The implications of demographic change for the regional retail trade relevant purchasing power in North Rhine-Westphalia

The choice of location for a retail shop is a complex process that determines the economic success of the store. The right choice depends on accessibility, purchasing power, demand structure and the competitive situation. The latter factors have considerable impact in the long run when consumption patterns and disposable income differ due to demographic changes. There already exist several kinds of retail trade relevant purchasing power indicators on regional level. The shortfall of these indicators is however that they focus only on one point in time, i.e. that they are static and thus fail to show the prospective positive or negative factors for the locational choice due to changes in income or population. Furthermore they merely indicate the purchasing power of an average representative consumer in the relevant region though it shows in the data (Household budget survey) that the expenses and consumption structure differ considerably between different socioeconomic groups. Integrating the consumption behaviour of different age groups relating to retail trade in the multidimensional, macroeconometric model PANTA RHEI REGIO II, results in a dynamic retail trade relevant purchasing power indicator that takes the different demographic changes into account. The indicator will be modelled using the German Federal State North Rhine-Westphalia as an example. Based on data from the Household Budget Survey for North Rhine-Westphalia (NRW) the share of consumption in disposable income by purpose and age group will be calculated. For the information of the consumption structure on NUTS 3 level within the Federal State NRW the shares will be assigned to the different age and income patterns in the NUTS 3 regions. The resulting data will then be integrated in the model PANTA RHEI REGIO II and projected to the year 2020. The level of consumption expenditures changes conditional on the development of income and demographic composition, generated by this model. PANTA RHEI REGIO II is an equation system that projects the economic development of 439 regions on NUTS 3 level until the year 2020. The data set consists of the regional National Accounts. The model differs from top-down approaches in the way that it combines demographic and economic developments, includes bottom-up modules and incorporates disaggregated economic structures.An expected result will be that the situation of the NUTS 3 regions within the federal state NRW differs considerably depending on the age structure. With increasing age (aged 45 or older) people generally spend less on retail trade relevant consumption because their disposable income becomes smaller and their preferences change. Regions with a higher share of young people will thus show a higher retail trade relevant purchasing power. Most probably this will be the regions along the river Rhine where the share of people between 25 and 44 years is currently higher than in the other regions. These regions also benefit from the high income levels and a higher density of population. On the contrary, high rates of unemployment and below average disposable income as well as shrinking population und an increasing number of the old will weaken the retail-trade-relevant purchasing power, which may occur in the Ruhr area. Finally, a general result will be that the current situation will consolidate in the future.