Defining Catchment Areas: The Key to Retail Success

Catchment area is 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. It can be refined based on several different factors. Find out what those key factors are.

Defining catchment area in retail with location intelligence
Defining catchment area in retail with location intelligence
Defining catchment area in retail with location intelligence

Understanding your catchment area is crucial for retail success, whether you operate a brick-and-mortar store, an omnichannel business, or an e-commerce venture venturing into physical retail. But what exactly is a catchment area? It refers to the geographic region from which your business draws its customer base, encompassing the population that utilizes your services. In simpler terms, it's the area where your existing or potential customers are "captured."

Refining your catchment area involves analyzing various factors, including distances or travel times between sales outlets and target customer locations, as well as key demographic characteristics like household type, age, gender, and socio-economic background. By delving into these considerations, businesses can gain valuable insights and optimize their strategies accordingly.

The Importance of Location Intelligence in Retail

With the vast amount of data available, retailers are increasingly seeking streamlined solutions to identify the right catchment area. Gone are the days of deciphering complex Excel spreadsheets. Enter Location Intelligence - the new imperative for retailers. CleverMaps Platform offers a powerful decision-support tool that generates easy-to-read maps to visualize your catchment area. It not only delineates the catchment area for your existing stores but also predicts optimal regions of interest for your upcoming outlets. Now, how can retail professionals maximize the potential of their catchment area analysis? Let's explore four key questions to guide you.

Key Questions to Maximize Your Catchment Area Potential

1. Who are my 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 programs or from their transaction databases, including online/e-shop orders and in-store purchases. Thanks to map visualization, you can view the distribution of these addresses at different levels of granularity within your catchment area and better understand what types of customers you are attracting.

From where my customers come visualized in CleverMaps Studio

This catchment area highlights the origins of the store's customers and their locations.

2. What is the market share throughout the network? 

There's a school of thought that your client penetration will be higher in regions closest to your stores and lower in areas more out of reach. But this is only sometimes the case. Visualizing 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 geospatial context. Then you can even find out how extensive the customer base is and the turnover potential, which still needs to be covered.

Visualization of the market penetration in CleverMaps Studio

Visualization of the market penetration. 

3. What is the market share of my business compared to the competition?

The catchment area analysis enables us to find catchment areas that overlap with your competitors based on branch availability and to find locations without competition. Thanks to a combination of data (population, natural catchment areas of branches, branches of many competitors, modeling of competitor's turnover based on location criteria...), you can find answers to these questions in a few clicks.

Comparison of two stores to detect cannibalisation

Comparison of two stores to detect cannibalization.

4. Are there stores within my network cannibalizing each other? 

Competition within the same or similar catchment can be even worse than from the real competitor because it means the same or an equal number of customers and revenue for double the cost. Location Intelligence solutions allow 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. 

White spaces analysis in CleverMaps Studio

White Spaces Analysis in CleverMaps Studio.

Optimizing Your Branch Network with Location Intelligence

Choosing the right location for a new store is challenging. Location Intelligence helps identify white spaces in your business and avoid inner competition within your network. Moreover, optimizing the branch network based on customer availability is essential. Location Intelligence facilitates branch network optimization, saving costs while maintaining accessibility. See How to Optimise Your Branch Network for Maximum Performance in Three Steps.

All these questions are easily answered on an interactive map, where you have all the data you need. So why not check our Catchment Area Analysis Solution or book a demo with us? 

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