Where shall we shop today? A theory of multiple-stop, multiple-purpose shopping trips

Abstract

We integrate into a neo-classical multi-period consumer choice model two new elements: (1) storage and holding activities within a household and (2) an “economic landscape” containing many stores at different distances from the house, that sell possibly different product lines at different prices. The theory leads to multipurpose shopping trips in the one-household one-store case. In the one-household many-store model, we prove the existence of optima by an enumeration argument. We describe an iterative maximization process that generates a cost-minimizing “structure” of shopping trips. This “trip structure” defines a pattern of trips of different lengths to purchase different goods at relevant stores, so as to minimize the purchase and contextual (holding plus transport) cost of any level of consumption, with trip frequency and time-spacing determined over the planning horizon.