Remember last Monday when you were cruising down the street with your friend, Carl, and he asks if you could swing by the closest place that would provide cash-back? You pull up to a busy intersection with a Publix on one corner, down the street from a Walmart, a CVS on another corner, and its rival Walgreens perches itself catty-corner to the Wendy’s, which sits north of the Publix. Carl can’t decide. He’s frustrated with all the options that could potentially provide cash-back. All he wanted was a dragon fruit flavored Vitamin Water and a paper version of Andrew Jackson. What he didn’t want was to make a decision. You make a decision for Carl and pull into the Publix, mainly because your Grandpa has some stock in the grocery store in your name, but nonetheless Carl enters, grabs his fruit drink, and his 20 dollar bill and the night goes on.
Before you drop Carl off at his pregame, the two of you engage in a conversation about the effectiveness of bundling similar businesses together in one location – like when a Wendy’s seems to always stand across from a McDonalds or a Taco Bell, and is always down the street from a KFC or Bojangles. You remember this phenomenon being taught in your 10th grade AP Human Geography class, but can’t pull it out of the depths of your brain, filled with endless geographical facts and every state capital. Well let me help you out: the word you’re looking for is agglomeration.
Agglomeration is, “a mass or collection of things; an assemblage,” but in the world of economics and urban planning, agglomeration takes on a more precise meaning. In this video by The Audiopedia, an urban agglomeration is an “extended city or town area comprising the built-up area of a central place, usually a municipality.” Although The Audiopedia provides a broader definition than what you and Carl were discussing, it pertains to businesses all over the United States. Upsides to an agglomeration include, low transport costs (from business to business), a thriving local market, and large human capital which typically results in spillover between businesses. With upsides comes downsides, as agglomeration’s flaws lay in competitive pressure, environmental pressure, and overused infrastructure. This can be seen as shopping malls and big-time retail stores continue to close, throughout the nation. Although these terminations could be chalked up to the dominance of online shopping, premature agglomeration also plays a role when businesses strike up in underpopulated areas.
So the next time you’re lugging around that mooch Carl to his next frat party, be sure to lay some of this fat knowledge on him, as that seemingly out of place Jimmy John’s might not be as out of place as he thinks.