a map, which, in turn, determines the store’s trade area. A trade area can be divided into primary, secondary and tertiary areas. These subdivisions are based on distance and percentage of the market base (i.e. the percentage of shoppers). The primary trade area is the core for the store, which accounts for 60-70% of its customers. The secondary zone is seen as a transition into the tertiary area and accounts of an additional 15-25%. The tertiary area accounts for 5-10% of the customer base (Applebaum 1966). Other scholars have used customer spotting as a basis for in their studies. Hernandez and Bennison (2000), study the location decisions of retail outlets. Their research finds that distance to other shopping outlets and their customer base were important factors to consider when deciding the site of a new retail establishment. Other studies find that shopping experience (Grewal, Levy and Kumar 2009) (i.e. every interaction the customer has with the business,) and customer loyalty (Allaway, Gooner, Berkowitz and Davis 2006; Howell and Rogers 2001) are both factors that impact a retail outlets trade area. Grewal, Levy and Kumar (2009) determined that there are several ways (i.e., price, promotion and type of merchandise) to reach out to the 13 customer and provide excellent customer service. This will result in higher customer satisfaction, and return visits. Trade areas can also be identified and analyzed using trend surface mapping (Peterson, 1974). A trend surface is a grid in which patterns can be easily detected. Peterson, administered a questionnaire to every third shopper at all entrances to his selected mall, asking patrons for their zip code and home address. The gender of the patrons was also noted. The data were plotted on an air photo and overlaid with a grid consisting of equal-sized quadrants. The number of shoppers divided by the number of households in each quadrant was then computed to determine the number of households that contained a shopper in each quadrant. This technique is known as market penetration. The benefits of trend surface mapping include the establishment of gross structural parameters of the trade area (e.g., the fundamental natural period of the area or the gross external dimensions of the area), the identification of economically diverse portions of trade areas, and the comparison of multiple trade areas (Peterson 1974). Other studies use spatial modeling to analyze trade areas. Jones and Simmons investigate three approaches to trade area analysis: Spatial monopoly, market penetration and dispersed markets (Jones and Simmons 1990). Spatial monopoly is used in qualitative studies and is often times a theoretically based model. Generally the five or ten minute isochrones technique is applied. An isochrone is a line on a map connecting points relating to the same time or equal times. This technique simply implies that the establishment’s trade area is assumed to extend within a five or ten minute driving range and includes all households in that isochrone. Furthermore, a more complex spatial monopoly technique can be done through the use of Thiessen Polygons. Polygons are constructed in three steps: a) lines are drawn joining each establishment to the adjacent establishment in an area; b) each of these inter-store lines is then 14 bisected to obtain a midpoint of the line; c) each midpoint is then connected with the other bisectors to establish a polygon, one for each store. The polygon then serves as a theoretical service area for the store (Figure 8). Figure 8. Theissen polygon construction process. Market penetration is the second technique discussed by Jones and Simmons. Customer spotting and trend surface mapping, which are discussed earlier, are the two main ways to measure market penetration. Dispersed markets, the final technique discussed in the article is a technique that is concerned with the life style of the customer. Depending on the location of a store in a company chain, the products are shifted in order to better accommodate the clientele for that area. For example, The Shoe Department store in West Mifflin, PA, has shoes geared more towards an urban customer base (Timberland Boots, Polo Shoes and Fila Shoes). While the Shoe Department Store in Indiana, PA, has shoes that fit the lifestyle of a rural customer base: (Work Boots, Camouflage Realtree Shoes and Merrell Shoes). 15 Two other trade area analysis articles deal with spatial distributions and locational factors associated with customers around shopping centers. The first of these articles used Reilly’s Law of Retail Gravitation to examine the spatial aspects and patterns of shoppers around the Valley Shopping Center, located in St. Charles, Illinois. This law states that competition for retail trade between two cities is directly proportional to the product of their populations and inversely proportional to the distance from their trade areas (Blount 1964). Horton (1986) also conducted a quantitative analysis of locational and situational factors pertaining to retail attractiveness in Waco, Texas. The factors included investment differentials, locational differentials, contiguity effects, outside competition and other retail establishments. Horton found that competition from other retailers and investment factors are very important when attempting to explain the differences in the number of consumers attracted to a retail firm. Initially the location of competition was defined as driving time to competitive establishments in one of four zones surrounding the central business district. Zone one was established by constructing two forty-five degree angles on either side of a line which originates at the central business district and ends at the establishment. This degree measurement provides four different zones of equal size. Zone three is the area directly opposite of zone one. Zones two and four are directed towards periphery competitors (Horton 1986) (Figure 9). 16 Figure 9. Competition analysis as defined by Horton (1986). Shopping Behavior and Competition There are alternative explanations for retail decline. Retail establishments like Century III Mall are declining for reasons other than changes in neighborhood socioeconomic status. Competition in the form of other retail outlets is a prominent reason, followed by big box retailers and online shopping. Websites like Amazon and eBay give customers an opportunity to purchase almost any type of product they want. While also offering swift shipping options, the clientele can get whatever they want without ever leaving their home. This is extremely detrimental to traditional retailers. Product availability and convenience is something online shopping offers that traditional mall shopping doesn’t. Shopping behavior is an important element to the health of malls. The original retail function of shopping malls is becoming less prominent in today’s society (Parlette and Cowen 2011; Miller 2014). An example of this can be seen at Morningside Mall, located in Toronto, Canada. Following the trend of other suburban malls, Morningside became a drop-off location 17 for parents wishing to “abandon” their children for the day, an elderly walking path and was a hot spot for young teens to hang out. These types of activities exist because of the waning of the core retail function of malls. The population decline of the suburbs mirrors that of the inner city decades earlier. The demise of Morningside Mall was caused by diminishing sales and customer patronization in surrounding areas. Also contributing to Morningside’s decline were “category killers.” These include stores such as Toys R’ Us, Office Depot and Lowes. Their ability to kill the competition in their consumer category is attributed to the big-box format, which Wal-Mart pioneered. Malls were once protected from such competition by land use controls, but now this big box idea is becoming a major problem for malls (Paulette & Cowen 2011). Miller (2014), conducted a study at a Buenos Aires, Argentina, shopping mall, in which he surveyed mall shoppers to understand why they were shopping there. In a city that many called economically unstable or chaotic, a shopping mall provides an outlet to make people’s lives livable (Anderson 2011; Berlant 2011). Miller received responses from shoppers that were similar to what Anderson and Berlant received. Respondents of the survey said they come to the mall when they are “Bored, have nothing else to do, or because shopping makes them feel satisfied or more complete.” (Miller 2014) The behavior and motives of mall shoppers change. Nicholls, Li, Kranendonk and Roslow (2002), study the changes of shopping behavior of today’s mall patrons as opposed to those in the 1990s. According to the authors there seems to be two different types of shoppers; those who believe shopping is a job and those who believe shopping is a hobby. Surveys were conducted in 1993 and 1999 to see if there was any change in shopping behavior. It should be noted that this was a convenience sampling approach, because the survey was limited to those people in the mall at the time the survey was given out. The survey asked basic demographic 18 questions as well as some in-depth questions about the shopping patterns of the surveyed individuals. The following four main questions were asked. What drew people to the mall in 1993 to 1999? What were the changes in shopping destinations between 1993 and 1999? Are there any changes in shopping patterns between 1993 and 1999? Are there any changes in mall shopper’s purchasing behavior? Three conclusions were drawn from the survey. First, people who lived closer to the mall were less likely to make a purchase than those who lived farther away. Second, shoppers in groups of two or more were more likely to make a purchase than those who were alone. Lastly, the overall frequency of mall trips declined from 1993 to 1999. The latter could be a result of the growth of online shopping and competition from other malls and stores. Other types of shopping behavior include outshopping (Burns and Warren 1995), and the psychological processes that consumers go through when making purchases (Howell and Rogers 2001). Outshoppers are those who bypass shopping outlets and malls which are closer to their homes for other malls which are further away. Burns and Warren, found that dissatisfaction with the products available locally has led to higher levels of outshopping. Furthermore, the availability of other, more attractive, shopping alternatives outside of one’s primary shopping area has also led to an increase in outshopping (Burns and Warren 1995). Roy Howell and Jerry Rogers (2001) explored issues relevant to research into shopping mall choice behavior in a medium sized metropolitan statistical area (MSA). Two hundred sixty middle to upper class women were surveyed and asked to rate the adequacy of two enclosed shopping malls in the area as well as the downtown area. (It should be noted that the respondents were asked to rate the attributes of the shopping centers and to report their patronage only in the context of women’s clothes for themselves or family members). This study is unique, 19 because shopping situation has not been specified in other research on shopping behavior. Shopping situation is the psychological processes that consumers go through when making purchasing decisions. This study is concerned with 1) the image components of shopping malls, 2) the measurement of patronage behavior and 3) concerns over aggregation. Four measures of patronage were combined as a standardized item. They included types of purchases, frequency of visits, dollars spent, and number of weeks since last visit (as reported by respondents). A regression analysis was conducted, comparing each of the three shopping centers for patronage and preference. Atmosphere, personnel, fashion, advertising, convenience, proximity, accessibility were the predictors of patronage and preference. Results indicated that accessibility is the best indicator of preference and patronage for all three establishments. Atmosphere and fashion were also high indicators of preference. Convenience and proximity to other outlets were low indicators of preference for all three locations. Furthermore, the study found that situation and preference both must be addressed in order for a mall choice study to prove fruitful. There are two very different arguments suggested in the literature that may be responsible for mall decline, ‘neighborhood decline and poverty’ and ‘shopping behavior and competition.’ For the purpose of this study neighborhood decline and poverty will be analyzed with respect to its impact on Century III Mall’s service area. There are two reasons why this study will analyze neighborhood decline and poverty as opposed to shopping behavior and competition. First is that socioeconomic deterioration in the neighborhoods that surround the mall directly impacts potential mall shoppers. Secondly, time and resources only allowed for a thorough survey of one mall, Century III Mall. Therefore, a hypothesis was constructed accordingly. Additional time and assets would have allowed for a detailed survey of multiple malls, which in turn would have 20 allowed investigation into shopping behavior and competition. This will be discussed further in the prospective research section of the paper. 21 CHAPTER II METHODS The three techniques used to establish Century III’s service area included customer spotting (Applebaum 1966), trend surface mapping (Peterson 1974) and spatial monopoly (Jones and Simmons 1990). These methods were utilized as follows. Technique 1 - Customer Spotting Over a four day period (June 18th 2014, June 29th 2014, July 5th 2014 and July 11th 2014), mall patrons were asked for their zip codes, but gender and race of the 387 respondents were also noted. The following is a detailed breakdown of the respondents (Table 2). Of the respondents 186, were white (48.1%), 195 were black (50.4%) and five were Asian (1.3%). There were 138 males (35.7%) and 249 females (64.3%). In terms of gender and race together there were 79 white males (20.4%), 107 white females (27.6%), 57 black males (14.7%), 138 black females (35.7%), one Asian male (.3%), four Asian females (1%), and one Hispanic male (.3%). This customer data will be used to aid in the establishment of Century III’s service area. Figures 10 and 11 show the spatial distribution of mall shoppers, according to the survey. Table 2. Survey Data Results Gender/Race White Males White Females Black Males Black Females Asian Males Asian Females Hispanic Males # 79 107 57 138 1 4 1 Race White Black Asian Other Total Gender Male Female 22 # 186 195 5 1 387 # 138 249 Figure 10. Distribution of mall shoppers as whole numbers. Figure 11. Distribution of mall shoppers as a percentage. 23 The data were plotted on a zip code area map. Outlines were then drawn to identify the primary and secondary service areas. The primary service area (red shading) included 60 percent of the customers, while the secondary service area (orange shading) included 20 percent of the customers Figures 12 and 13 show the areal extent of the mall service area as defined by customer spotting. The primary service area map shows that all the zip code areas included in this area are in close proximity to Century III Mall. When more areas are added, such as the additional 20% of shoppers for the secondary service area map, two changes occur. First the service area becomes less contiguous and less compact. The additional zip code areas make the mall service area less uniform in the secondary service area map. Secondly, as the additional 20% of customers are added, the service area gets larger. It should be noted that this technique was given the most weight when determining the final service area of the mall. 24 Figure 12. Primary service area of Century III Mall. Figure 13. Secondary service area of Century III Mall. 25 Technique 2 – Trend Surface Mapping Trend surface mapping is a quantitative technique that uses statistical and cartographic techniques to determine the extent of a trade area. First, the data obtained from the customer survey was plotted on a map that was divided into equal size grid squares. The size of the squares was determined by the following formula: 2A/N, where A is the overall size of the study area (423 sq. miles) and N is the number of individuals surveyed (387 people). This resulted in a square size of 2.2 square miles. The number of shoppers divided by the number of households in each square was then computed. The result was the number of shoppers per household in each quadrant. One issue that needed addressed was how the customer data was going to be transferred from the zip code areas into the individual squares. This problem was resolved by establishing a centroid in the middle of the zip code areas. Then, when the grid was overlaid, whichever square contained a centroid was assigned a value for the household and shopper data of that zip code. It should be noted that some squares were assigned values from multiple zip code areas (Figure 14). The final output is a map showing shoppers per household in each square (Figure 15). 26 Figure 14. Centroid map used in trend surface analysis. Figure 15. Customers per households map. 27 Technique 3 – The Construction of Theissen Polygons The final technique used to establish the Century III trade area is called “spatial monopoly,” and involves the construction of Theissen polygons. The resulting polygons identify a theoretical trade area, and are constructed as follows. First, all six major regional shopping malls in the Pittsburgh metropolitan area were located on a map. Secondly, lines were drawn between each mall and an adjacent mall (Figure 5). Each of these inter-store lines is then bisected to obtain a midpoint of the line. Finally, each midpoint is then connected to the other midpoints to establish a polygon, one for each mall. The polygons then serve as a theoretical trade areas for the malls. The blue star represents Century III Mall, while the yellow dots represent the five other Pittsburgh Regional Shopping Malls. The red lines are the end results from the polygon construction technique (Figure 16). Figure 16. Theissen polygon construction (Google Maps). 28 Final Service Area Evaluation By using a combination of three techniques, customer spotting (Applebaum), trend surface mapping (Peterson), and spatial monopoly (Jones and Simmons) the final service area for Century III Mall was determined (Figure 17). The most weight in the final analysis was given to Applebaum’s customer spotting method, because of the nature of my data. This technique gives a more precise approximation of the mall’s service area, because it is based on the actual customer data from my survey. Trend surface mapping approximates the service area by replacing the zip code boundaries with grid squares. This method is not as precise as customer spotting, but can still show generalities of the data. Such as an approximation of where customers are located. Trend surface mapping would provide more exact results if the data gathered was more precise (such as addresses as opposed to relative zip codes). Finally the Theissen polygon technique is a qualitative way of showing a malls service area. This technique was given less weight because it is not based on any data and only shows a theoretical service area for the mall. 29 Figure 17. Final service area of Century III Mall. Keeping the mall service area completely contiguous was essential, because accounting for any noncontiguous areas would skew the results of my statistical tests. Any areas that were not contiguous were eliminated. Also, counting as many customers as possible, while keeping the amount of zip codes included as small as possible was also essential. County boundaries and physical elements (topography, streams, rivers, etc.) were not included in the determination of the mall’s final service area. The final service area for Century III is comprised of 43 neighborhoods, 42 in Allegheny County and one in Westmoreland County (indicated by red on figure 17). This area accounts for 294 of the 387 people who were surveyed (76%). 30 Variable Identification Previous research on neighborhood change and socioeconomic decline identify variables that could help link neighborhood alterations with external factors, such as declining retail performance. Based on previous research, nine variables, from three separate time snapshots (1990, 2000, and 2010) have been identified that are considered to be possible explanatory variables of neighborhood change. The years were selected based on availability of data and the timeline of Century III’s decline, which started in the late 1990s. The variables were identified as follows. Variable 1- Proportion of the Population with a High School Education Numerous studies have used educational attainment as a variable for their models. Galster & Quercia (1993) found that education attainment was an explanatory variable in the identification of neighborhood socioeconomic decline. Crane (1991) used education attainment as a variable to explain high levels of school dropout rates and high levels of teen child bearing rates. Schulz et. al. (2008) recognized education as a variable to explain levels of social and physical stress. Variable 2- Proportion of Population with Income Above $35,000 Throughout the literature, income has been measured both as an average as well as on a proportional scale. Crane (1991) used median income levels as one of the variables in his model, attempting to relate teen child bearing and school dropout rates to neighborhood stress levels. Galster & Quercia (1993) used the proportion of people with an income above $30,000 in their study of identifying neighborhood decline. Schulz et al. (2008) used the proportion of people with an income above $35,000 for their study on neighborhood stress levels. Silverman et al. (2012) used median income and associated it with vacancy patterns in Buffalo, New York, 31 however their study used median income in three different ways: Total median income, white median income & black median income. Silverman et. al’s, study on vacancy rates in Buffalo used income grounded in race (i.e., mean black income and mean white income) to study vacancy patterns in a major city. It is essential to treat income and race as separate socioeconomic characteristics, because this study involves identifying specific variables that may be indicators of mall decline. Variable 3 - Mean Age of the Population Literature on socioeconomic decline in neighborhoods identifies mean age as an important variable for studies on: neighborhood stress levels (Schulz et al. 2008) and teen child bearing and school dropout rates (Crane 1991). Additional studies have used age grounded in gender (i.e. proportion of the population between the ages of 10 and 64 who are either male or female (Galster and Mincy 1993)). Other scholars have discovered that targeting specific age groups with senior discounts and advertising has little influence on patronization (Gillette and Schnieder 1978; Lumpkin, Greenberg and Goldstucker 1985). Furthermore, there is an inconsistency in the literature on defining ‘elderly.’ Fentiman, Tirelli, Monfardini, Schneider, Festen, Cognetti, and Aapro, (1990), define elderly as age 70 or above, while other researchers define elderly as age 65 to 84 (Kerrigan, Todd, Della Croce, Lipsitz, and Collins 1998), 70-94 (Jensen and Blichert-Toft, 1971), and 65 to 99 (McItosh 1995). To eliminate the inconsistency in the literature of defining this age group, mean age was selected as a variable. 32 Variable 4 - Poverty Rate Poverty rate is one of the most reliable and continuously used explanatory variables in socioeconomic studies. Poverty rate has been used as an independent variable in studies investigating teen child bearing and school drop outs rates (Crane 1991), social and physical stress indicators (Schulz et. al 2008) and socioeconomic change of neighborhoods over time (Galster and Mincy 1993). Elevated poverty rates cause economic reform in neighborhoods (Tendulkar and Jain 1995), and economic reform then effects the retail environment (Goetz and Swaminathan 2006). Variable 5 and Variable 6 - Proportion of the Population that is White and Non-White Race has been used as a variable to explain many aspects of retail patronization. Sullivan and Shaw (2011) found that different racial groups react differently to new retail establishments. Whites embrace new retail, while African Americans tend to have negative feelings towards new retail. Other researchers have determined that race influences the behavior and interactions of customers at shopping malls (Readdick and Mullis 1997; Kim and Kim 2005). These findings show that cities may be refashioning their neighborhoods and developments in a way that is hostile to minority groups. Variable 7- Mean Housing Value Housing value has been used as a socioeconomic variable in various studies. Cozier, Palmer, Horton, Fredman, Wise and Rosenberg (2007), classify housing value as an indicator of health risks among women in the United States. While, Campbell and Cocco (2007) found a direct positive correlation between housing prices and consumption. Housing value was also used as a predictor variable for vacancy rates in Buffalo, New York (Silverman 2012), and as a 33 variable in unison with population change to identify processes of neighborhood ascent outside of gentrification. (Owens 2012). Variable 8 – Percent Population Change Population change has been used in longitudinal studies (Galster and Mincy 1993; Silverman et al. 2012 and Owens 2012). These studies found that socioeconomic variation in neighborhoods is associated with population change over time. Other scholars have studied population change and its impact on retail/wholesale employment in a rural setting. Findings indicate that population change is highly correlated with retail and wholesale employment (Adamchack, Bloomquist, Bausman and Qureshi 1999). Furthermore, in small communities population change had a direct relationship with retail sales (Walzer and Schmidt 1977). That is as population increased, sales increased as well. Variable 9- Proportion of the Population that is Female Tauber (1972), found people who shop do it for multiple social reasons including selfgratification, physical activity and learning new trends. He also found that females tend to identify with these social shopping roles more than males do. In addition, research indicates that females shop more regularly than do males (Roy Dholakia 1999) although male shopping has been slowly increasing over the past decade (Otnes and McGrath 2001). My survey data supports higher female shopping frequency (249) as opposed to male frequency (138). 34 Difference of Means and Difference of Proportions Tests Hypothesis testing procedures are not limited to situations where there is only one sample and a statement about a characteristic of the population being examined. In many situations comparing a quantitative characteristic of two separate populations, such as a mean or a proportion is very tangible. For example, one may want to compare the average money spent at a clothing store by males and females. In order to do this a random sample of male shoppers and a random sample of female shoppers is needed. Then, using the sample means a hypothesis is tested, where we assume there is no difference between the two groups would be conducted using the sample means. This is known as a two sample test, because a value within the two samples is being tested. They could also be referred to as a two population test, because the fundamental question is do these samples come from the same or different populations (Barber 1988)? These tests are relevant to this study, because comparing the variables identified in the literature for the mall’s service area to Allegheny County as a whole will show which variables in the defined service area are significantly different from the same variables in the county itself. For example, is the average housing value of Century III’s service area in 1990 the same as the average housing value of Allegheny County in 1990 (i.e., are they from the same population?) or are they significantly different from one another (i.e., are they from different populations?)? It is hypothesized that the variables selected will be significantly different in Century III’s service area when compared to Allegheny County as a whole. If any of the variables have a significant standard score as a result of these tests, they will be assessed as possible indicators of mall decline, and considered for further testing. 35 In order to interpret the analysis results, it is important to understand the parameters of the tests. A confidence level refers to the percentage of all possible samples that can be anticipated to include the actual population parameter. We assume all possible samples were selected from the same population, and a confidence interval was computed for each sample. A 95% confidence level implies that 95% of the confidence intervals would include the true population parameter. For this study a 95% confidence level was used. The critical Z values for these tests are -1.96 and +1.96. This means that any variables that have a Z-score between those values is not statistically significant. Any variables that have a Z-score outside of the critical range is statistically significant. Furthermore, statistical significance is attained when the p-value (another statistic used for measuring significance) is less than the significance level (Krzwinski and Altman 2013; Cumming 2012). In a two-tailed test, the rejection region for a significance level of α=0.05 is partitioned to both ends of the sampling distribution and makes up 5% of the area under the curve (Figure 18). Figure 18. SignificanceInterpretation regions for difference of means and of Results difference of proportions results. 36 When evaluating the results, the Z-scores are particularly important. A positive Z-score indicates Allegheny County has a higher value than the service area. A negative Z-score indicates Allegheny County has a lower value then the service area. The only variable that was significant in 1990 was income, which was significantly higher in Allegheny County (Z = 4.21). In 2000, income (Z = -2.818), age (Z = -1.975) and housing value (Z = -2.650) were significantly lower in Allegheny County. In 2010, income (Z = -2.500) and age (Z = -2.302) remained significantly lower in Allegheny County. Table 3 displays the variables that were examined. Tables 4, 5 and 6 show the results of the difference of means and difference of proportions tests, and table 7 is a descriptive analysis of these results. Table 3. Variables Used in Difference of Means and Difference of Proportions Tests V1 V2 V3 V4 V5 V6 V7 V8 V9 Proportion of population with a highschool education Proportion of population with income over 35K Mean Age of the population Poverty Rate Proportion of the population that is white Proportion of the population that is non-white Mean Housing Value Population Change Proportion of the population that is female 37 Table 4. Difference of Means and Difference of Proportions Tests 1990 Results Service Area/ Allegheny 1990 Variable Z/T-Score P-Value Sig. Level Result V1 0.739 0.459 0.05 Not Sig. V2 4.2104 0 0.05 Is Sig V3 -0.5598 0.0575 0.05 Not Sig V4 0.0805 0.936 0.05 Not Sig V5 0.3149 0.756 0.05 Not Sig V6 -0.3149 0.756 0.05 Not Sig V7 1.3729 0.17 0.05 Not Sig V8 N/A N/A N/A N/A V9 0.711 0.8952 0.05 Not Sig Notes means test means test Table 5. Difference of Means and Difference of Proportions Tests 2000 Results Service Area/ Allegheny 2000 Variable Z/T-Score P-Value Sig. Level Result V1 0.3339 0.7414 0.05 Not Sig. V2 -2.8184 0.00587 0.05 Is Sig. V3 -1.9752 0.05 Is Sig. V4 -0.5599 0.575 0.05 Not Sig. V5 -1.503 0.13362 0.05 Not Sig V6 1.503 0.13362 0.05 Not Sig. V7 -2.65 0.05 Is Sig. V8 1.2475 0.089 0.05 Not Sig V9 0.3167 0.67448 0.05 Not Sig Notes means test means test Table 6. Difference of Means and Difference of Proportions Tests 2010 Results Service Area/Allegheny 2010 Variable Z/T-score P-Value Sig. Level Result V1 0.2644 0.79 0.05 Not Sig V2 -2.5 0.012 0.05 Is Sig V3 -2.302 0.05 Is Sig V4 -0.1299 0.89656 0.05 Not Sig V5 -1.6749 0.0949 0.05 Not Sig V6 1.6749 0.0949 0.05 Not Sig V7 1.2388 0.05 Not Sig V8 1.3277 0.18352 0.05 Not Sig V9 0.0244 0.98404 0.05 Not Sig 38 Notes means test means test Table 7. Difference of Means and Difference of Proportions Test Descriptive Analysis Allegheny (%)1990- Whole Numbers 1990 V1 (Education) 79.30% 1059804 V2 (Income over 35k) 39.40% 53761 V3 (Mean Age) 36.6 V4 (Poverty Rate) 11.50% 153692 V5 (White Population) 87.10% 1164047 V6 (Non-White Pop) 12.90% 172402 V7 (Housing Value) $56,800.00 V8 (Population Change) -7.90% 723019 V9 (Female Population) 54.10% 1990-2000 1990-2000 2000-2010 2000-2010 (%) 2000 Whole Numbers 2000 (%) 2010 Whole Numbers 2010 % Change Whole Number Change (%) Change Whole Number Change 86.50% 1108641 92.60% 1132820 7.20% 48837 6.10% 24179 54.10% 6393381 63.90% 781719 14.70% 6339620 9.80% -5611662 41 40 4.4 -1 11.20% 143547 12.70% 155365 -0.30% -10145 1.50% 11818 84.30% 1080444 82.00% 1003145 -3.70% -83603 -2.30% -77299 15.70% 201222 18.00% 220203 2.80% 28820 2.30% 18981 $97,200.00 $ 120,300.00 40400 23100 -4.10% 1281666 -4.50% 1223348 1281666 -58318 53.00% 679283 52.00% 636140 1.10% -43736 -1.00% -43143 Whole Numbers 1990(%) 2000 Whole Numbers 2000 (%) 2010 Whole Numbers 2010 % Change Whole Number Change(%) Change Whole Number Change Century III Service Area V1 (Education) 78.80% 530610 87% 405947 92.20% 541310 8% -124663 5.20% 135363 V2 (Income over 35K) 31% 208743 61.30% 371411 69.80% 409799 30.30% 162668 8.50% 38388 V3 (Mean Age) 37.7 42.1 43.9 4.4 1.8 V4 (Poverty Rate) 11.30% 76090 11.30% 68466 12.90% 75736 0% -7624 1.60% 7270 V5 (White Population) 86.60% 583132 87% 527125 85.30% 510781 0.40% -56007 -1.70% -16344 V6 (Non-White Pop) 13.40% 90231 13% 78766 14.70% 86304 -0.40% -11465 1.70% 7538 V7 (Housing Value) $49,930.00 $101,749.00 $103,319.00 51819 1570 V8 (Population Change) N/A -2.80% 605891 -3.20% 587104 N/A 605891 -18787 V9 (Female Population) 52.90% 356209 52.10% 315669 51.80% 304120 -0.80% -40540 -0.30% -11549 39 This section will briefly discuss the significant results of the difference of means and difference of proportions tests as they relate to the study’s proposed hypothesis. After analyzing literature on neighborhood socioeconomic change, nine variables were identified as possible explanatory elements of retail decline. A small number of these variables were documented as significant following the tests. The outcomes of these tests reveal a counterintuitive result to what was hypothesized at the outset of this study. Compared to Allegheny County, the defined study area seems to be economically and socially healthier than the county, with respect to the variables identified in the literature. Again, this is the counter to this study’s hypothesis, which suggests that the negative socioeconomic conditions of neighborhoods in Century III’s service area largely explain the mall’s decline. Tables 4, 5 and 6 yield the following results. In 1990 the proportion of the population with an income over $35,000 was significantly lower in the study area than it was in Allegheny County. However, by 2000 the proportion of the population with an income over $35,000 was significantly higher in the study area compared to Allegheny County. Finally in 2010 the proportion of people with an income over $35,000 remained significantly higher in the study area than in Allegheny County. Also, mean housing value in 2000 was significantly higher in the study area compared to Allegheny County. With the exception of the income variable in 1990, these results do not support the original hypothesis that the neighborhoods in the study area are declining and therefore negatively impacting the mall’s performance. In 2000 and 2010 the proportion of people with an income over $35,000 is higher in the study area then it is in Allegheny County. This finding is interesting because while the income levels of the study area were stable during these years, the mall that serves it was and still is 40 failing. Furthermore, mean housing value in 2000 was reported as significantly higher in the service area, compared to Allegheny County (Table 8 shows national mean housing values). This is also contradictory to my original statement about Century III Mall’s decline being related to its service areas socioeconomic status. This is evidence that the decline of Century III Mall is related to something other than the socioeconomic status of the defined service area. Table 8. National Mean Housing Values National 1990 2000 2010 Housing Value $78,500 $119,600 $179,200 The only variables that had significant results consistent with my initial hypothesis are mean age in 2000 and 2010. Mean age in Century III Mall’s service area was significantly higher than it was in Allegheny County, during these years. This is particularly important because Allegheny County is one of the oldest counties in the United States. The University of Pittsburgh’s Center for Social and Urban Research reports that 17.8% of Allegheny County was over the age of 65, compared to 12.4% nationally (Musa 2014). According to the difference of means and difference of proportions test, this percentage is even higher for Century III Mall’s service area. There are many ways that age can negatively impact a mall’s service area, accessibility being one of them. Studies have found that accessibility to malls is a good indicator of patronage (Howell and Rogers 2001). This is vital, because, as individuals get older, their mobility decreases, making it harder to access places such as shopping malls. Increasing age can also be detrimental to malls from a customer loyalty standpoint. Scholars have discovered that targeting specific age groups with discounts (e.g., senior discounts) and advertising (product exposure) has 41 little influence on patronization (Gillette and Schnieder 1978; Lumpkin, Greenberg and Goldstucker 1985). In fact, elderly shoppers do not like being targeted with such age based advertisements and often times act unfavorably towards them. Also, older consumers prefer to shop in groups as opposed to being alone (Tongren 1988). These conditions clarify the difficulty in keeping elderly individuals engaged in retail patronization. In conclusion, statistical results (with the exception of age) conflict with my original hypotheses regarding the impact of the socioeconomic circumstances of a mall’s service area on its performance. My research largely does not support the idea that Century III Mall’s decline can be directly related to the socioeconomic degeneration of the neighborhoods that make up its service area. It seems that some other phenomena are responsible for Century III’s demise. These elements will be discussed in the following chapter. 42 CHAPTER III RESEARCH DISCUSSION AND SUMMARY Chapter three will begin with a summary of the research process, followed by a discussion of the strengths and weaknesses of the study. Suggestions of alternative explanations for the decline of Century III Mall will conclude this paper. Summary Customer data was collected at the zip code level, through a one question survey that was conducted at Century III Mall in West Mifflin, Pennsylvania. I asked mall patrons for zip codes because most people know their zip code and the census collects data at the zip code level.. Three methods were used to help establish Century III Mall’s service area: customer spotting (Applebaum 1966), trend surface mapping (Peterson 1974) and spatial monopoly (Jones and Simmons 1990). Customer spotting was included because of the accurate results the technique provided to this study. Trend surface mapping was used because of the quantitative components (grid squares, numbers of shoppers, and numbers of households) that were used to establish the service area. Finally, spatial monopoly was used because it provided a qualitative technique to the study. The final service area included 76% of my survey sample (294 out of 387 respondents). Following the establishment of Century III Mall’s service area, difference of means and difference of proportions tests were implemented. These tests measure the quantitative characteristics of one population to the same characteristics of a different population. The two populations tested were Allegheny County and Century III Mall’s service area. Comparing the socioeconomic status of the service area to the socioeconomic status of Allegheny County revealed which elements of neighborhood change were significantly different in the service area 43 compared to the county as a whole. Undertaking statistical testing of variables identified from the literature was designed to help answer the question of whether the socioeconomic status of the neighborhoods in Century III Mall’s service area are related to the decline in performance of Century III Mall. The literature offers two arguments that could be used to explain mall decline. The first is neighborhood decline and poverty. This literature highlights the economic and social distress that neighborhoods are going through. Teen pregnancy (Crane 1991), elevated poverty (Galster and Mincy 1993), racial segregation (Schulz, Zenk, Israel, Mentz and Galea 2008), and high school dropout rates (Crane 1991) are all indicators of neighborhoods going through socioeconomic distress. The second literature relates to shopping behavior and competition. This literature discusses the motives and intentions of shoppers as well as the impacts of other retail (i.e., other malls, online shopping). These two different explanations will be revisited in the latter portions of this chapter. This study focused on theories of neighborhood change and attempted to relate them to Century III Mall’s decline. It was hypothesized that the neighborhoods in Century III Mall’s service area have undergone socioeconomic decline, which has directly impacted the health of Century III Mall. The results of the difference of means and difference proportions tests were counter to this proposition however. In chapter one, two different research arguments were laid out through the literature. The first group of literature was neighborhood decline and poverty, second was shopping behavior and competition. This study tested neighborhood decline and poverty. The ultimate hypothesis was that the declining socioeconomic status of the neighborhoods in Century III Mall’s service area are responsible for the occupancy decline in the mall. Results from the difference of means and difference of proportions tests indicated that 44 Century III’s service area was socially and economically healthier than Allegheny County. Proportion of the population with an income over $35,000 was significantly higher in the service area in 2000 and 2010. Mean housing value was also significantly higher in the service area in 2000. Age was the only variable that was consistent with what was hypothesized, being significantly higher in the service area in 2000 and 2010. Based on these results we would reject this study’s hypothesis that the socioeconomic decline of Century III Mall’s service area is responsible for the decline in the mall’s occupancy. These findings may be counterintuitive to what was hypothesized, however, based on the literature they are still instructive and provide an explanation as to what is happening in Century III Mall’s service area compared to Allegheny County. With the exception of age, the significant variables indicate that the service area is doing socially and economically better than Allegheny County is. The mall service area delineation was constructive and offers the most credible finding of the study. Three practical techniques were employed to help delineate Century III Mall’s service area. Customer Spotting (Applebaum 1966) provided a result based highly on the customer data that was collected. This technique also provided a very specific result with no generalities or simplifications. Trend surface mapping (Peterson 1974) also provided a result based on the customer data that was collected. The result of this method was less specific, but still did provide an informative outcome. Spatial monopoly (Jones and Simmons 1990) was the final service area analysis technique used. Though this method was not based off of any customer data, it did deliver a qualitative result for Century III’s service area. This method provided an alternative view on how a service area could be established. These three techniques offered a solid foundation to help delineate the mall’s service area. The final service area included 76% of my sample (294 of 387 respondents). 45 Data availability for this study was difficult. The nine variables identified in the literature provided a solid framework for statistical testing, but the data itself was not readily obtainable. The United States Census provided data for the years examined in the difference of means and difference of proportions tests (1990, 2000, and 2010). However this left a gap of unattainable data for the intercensal years. The difference of means and difference of proportions tests provided a small number of significant explanatory variables. This is due to the limited amount of data that was obtained for this study. More data, especially for intercensal years, would have been beneficial to the statistical analysis section of this study. If additional data was incorporated into the statistical testing, this may have yielded a higher number of significant results, thus more explanatory variables. This would, in turn provide more evidence for improved interpretation of results. Economic Restructuring Revisited Literature on the economic geography of Pittsburgh provides two differing viewpoints on what is occurring in and around the city. This section of chapter three will discuss the economic revitalization efforts of Pittsburgh, Pa and the ramifications on the city’s economy as studied by Bluestone and Harrison (1988), Beeson and Tannery (2004), and Deitrick (1999). Pittsburgh lost its steel base in the 1980’s, forcing the city into a partnership along consensual lines. New, nonprofit, community based organizations were incorporated into the revitalization efforts. By the 1990’s the region’s economy had weakened. Manufacturing decline continued, as the service sector began to gain importance to overall regional employment. Pittsburgh’s postindustrial transformation has led to an impact on the region as a whole. According to Deitrick (1999) in 1990 the average annual service sector wage was $24,442. This is considerably lower compared to an average annual manufacturing wage of $36,989. Deitrick 46 furthers this argument of overall regional wage shrinkage by comparing the region’s wages to national wages. In 1979 Pittsburgh workers hourly wages were 18% greater than the national median. By 1989, the hourly wage had dropped 20% and dipped below the state and national median (Deitrick 1999). According to Beeson and Tannery (2004) the 1980’s were a remarkable period for Pittsburgh’s economy. In 1979 the region’s unemployment rate was 5.1%. In 1983, this number more than tripled to 17.1%. By 1990 the region’s economy recovered gradually alongside the nation’s economy. This resulted in shifts from industrial employment to unskilled service sector employment. The impacts of this type of employment shift has received attention as a source of earnings inequality (Bluestone and Harrison 1988). Beeson and Tannery’s study found that earnings had dropped in the Pittsburgh region overall between 1978 and 1989. Shifts of employment accounted for most of the reduced earnings in lower income divisions, but had little impact in the higher income divisions. Thus, it was concluded that restructuring plays a major role in the explanation of wage inequality in the Pittsburgh region (Beeson and Tannery 2004). This type of economic polarization can impose consequences such as changing business cycle recoveries and permanent job loss (Jaimovich and Siu 2012). While Deitrick contends that Pittsburgh as a region overall had declined because of the employment shift from industry to unskilled services, Beeson and Tannery take a different approach. They claim that earnings inequality had occurred in and around the city, causing more harm to the lower income sectors, than the middle and upper class. While both of these approaches have merit the findings of this study on Century III Mall’s service area favors Beeson and Tannery. 47 Their findings of wage inequality impacting lower income classes more so than middle and higher level income classes, can be explained through the results of this studies statistical testing. Results from the difference of means and difference of proportions tests indicate that in 2000 (Z= -2.8184) and 2010 (Z= -2.500), the proportion of people with an income over $35,000 was significantly higher in the mall’s service area than it was in Allegheny County. This means that the neighborhoods in Century III Mall’s service area were less impacted by wage inequality, caused by the postindustrial shift than other neighborhoods in the Pittsburgh area. According to Beeson and Tannery’s findings, the neighborhoods in Century III Mall’s defined service area are above the lower income levels that are most adversely impacted by wage inequality. Prospective Research The literature on shopping behavior and competition provides additional alternative explanations for retail decline. The motives and techniques of mall patrons are an ever changing phenomena. Nicholls, Li, Kranendonk, and Roslow (2002) found that overall frequency of mall trips declined between 1993 and 1999. Also, those that live closer to the mall are less likely to make a purchase than those that travel further. The decline in mall visit frequency could be a result of online shopping and competition from other retail outlets. Furthermore, big box retailing has been cited in the literature as a source contributing to the decline of malls. Morningside Mall in Toronto, Canada has become a mall with a waning core retail function. The demise of this mall was caused by diminishing sales and customer patronization. Also contributing to Morningside’s decline are these big box stores such as, WalMart, Target and K-Mart. These types of stores are able to kill the competition by providing a one stop shop for customers (Paulette and Cowen 2011). 48 In addition to online shopping and big box retailers, another possible culprit could be outshopping. Outshoppers are those who bypass shopping outlets and malls that are closer to their homes for other establishments which are further away. Dissatisfaction with the products available locally and more attractive shopping alternatives can lead to outshopping (Burns and Warren 1995). Research on shopping behavior and retail competition (online shopping and big box stores) have provided possible explanations for why retail establishments like Century III are declining. This study did not test the explanations listed above so they should be looked at as possible explanatory elements of retail decline. One way to address these potential explanations would be to conduct a detailed survey with more thorough questions. Asking mall patrons questions such as: how frequently they shop at this location?, how often do they shop online?, do you have a budget when shopping? Also conducting surveys at multiple malls could be beneficial to understanding what kind of and how many shoppers patronize certain establishments. This type of survey would generate much more detailed data compared to what was collected during this study. A possibility for future research is the analysis of relationships between changes in Century III Mall’s occupancy rates and changes of selected socioeconomic variables using correlation analysis. The technique attempted in this study used Spearman’s correlation, a nonparametric test which measures the strength of relationship between dependent and independent variables. Basically, correlation analysis measures the strength of the relationship between two variables, and is expressed as the “correlation coefficient.” When an increase in the value of one variable results in an increase in the value of another variable, the correlation is 49 said to be positive (+). On the other hand, if the value of one variable increases, while the value of the other variable decreases, the correlation is said to be negative (-). One aspect of this research was to determine which socioeconomic characteristics are causing Century III Mall to decline. Using data from the Directory of Major Malls, occupancy rates (dependent variable) of Century III Mall were calculated for 2005 to 2015. The service area independent variables thought to be associated with Century III’s occupancy rate decline included proportion of the population with income over $35,000 in 1990, proportion of the population with income over $35,000 in 2000, mean age in 2000, mean housing value in 2000, mean age in 2010, and proportion of the population with income over $35,000 in 2010. The latter six variables were included because of their significance level in the difference of means and difference of proportions tests. Furthermore, six additional variables were added to the correlation tests, they include: mean income in 2011, 2012 and 2013, and mean age in 2011, 2012, and 2013. The results of the Spearman correlation analysis showed that none of the above variables are significantly correlated with Century III’s occupancy rate between 2005 and 2015. This result seemingly means that none of the selected variables are significant indicators of the occupancy decline of Century III Mall between 2005 and 2015. It should be noted that in Century III Mall’s case, not all factors could be analyzed using Spearman’s correlation, which is why it wasn’t included in the analysis section of the study. Furthermore, as is the case of many socioeconomic analyses, there is a limited number of socioeconomic variables available in the intercensal years between 2000 and 2010. A future avenue of research would involve identifying causal variables associated with Century III’s occupancy decline using a questionnaire survey of individual shoppers. 50 REFERENCES Adamchak, Donald J., Leonard E. Bloomquist, Kent Bausman, and Rashida Qureshi. "Consequences of Population Change for Retail/Wholesale Sector Employment in the Nonmetropolitan Great Plains: 1950–19961." Rural Sociology 64, no. 1 (1999): 92-112. Anderson, Ben. 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Journal of retailing 79, no. 3 (2003): 183-198. 56 APPENDIX A SPEARMAN’SCORRELATION RESULTS Table 9: Spearman's Correlation Results 57 APPENDIX B STORE DATA FOR CENTURY III MALL Table 10: Store Data for Century III Mall # Spaces # Stores 2000 191 2001 190 2002 190 2003 190 2004 190 2005 190 131 2006 190 133 2007 180 142 2008 180 138 2009 166 138 2010 166 94 2011 161 85 2012 161 90 2013 161 119 2014 161 119 2015 161 91 Occupancy 73% 65% 64% 75.30% 74% 71.20% 75% 75% 64% 60% 38% 58 sq ft sq ft GLA Area Occupied 1289115 1289115 1289115 1289115 1289115 1280995 931283.365 1254795 811852.365 1255166 798285.576 1255166 945139.998 1265916 941841.504 1265916 901332.192 1195506 896629.5 1193000 898329 1193000 763520 1193000 719379 1193000 456919