Defining Catchment Areas: 4 Questions Retailers Need to Ask

Whether you're a bricks-and-mortar retailer, an omnichannel or an e-commerce business looking to open a physical outlet, identifying your catchment area is essential. So what is a catchment area? It's a geographic area from which a business attracts a population that uses its services. In other words, the area that "catches" your existing or prospective customers. A catchment area can be refined based on several different factors. For instance, it can be based on distances or travel times from sales outlets to target customer locations or on key demographic characteristics such as household type, age, gender or socio-economic background. 

Bombarded with so much information, more and more retailers are now looking for an easy solution that will help them mark out the right catchment area. Thankfully, the days of trying to make sense of impenetrable facts and figures in Excel spreadsheets are gone. For retailers, location intelligence is the new paradigm. The CleverMaps platform is a decision-support tool that visualises your catchment area using easy-to-read maps. Not only does it define the catchment area for your existing stores, but it also forecasts the ideal regions of interest for your up-and-coming outlets. So how can retail professionals get the most out of their catchment areas? We've come up with four helpful questions: 

1. Who are your customers, and where do they come from?

We've learned that your business catchment area should ideally be populated by consumers who will purchase your products. Most retailers obtain their customers' details and addresses from data collected through loyalty programmes or from their transaction databases, including online/e-shop orders and in-store purchases. Thanks to map visualisation, you can view the distribution of these addresses at different levels of granularity within your catchment area and get a better understanding of what types of customers you are attracting.

Catchment area showing where from are the customers coming to your store. View in map

2. What is the market share throughout the network? 

There's a school of thought that your market share will be higher in regions closest to your stores and lower in areas that are more out of reach. But this is not always the case. Visualising the size and demographics of your catchment area allows you to make a more nuanced assessment. The CleverMaps solution enriches customer data with demographics from the most recent censuses, placing market potential, share and penetration in a geo-spatial context.

Visualization of the market penetration. View in map

3. Are there stores within your network cannibalising on each other? 

Competition within the same or similar catchment can be even worse than from the real competitor because it means the same or the similar number of customers and revenue for double the cost. CleverMaps allows you to compare the catchment areas of your stores, identify the dominant catchment for each and measure the overlaps. This gives you accurate information to help you make sounder business decisions and keep your network intact. 

Comparison of two stores to detect cannibalisation. View in map

4. Where should you open new stores without cannibalising your own business?

This also feeds into the last question. Searching for the right location to situate your next store is also tricky. You might assume that opening an additional outlet in an already-thriving catchment area that contains your existing stores might be a good move. But the "inner competition" you face from within your network has to be thought out carefully. Location mapping will help you identify the white spaces in your business.

White Spaces Analysis in CleverMaps. View in map

 All these questions are easy to answer on an interative map, where you have all the data you need. So why don't you check out our Catchment Area Analysis solution or head straight to book a demo with us?