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How to Perform a Catchment Area Analysis & Where to Get the Data

April 30, 2020
by
Fletcher Berryman

In the retail industry, it’s critical to have an inside-out understanding of your target customers; you need deep knowledge of who is likely to be drawn to your business. This requires understanding resident demographics, consumer shopping behaviors, and any gaps in the local market competition. Catchment analysis is the key to getting a clear view of this information.

Simply put, catchment analysis is a process for understanding the geographic area from which a business is likely to draw its customers. It’s also helpful for making strategic decisions around attracting foot traffic, maximizing ROI, and setting your business apart from the competition. 

Here, we’ll run through the fundamentals of catchment analysis and explain how you can create compelling visual insights using SafeGraph Patterns data, and cover the most important topics, including: 

  • What is catchment area analysis?
  • Why you need a catchment area analysis
  • 3 benefits of performing catchment area analysis
  • How to perform a catchment area analysis
  • Where to get data for your catchment area analysis

What is catchment area analysis?

Catchment area analysis is the study of where people who visit a specific place come from. Catchment areas are also known as trade areas, and can be developed using a variety of techniques, such as buffer analysis, walk or drive times, and measuring foot traffic. 

Visualization of catchment area analysis methods

Derived from the ecological concept of catchment areas (in that case, the areas from which rainfall flows into another body of water), trade areas are loosely based on a gravity model that suggests people nearer to a location are more likely to frequent it.

But as in the environment, in business there are often many other factors that contribute to where someone or something goes. As a result, different organizations use different catchment area analysis techniques to properly weigh the factors most important to their business and produce the most accurate result. 

U.S. catchment area regional map visualization

For retail businesses, there’s always a finite amount of resources you can allocate to better serve your customer base. You need to decide which physical locations to invest in and where to put your advertising and marketing dollars to gain the greatest potential return. 

Catchment analysis creates a better, more strategic way to make these decisions—and can provide a clear picture of who lives in your area, how far they’re willing to travel, and their capacity to spend. Additionally, it can shed insight on what kind of pricing and promotions will most likely attract and resonate with your target customers.

Why you need a catchment area analysis

Beyond simply allowing retailers to more accurately estimate potential customer foot traffic, catchment area analysis offers a window into more practical considerations as well (i.e. customer parking needs). It can even help retailers decide the right category mix of outlet stores.

Businesses can use this deeper understanding of its local customer base to differentiate themselves from the competition, which is especially key for retailers serving well-defined demographic groups, like families with young children or the elderly. 

For example, let’s say you planned to open a co-working cafe in a metropolitan area. Before choosing where to put up shop, you’d need to know whether the demographics of the catchment in consideration—more specifically, the number of self-employed people this location could potentially serve—would support long-term business growth. 

Additionally, you would want to consider how many other co-working locations already exist in that same area to gauge what part of the local population can potentially make up your future serviceable available (and truly obtainable) market. 

In this way, catchment analysis can quickly tell you where you’ve got the greatest opportunity for business growth, as well as where your kind of business would be most needed by the local population (i.e. by filling in a gap that doesn’t yet exist). This information is critical for making well-informed decisions about when and how to enter a local market.

3 benefits of performing catchment area analysis

Analyzing catchment areas enables organizations to strategize with data-driven insights, instead of relying on what they think will be best for their business. Trade areas provide the level of detail needed to rise above the competition and truly own a market. Three key benefits of catchment area analysis are:

  1. Know your customers - Understand the types of people likely to visit your location and develop personalized offerings, services, and advertisements.
  2. Identify opportunities and risks - See where lookalike trade areas are and expand into new markets; similarly, you can identify which areas might not be best for your business.
  3. Reveal trends  - With a geographic understanding of your target customer base, you can begin to append additional information like sales volume and weather data that may impact strategic planning.

How to perform a catchment area analysis

Regardless of which method you choose to create trade areas, catchment analysis can be conducted in the following four steps:

Step 1.Identify store location points

Visualization of a building footprint on a map

Identify the stores or locations you want to run a trade area or catchment analysis of and obtain the data needed.

Step 2. Identify methodology

Based on your organization’s needs, choose the methodology right for you.

Step 3. Load the data into the geospatial processing tool of your choice

Pick a GIS or BI tool with geospatial capabilities that align to your methodology.

Step 4. Perform the geoprocessing necessary for your methodology

Map visualization of a five-minute walk time around a building footprint

Run the geoprocessing tool needed for a buffer, drivetime, or walktime. 

If using mobility data, see where people are coming from and map those areas with a symbology that reflects the differing volumes from each place.

>> This information is also available in greater detail as an interactive Google Colab notebook. Click here to play with the code yourself. <<

Where to get data for your catchment area analysis

Trade areas represented on a map

As useful as catchment area analysis is on its own, it doesn’t paint the whole picture. After all, numbers on the page don’t always tell the full story. By leveraging SafeGraph Patterns data, you can visualize mobility data for catchment analysis to create a more compelling view of local market opportunities. 

The SafeGraph Patterns dataset lets you pick among millions of points of interest (POIs), run catchment analysis on it, and then begin to deduce where the visitors to that place are coming from. Even more, because this data is updated weekly, it can help you understand POI trends over time and shed light on how consumer habits change during different days or seasons.

Let’s return to our co-working cafe example for a second. With the help of SafeGraph Patterns data, you can see a detailed breakdown of the census block groups (CBGs) your competitors are currently serving to help identify the best possible location to set up your business where you could establish local relevance and maximize your long-term growth potential. 

Get the most out of catchment analysis with SafeGraph Patterns

Great catchment analysis helps retailers make better decisions. It provides insights into how you can best serve your target customers while also giving you a leg up in positioning your business for maximum foot traffic and exposure. And now, by fueling and amplifying this analysis with SafeGraph Patterns data, you can give these insights a new and impactful visual dimension.

Our team is ready to show you how to visualize catchment area analysis like never before. Sign up for a live session with our product team to start making more informed decisions that will set up your business for long-term growth and success.

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