Understanding the General Equilibrium on Retail Tenant Mix with a Five-Factor Island-Species-Area-Energy Model

Purpose – Achieving a balanced tenant mix is a long-standing discourse in the retailing and consumer marketing literature. This paper applies the Island Species-Area-Energy (ISAER) model from biogeography to theorise tenant mix equilibrium. A five-factor tenant mix model is developed. Design/methodology/approach – We seek to test the equilibrium tenant mix effects on total retail rents based on 129 major U.K. regional malls in 2017. Findings – The results confirm that equilibrium tenant mix is positively associated with mall size and the purchasing power of shopping districts. Any deviations from the equilibrium tenant mix will impose a negative impact on total retail rents. Research limitations/implications – The findings provide two substantial implications. First, the study extends the established biodiversity theory to examine the shopping mall ecosystem and develop a useful framework for measuring tenant mix equilibrium. Second, the study constructs a novel five-factor model to understand the implicit rents of shopping mall attributes. These five factors are tenant-mix equilibrium, building quality, locational convenience, leasing management, and anchor tenants.Practical implications – Tenant mix equilibrium also provides a framework for practitioners to evaluate tenant mix effects on mall performance.Originality/value – This is a general equilibrium tenant mix model that evaluates the five critical success factors in achieving a balanced tenant mix in order to optimise retail rents