Industry Structure of Commercial Districts and the Impact of COVID-19
Round 1
Reviewer 1 Report
JLST-D-23-00012
Dear authors,
Many thanks for giving me the opportunity to review the manuscript entitled “Industry structure of commercial districts and the impact of COVID-19”.
Although I have appreciated the topic, unfortunately the paper suffers from some major and minor concerns that prevent publication.
Here below, I have pointed out my main hesitations.
1) Abstract
The abstract does not clarify the purpose of the article and does not emphasize the originality aspects of the study. The methodology is barely hinted at and the implications of the study are not addressed.
2) Introduction
I appreciated the efforts to reinforce the introduction, however this section remains incomplete and insufficient. In particular, authors should fix the architecture of the introduction, highlighting:
Research purpose
Research gap
Positioning
Research questions
Theoretical and practical implications
Organizing
Originality
What is the positioning of the study in the field literature? What research gap does it intend to fill?
This section uses references that are too outdated and should also clarify the theoretical framework in which the study is placed.
2) Theoretical background
This section still seems inconsistent and too synthetic; therefore, it should be developed more critically. On my opinion, articles suggested to implement this section are not sufficiently explored. Authors should critically discuss these studies, highlighting the positioning of their contribution in the field literature.
3) Methodology
This section is really problematic.
How did you build your sample? Which database did you use and why?
Please explain!
4) Findings
On my opinion, this section is not clear. Authors should better explain the results in light of previous comments and suggestions.
5) Discussion and Conclusions
Such as for the findings section for the discussion section as well, you should avoid overlapping and try to separately explain the new understanding that emerged as a result of your research.
In this section, you should extend your suggestions for future research, add research limits, and Deeping the practical and theoretical implications. As far as I’m concerned, this work is too dispersive. Therefore, the authors should sketch out the manuscript structure in a different way, by preferring explanatory clarity.
Finally, a professional proofreading is strongly suggested.
Finally, a professional proofreading is strongly suggested.
Author Response
1) Abstract
The abstract does not clarify the purpose of the article and does not emphasize the originality aspects of the study. The methodology is barely hinted at and the implications of the study are not addressed.
Response:
In the revised version, the purpose of the paper is explicitly described as follow,
“This paper aims to empirically analyze the difference in the closure rate of the commercial district according to the industry structure of the commercial district.”
The originality aspects of the study is added as follow,
“To our best knowledge, it is the first try to use all commercial districts in Korea for a research in evaluating the impact of COVID-19.”
The methodology is hinted as follow,
“According to the empirical results of the regression analysis . . .” and “as a result of additional estimation by 2SLS and GMM using instrumental variables, . . .”
The implications of the study is addressed as follow,
“. . . implies that it is necessary to introduce incentives that allow stores in the same industry to cluster together in terms of policy.”
2) Introduction
I appreciated the efforts to reinforce the introduction, however this section remains incomplete and insufficient. In particular, authors should fix the architecture of the introduction, highlighting:
Research purpose
Research gap
Positioning
Research questions
Theoretical and practical implications
Organizing
Originality
What is the positioning of the study in the field literature? What research gap does it intend to fill?
This section uses references that are too outdated and should also clarify the theoretical framework in which the study is placed.
Response:
In the revised version, we addressed the gap to be fulfilled and the objective of this study as follow,
“However, this paper is differentiated in that it empirically analyzes the existence of the agglomeration economies in terms of consumption. Even though the existence of shopping externalities has been shown by some previous studies, the sources, that is, comparison shopping vs. one-stop shopping have not been proved yet. This paper aims to empirically show what type of shopping externalities would work in Korea between the two conflicting forces.”
In the revised version, we added recent references as follow,
“Recently, Knight (2022) sets up a model of interdependent retail demand based on multi-stop shopping and find the existence of shopping externalities from retail stores agglomeration by estimating a 5%-6% average decline in nearby store foot traffic after a grocery closure. Koster et al. (2019) argues that retail firms benefit from shopping externalities. They estimate an elasticity of store owners’ rental income with respect to footfall (that is, the number of pedestrians that pass by) as well as number of shops in the vicinity of (at least) 0.25. It implies that the shopping externalities are unlikely to be internalized.”
2) Theoretical background
This section still seems inconsistent and too synthetic; therefore, it should be developed more critically. On my opinion, articles suggested to implement this section are not sufficiently explored. Authors should critically discuss these studies, highlighting the positioning of their contribution in the field literature.
Response:
In the revised version, we added recent studies related with our paper as follow,
“Nakajima and Teshima (2020) argues that stores perform better when they are surrounded by other stores of diverse complementary products because diverse stores attract consumers with love of variety preference. In their empirical study on the Tokyo Tsukiji Fish Market they find that the diversity of the types of neighboring wholesalers positively affects the performance of small-sized and specialized retailers. However, Sevtsuk (2014) through a study using approximately fourteen thousand buildings on the street network of Cambridge and Somerville, Massachusetts finds that consumers enjoy comparison shopping across proximal similar-type stores, leading to clustering of similar-type stores.”
And we added the explanation of what we are doing in this paper in order to highlight the positioning of our contribution in the literature as follow,
“This paper empirically analyzes how the closure rate differs between commercial districts in 2022 due to the impact of COVID-19 according to the industry structure of individual commercial districts in 2019, before the outbreak of COVID-19, using data on all 1,164 commercial districts in Korea.”
3) Methodology
This section is really problematic.
How did you build your sample? Which database did you use and why?
Please explain!
Response:
The methodology of our paper is provided in Section 2.2 where analytic models and regression equations seem to be sufficiently explained already.
In our paper, Section 3 includes the explanation about our samples and the database. Anyhow, we added new explanation as follow,
“There are 1,164 commercial districts nationwide, and the boundaries of individual commercial districts were extracted from information on major commercial districts nationwide (data.go.kr/data/15029180/standard.do) provided by the Small Business Corporation. On the other hand, the information on individual stores in the commercial district was extracted from the shopping district (commercial district) information of the Small Enterprise Market Promotion Agency (data.go.kr/data/15083033/fileData.do). However, this dataset only provides information on currently operating commercial businesses and does not provide information on closures. However, regular updates are made on a quarterly basis, allowing the construction of closure data using past data. For example, if there was store information in the third quarter of 2019 but no data available in the third quarter of 2022, it was considered as a closed store. Using this method, the number of operating stores and closed stores were aggregated.”
4) Findings
On my opinion, this section is not clear. Authors should better explain the results in light of previous comments and suggestions.
Response:
In the revised version, key findings are highlighted as follow,
“In sum, the empirical results of this paper find the existence of shopping externalities in Korea. However, they arise from comparison shopping among stores competing each other, not from complementarity among stores dealing with similar products. And results from 2SLS and GMM show that these shopping externalities are unlikely to be biased potentially from self-selection.”
5) Discussion and Conclusions
Such as for the findings section for the discussion section as well, you should avoid overlapping and try to separately explain the new understanding that emerged as a result of your research.
In this section, you should extend your suggestions for future research, add research limits, and Deeping the practical and theoretical implications. As far as I’m concerned, this work is too dispersive. Therefore, the authors should sketch out the manuscript structure in a different way, by preferring explanatory clarity.
Response:
In the discussion section, we tried to suggest the practical implications of our findings by relating the results with COVID-19 and by introducing a diagnostic indicator. The findings that the industry structure of commercial districts and shopping externalities are important in the era of COVID-19 are emphasized in this section.
In the conclusion section, the limit and future research are described as follow,
“This paper analyzes big data by using data on the closure of individual stores at each point in time throughout Korea. However, due to data limitations, sales could not be analyzed. Since a decrease in sales would appear before the decision to close a business is made, more diverse analysis results and policy implications could be derived if sales data are included in future analyses.
The resilience of commercial districts is also a big issue academically as well as from a policy point of view. Thus, it would be worthy of analyzing under what circumstances the commercial districts recover quickly from COVID-19. Then the government could use a subsidy as a policy tool to attract a specific-type of stores to a commercial district and allow comparison shopping to customers.”
Reviewer 2 Report
Dear Authors,
The research topic is up-to-date and important. The negative impact of COVID-19 on the functioning of the retail industry has been noted around the world, which has been confirmed in the presented research. I believe that it is useful for the practice of city and regional management to show that rate of store closures is relatively low in districts specialized in certain industries. The presented research results may be helpful in planning and improving the industry structure of individual commercial districts.
In my opinion, the article should be supplemented with a review of the current literature and a slightly broader discussion of the theoretical basis of the research. Referring to studies conducted in the period before the Covid-19 pandemic is insufficient. Moreover, many studies have been published in this area recently.
It would be beneficial to show more clearly the possibilities of practical use of research results.
Good luck
Author Response
The research topic is up-to-date and important. The negative impact of COVID-19 on the functioning of the retail industry has been noted around the world, which has been confirmed in the presented research. I believe that it is useful for the practice of city and regional management to show that rate of store closures is relatively low in districts specialized in certain industries. The presented research results may be helpful in planning and improving the industry structure of individual commercial districts.
In my opinion, the article should be supplemented with a review of the current literature and a slightly broader discussion of the theoretical basis of the research. Referring to studies conducted in the period before the Covid-19 pandemic is insufficient. Moreover, many studies have been published in this area recently.
It would be beneficial to show more clearly the possibilities of practical use of research results.
Good luck.
Response:
In the revised version, we added recent studies related with our paper as follow,
“Recently, Knight (2022) sets up a model of interdependent retail demand based on multi-stop shopping and find the existence of shopping externalities from retail stores agglomeration by estimating a 5%-6% average decline in nearby store foot traffic after a grocery closure. Koster et al. (2019) argues that retail firms benefit from shopping externalities. They estimate an elasticity of store owners’ rental income with respect to footfall (that is, the number of pedestrians that pass by) as well as number of shops in the vicinity of (at least) 0.25. It implies that the shopping externalities are unlikely to be internalized.”
“Nakajima and Teshima (2020) argues that stores perform better when they are surrounded by other stores of diverse complementary products because diverse stores attract consumers with love of variety preference. In their empirical study on the Tokyo Tsukiji Fish Market they find that the diversity of the types of neighboring wholesalers positively affects the performance of small-sized and specialized retailers. However, Sevtsuk (2014) through a study using approximately fourteen thousand buildings on the street network of Cambridge and Somerville, Massachusetts finds that consumers enjoy comparison shopping across proximal similar-type stores, leading to clustering of similar-type stores.”
In the revised version, the possibilities of practical use of research results is discussed as follow,
“The resilience of commercial districts is also a big issue academically as well as from a policy point of view. Thus, it would be worthy of analyzing under what circumstances the commercial districts recover quickly from COVID-19. Then the government could use a subsidy as a policy tool to attract a specific-type of stores to a commercial district and allow comparison shopping to customers.”
Reviewer 3 Report
Thank you for this interesting research. This study aims to analyzes the factors that affect the closure rate of stores in commercial districts. Hereby are some comments that may help you improve on it:
1) Introduction
Overall, the introduction section is ok. Nevertheless, you should put additional focus in what is the main gap to be fulfilled by your study and on a clear description of what is the study’s objective. I would suggest that the introduction be more succinctly present the research gaps, and research purpose or question.
2) Theoretical and managerial implications
This article should reinforce the discussion and implications behind the data analysis, especially dialogue with the extant literatures. Please extend the discussions in this paper and link them to the contribution.
3) Conclusions and Implications
Limitations of the study and the future directions should also be discussed.
4) References
The references used are related to the research topic; update the references, most of them are outside the five-year validity.
I hope that these notes are helpful in reviewing your article.
Minor editing of English language required.
Author Response
Thank you for this interesting research. This study aims to analyze the factors that affect the closure rate of stores in commercial districts. Hereby are some comments that may help you improve on it:
1) Introduction
Overall, the introduction section is ok. Nevertheless, you should put additional focus in what is the main gap to be fulfilled by your study and on a clear description of what is the study’s objective. I would suggest that the introduction be more succinctly present the research gaps, and research purpose or question.
Response:
In the revised version, we addressed the gap to be fulfilled and the objective of this study as follow,
“However, this paper is differentiated in that it empirically analyzes the existence of the agglomeration economies in terms of consumption. Even though the existence of shopping externalities has been shown by some previous studies, the sources, that is, comparison shopping vs. one-stop shopping have not been proved yet. This paper aims to empirically show what type of shopping externalities would work in Korea between the two conflicting forces.”
2) Theoretical and managerial implications
This article should reinforce the discussion and implications behind the data analysis, especially dialogue with the extant literatures. Please extend the discussions in this paper and link them to the contribution.
Response:
In the revised version, key findings are highlighted as follow,
“In sum, the empirical results of this paper find the existence of shopping externalities in Korea. However, they arise from comparison shopping among stores competing each other, not from complementarity among stores dealing with similar products. And results from 2SLS and GMM show that these shopping externalities are unlikely to be biased potentially from self-selection.”
In the revised version, we added recent studies to link our paper to the extant literatures as follow,
“Recently, Knight (2022) sets up a model of interdependent retail demand based on multi-stop shopping and find the existence of shopping externalities from retail stores agglomeration by estimating a 5%-6% average decline in nearby store foot traffic after a grocery closure. Koster et al. (2019) argues that retail firms benefit from shopping externalities. They estimate an elasticity of store owners’ rental income with respect to footfall (that is, the number of pedestrians that pass by) as well as number of shops in the vicinity of (at least) 0.25. It implies that the shopping externalities are unlikely to be internalized.”
“Nakajima and Teshima (2020) argues that stores perform better when they are surrounded by other stores of diverse complementary products because diverse stores attract consumers with love of variety preference. In their empirical study on the Tokyo Tsukiji Fish Market they find that the diversity of the types of neighboring wholesalers positively affects the performance of small-sized and specialized retailers. However, Sevtsuk (2014) through a study using approximately fourteen thousand buildings on the street network of Cambridge and Somerville, Massachusetts finds that consumers enjoy comparison shopping across proximal similar-type stores, leading to clustering of similar-type stores.”
And our contribution is added to the introduction in the revised version as our response to your first comment.
3) Conclusions and Implications
Limitations of the study and the future directions should also be discussed.
Response:
In the revised version, limitations of this paper and the future directions are discussed as follow,
“The resilience of commercial districts is also a big issue academically as well as from a policy point of view. Thus, it would be worthy of analyzing under what circumstances the commercial districts recover quickly from COVID-19. Then the government could use a subsidy as a policy tool to attract a specific-type of stores to a commercial district and allow comparison shopping to customers.”
4) References
The references used are related to the research topic; update the references, most of them are outside the five-year validity.
Response:
In the revised version, we added recent studies related with our paper as follow,
Knight, S., 2022. Retail demand interdependence and chain store closures. Working paper.
Koster, H., Pasidis, I., and Ommeren, J., 2019. Shopping externalities and retail concentration: Evidence from dutch shopping streets. Journal of Urban Economics 114: 103194
Nakajima K. and Teshima K., 2020. Identifying neighborhood effects among firms: Evidence from location lotteries of the Tokyo Tsukiji Fish Market. RIETI Discussion Paper Series 18-E-044.
Sevtsuk, A., 2014. Location and agglomeration: The distribution of retail and food businesses in dense urban environments. Journal of Planning Education and Research 34(4): 374-393.
Round 2
Reviewer 1 Report
Dear author / s,
it is evident that the manuscript has improved from its original version. I find the sections are now clearer. However, the manuscript still requires some minor interventions before its publication.
-First, the introduction should clarify the goal of the work even better.
- It should also describe the implications of the study.
-Section 2 should be further investigated.
-Finally authors should add new sections related to theoretical and practical implications of the study and limitation of the study and future research avenues.
Good luck for the next steps.
Moderate editing of English language required
Author Response
Please see the attachment.
Author Response File: 
Author Response.pdf
Reviewer 3 Report
I have no further comments.
Author Response
We appreciate your helpful comments in the first round.
