Profitability Variations among Norwegian Shopping Centres: An Empirical Study of Drivers Behind Profitability Variations in an Evolving Industry

Henrik-Christian Heffermehl & Sondre Ovnerud

Student thesis: Master thesis


After two decades of continuous growth, the Norwegian shopping centre industry has experienced a stagnation of growth in overall turnover in the last few years, hinting that the industry is entering a maturity phase. The lower growth rates are in large part attributed to the rapid rise of e-commerce, which represents a digital revolution of the retail industry that might entail fatal consequences as the trend continues. Therefore, this thesis aims to uncover which factors are the most important to consider in order for the shopping centre industry to maintain its high levels of profitability. By examining the two most prominent players in the industry, we gain a valuable and representative overview of the industry as a whole. We conduct a thorough analysis of the shopping centres’ macro environment, as well as the competitive situation in the industry, which creates a solid foundation when forthcoming results are assessed. A profitability analysis is performed in order to evaluate the industry players' performance and to determine an appropriate measure of profitability which is used in both bivariate and multivariate analyses. A wide range of factors, rooted in academic theory and empirical research, are examined through a bivariate analysis that assesses their relationships with profitability. Hypotheses regarding each factors' effects on profitability are formulated before multivariate analyses are conducted. In order to test the hypotheses, a systematic approach is adopted in the search for the best model fit, and the hypotheses are concluded upon. Finally, important aspects off the analyses as well as future developments are discussed, and conclusions are drawn on the thesis' research questions and formulated problem statement. We find that the profitability variations in the industry are significantly affected by the shopping centres’ size, measured in leasable area, and the shopping centres’ geographical location relative to the municipality-centres. Moreover, we obtain clear indications of associations between the shopping centres’ mix of retail segments and the profitability variations.

EducationsMSc in Accounting, Strategy and Control, (Graduate Programme) Final Thesis
Publication date2019
Number of pages146