Combining microsimulation and spatial interaction models for retail location analysis

Although the disaggregation of consumers is crucial in understanding the fragmented markets that are dominant in many developed countries, it is not always straightforward to carry out such disaggregation within conventional retail modelling frameworks due to the limitations of data. In particular, consumer grouping based on sampled data is not assured to link with the other statistics that are vital in estimating sampling biases and missing variables in the sampling survey. To overcome this difficulty, we propose a useful combination of spatial interaction modelling and microsimulation approaches for the reliable estimation of retail interactions based on a sample survey of consumer behaviour being linked with other areal statistics. We demonstrate this approach by building an operational retail interaction model to estimate expenditure flows from households to retail stores in a local city in Japan, Kusatsu City.