Understanding the theories, techniques, and models for conducting trade area analysis is a good start. But what does trade area analysis actually look like in practice? How much do you need to know, and what precisely do you need to know? That will depend on things like what type of business you run, where you’re thinking about setting up shop, and what demographic metrics you’re trying to measure.
Trade area analysis has been done in new and different ways over the years, so it’s possible that you’ll be able to use an existing study that had similar objectives to yours as the basis for your analysis.
Even if you don’t, looking at past experiments can still give you an idea of what you need to consider (or not) when you do your own research. On that note, here are 17 samples of how trade area analysis is done so you can get a grasp on how to conduct it yourself.
All of these templates and examples have slightly different objectives. So they use different approaches, datasets, models, and even software. Our hope in showing you these diverse samples is that you’ll be able to synthesize them into a methodology that works for you.
Using Tableau, SafeGraph has put together interactive maps that examine trade areas for a number of Costco, Target, and Walmart stores throughout the US. The point is to show how using human mobility data provides a more accurate picture of a store’s trade area than just using a 5-mile radius buffer.
This study by SafeGraph, CARTO, and Spatial.ai discusses the rapid growth of the home improvement industry in 2020. As the COVID-19 pandemic caused people to isolate and businesses to shut down, many turned to doing home improvement projects themselves rather than hire a contractor. The study examines changes in both inventory sold and clientele for Home Depot and Menards stores in Milwaukee as they transitioned into the pandemic.
A trade area analysis template created by the University of Wisconsin-Madison in 2010. It presents techniques for estimating supply and demand and exploring market opportunities for retail and restaurant businesses in downtown areas. It also contains a number of downloadable resources that you can use to conduct trade area analysis in your own community.
A demonstration of how to use Esri's ArcGIS software to create trade areas on a map, then analyze them and generate a demographic report based on them. It is part of a larger tutorial on how to use Esri’s Business Analyst.
A map application developed by Esri and SafeGraph. It uses walk/drive time trade area analysis to measure the accessibility of grocery stores in the US, including Puerto Rico. You can enter a ZIP code, city, or point of interest to focus on a specific area.
A 2013 trade area analysis example for the Ambleside district of Vancouver, British Columbia. The analysis considers both residential retail stores and office space. Input from business owners and customers was used to make suggestions on the ideal commercial mix based on existing businesses, competition from nearby communities, and the potential for future business growth.
A blog explaining the importance of catchment analysis for retail businesses: knowing who their customers are, what they want, how far they’re willing to travel, and how much they’re willing to spend. It also offers SafeGraph Patterns data as a solution to help perform catchment analysis over time and see how consumer behavior changes over weeks, months, seasons, or years.
An explanation of how to use the Trade Area Tool for Alteryx Designer, a data analytics platform. You can use this to create regions around a specific objects from the file you’ve input, allowing you to create trade areas for your locations.
In this eBook, SafeGraph explains how having accurate data about locations and other points of interest can be critical to business success. They argue that accurate location information can help with questions about whether there’s a market for your products or services in a specific area, where exactly in that area you should build a store to get the best market share, and how you should run your store and marketing campaigns to draw in more customers… and keep them.
An explanation of different techniques for determining trade areas used by Mapping Analytics. Contains pictures for illustrative purposes, helping to show you how to create deterministic and proximal trade areas for your analyses.
A webinar from SafeGraph and Spatial.ai on new ways of performing trade area analysis. It covers gathering information on foot traffic by using location data from mobile devices. It also discusses using social media data (especially concerning locations) to build geosocial profiles of areas based on people’s activities and lifestyles.
A trade area analysis template from CARTO and SafeGraph that examines the effectiveness of using human mobility data as a method. They demonstrate catchment analysis using the mobility data of customers at Costco stores in the San Francisco Bay area, and conclude that it is superior to both buffer and drive-time models for finding out where a store’s customers actually come from. This also makes the mobility data method more effective in determining which stores are competing with a specific store, based on the locations of its clientele.
This 2018 academic paper theoretically explores the strengths and weaknesses of traditional trade area analysis methods with respect to choosing locations for quick service restaurants. It then proposes a new trade area analysis template for these types of businesses that incorporates regression analysis methods and geographical information systems (GIS).
A 2018 trade area analysis example based on a residential area in Kharkiv, Ukraine. It uses multiple standard trade area analysis methods, but also takes into account limitations based on geography and road structure. These adjustments allow for more accurate, but more limited, trade areas to be identified.
A 2017 paper that discusses how to implement two models of trade area analysis – the Huff model and the Multiplicative Competitive Interaction (MCI) model – into a combined analysis package for the statistical programming language R.
A retail gap analysis for the city of Wildwood, Missouri. It indicates which business sectors are losing money to outside competitors, and which are bringing in revenue sources for both the city and surrounding areas.
This 2010 paper is about the development of a phone-based consumer data collection system called ConvenienceProbe. Targeting shoppers at convenience stores, the study demonstrates that the system could be used as an easier and less expensive alternative to traditional in-person consumer surveys for the purpose of trade area analysis.
As you can see, trade area analysis has been thought about, conducted, and modeled in many different ways over time. Hopefully, one or more of the examples above will have given you a starting point for performing your own analysis. And if you’re still unclear on why trade area analysis is important, check out SafeGraph’s guide to the benefits of trade area analysis.
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