Evaluation of Trade Turnover of the Shopping Center with the Help of the Huff Model—Theory and Practical Aspects

Abstract

The author considers an important problem of using the Huff model for obtaining quantitative estimates of trade turnover of the shopping center. The aim of the article is to identify the actual limitations of the specified model, which when conducting a practical assessment of potential trade turnover of large objects of commercial real estate in a significant way affect the quantitative results of the calculation and the quality of the conclusions. In accordance with the goal, the author solved the following tasks: –economic and mathematical structure of the Huff model is considered; –the calibration parameters of the model are revealed, the accuracy of which determines the accuracy of calculations and the correctness of conclusions; –an algorithm for estimating the potential trade turnover of the trading center based on a combination of the Huff model and econometric methods is constructed. The hypothesis of the research: For correct application of the Huff model in practice it is necessary to use econometric methods of estimation of calibration parameters. The article shows that the evaluation of calibration parameters of the model significantly affects the accuracy of the evaluation. As a result, the necessity of using empirical data and constructing econometric model based on them is proved by obtaining accurate quantitative estimates. The author presents the algorithm of correct estimation of potential trade turnover of the shopping center using econometric estimation of parameters of the Huff model, empirical and expert data and a calculation example. Conclusions on the use in practice of the Huff model with its methodological and actual limitations are formulated.