What is the reason for the grouping of similar businesses in close proximity in various locations?
Primarily, it’s zoning. Municipal codes dictate where certain types of businesses and buildings can operate/be built. Retail business, for example, is limited to specified locations (for the most part). It’s also better to have clusters of those businesses so shoppers have fewer overall destinations.
it’s also where the market is.
for years Burger King did no market research and saved money by building a Burger King across the street from every McDonalds.
I know for a mall, there can be clauses in the lease stating there can be no other competitive business.
Game Theory. There’s a really good TED ED video on it using the example of two ice cream salesmen working on the same beach. It simplifies things a bit but essentially it comes down to having multiple competitors in the same area being the best way to maximise your market share, even if a more spread out arrangement is better for the customers.
It comes down to two things really. Zoning laws forcing all retail to the same areas so it just seems like everything is close together. Other thing is for cars and large purchases it’s more likely people want to shop around. If three car dealerships are within 2 minutes of each other and one is 15-20 miles away you’re more likely to go where there are more options first.