The theories on location economics refers that informal localization does not develop arbitrarily. There are significant economic factors that influence formation of a cluster of industry or group of industries and businesses in particular spaces. The same holds true for the two informal localized businesses in our discussion. It is worth to mention that the business in one location within a cluster with repeated transactions among themselves promote better coordination, trust, and informal linkages between businesses, efficiency, effectiveness, flexibility, management linkages in partnerships and alliances, and many others. The present paper is an effort to detect the contributory economic factors that explain the formation of informal business clusters in the developing nations. The study considers two important clusters of recycling businesses over used commodities, namely street trading activity in second-hand garments near Girish Park and second hand furniture in Bowbazar in Kolkata, West Bengal. The paper is a mere effort to investigate whether the Harold Hotelling’s “Principle of Minimum Differentiation” and William J. Reilly’s “Law of Retail Gravitation” are able to explain the spatial clustering of the informal sales outlets of these particular two street-trading activities in Kolkata. The micro-level field surveys, sampling design and data analysis of the study conducted is based upon the standard model approach to avoid spatial homogeneity.