The March away from Density in Retail

As prices are driven down by economies of scale, the number of customers required at each terminal of the global supply chain (i.e. each Wal-Mart super center) goes up and up. Which is to say: lower prices require larger and fewer retail stores, each of which requires more customers in their catchment (or “threshold”) area. (The use of customer-miles as an ever-increasing part of the supply chain (an externality?) is a subject for another time.)

This means that even at pre-existing densities, the number of things within a reasonable walking (and possibly transit) distance gets smaller and smaller. The best on-the-ground description of this I’ve seen is in Rae’s City, where he documents the mid-century chain grocery’s affect on the concentration of groceries in New Haven.

Far from a return to the romantic urban densities of the New Urbanist crowd, an even greater density would seem to be required to lure suburbanites back to urban living if they are to keep the same price structures and choices that exist now (a variant of the Church Problem, see Religious Pluralism below.) The urban problem, then, is actually getting worse. The economic underpinnings are:

2. The "threshold range" is the minimum radius of a market area needed to generate sufficient demand to support the supply of a good; it refers to the minimum (potentially also the maximum) market area which a supplier needs (or can sell to) to make his undertaking viable. More specifically, "given the equilibrium f.o.b. market price; the threshold range represents the distance to the perimeter of an area enclosing the minimum level of aggregate demand (or a minimum population) which is sufficient to permit the commercial supply of the good, i.e which permits only normal profits to be made." (Parr & Denike, 1970, p.570) Parr, John and Kenneth G. Denike, "Theoretical Problems in Central Place Analysis," Economic Geography 46(4), October 1970, pp.568-86 (Quoted in Geography 450 glossary, Krumme, University of Washington (WA).)

Manhattan densities are still workable on the left side of the graph, but get harder (and more expensive) daily.

Is ever-cheaper individual delivery the only workable answer to urban life? Will it ever be realistically feasible for the lower half of the income distribution?