  This paper introduces on-the-way choice of retail outlet as a form of
convenience shopping. It presents a model of on-the-way choice of retail outlet
and applies the model in the context of fuel retailing to explore its
implications for segmentation and spatial competition. The model is a latent
class random utility choice model. An application to gas station choices
observed in a medium-sized Asian city show the model to fit substantially
better than existing models. The empirical results indicate consumers may adopt
one of two decision strategies. When adopting an immediacy-oriented strategy
they behave in accordance with the traditional gravity-based retail models and
tend to choose the most spatially convenient outlet. When following a
destination-oriented strategy they focus more on maintaining their overall trip
efficiency and so will tend to visit outlets located closer to their main
destination and are more susceptible to retail agglomeration effects. The paper
demonstrates how the model can be used to inform segmentation and local
competition analyses that account for variations in these strategies as well as
variations in consumer type, origin and time of travel. Simulations of a
duopoly setting further demonstrate the implications.
