Calculating your catchment area: method and pitfalls

What a catchment area measures

It answers a single question: how many people can reasonably come and buy here, and how often. Everything else — potential turnover, reachable market share, bearable rent — follows from it. An error at this stage propagates through the entire financial plan.

It is traditionally divided into three rings. The primary zone supplies most of the turnover and is visited several times a month. The secondary zone brings a regular supplement. The tertiary zone travels only occasionally, for an offer it cannot find closer to home.

Method 1 — the as-the-crow-flies radius

You draw a circle of 500 metres, 1 kilometre, 5 kilometres, and count the inhabitants. It is immediate, it is reproducible, and it is wrong as soon as an obstacle crosses the circle: a lake, a railway line, a motorway with no crossing, a cliff, a cantonal boundary with a shopping centre on the other side.

The radius remains useful as a first framing, provided it is read for what it is: an upper bound. The genuinely reachable population is always smaller than the disc.

Method 2 — the isochrone

You stop reasoning in distance and start reasoning in travel time: five minutes on foot, ten minutes by car, fifteen minutes by public transport. The isochrone follows the real network, goes round obstacles and makes the asymmetry of a location visible — a unit can be five minutes from 4,000 people on one side and from 400 on the other.

It is the reference method for local retail. The time threshold depends on the type of purchase: five minutes on foot for a bakery, fifteen minutes by car for a sports shop.

Method 3 — the gravity model

Reilly- or Huff-type models posit that a point of sale attracts more the larger it is and less the further away it is, and distribute the population between competing points of sale according to that ratio. They produce not a boundary but a probability of patronage per zone.

That is more accurate and far more demanding in data: you need to know the floor area and the pull of every competitor. For an independent business, the complexity generally exceeds the gain.

Converting population into turnover potential

The chain of calculation is simple, and every link must be documented. You start from the number of households in the area, multiply it by the average monthly spending of a household in the relevant category, which gives the theoretical market of the area. Finally you apply a capture rate: the share of that market a point of sale can hope to take, given the competition present.

The capture rate is the parameter that decides everything, and the only one found in no statistic. Common sense bounds it: in an area with ten comparable competitors, claiming more than 15% calls for an explicit justification.

The average spending per household comes from the FSO household budget survey, by consumption item. It is national: adjusting it to the local median income is legitimate, inventing it is not.

The flows that do not live in the area

A catchment area limited to residents systematically underestimates town-centre and station locations. Three flows are added: inbound commuters, who come to work in the municipality and eat there at midday; station travellers, measurable through average daily usage; and tourist overnight stays, decisive in Alpine municipalities where the population doubles in season.

Conversely, a dormitory municipality whose working population mostly leaves to work elsewhere sees its daytime custom melt away. The commuter balance — inbound minus outbound — is one of the most telling and least examined indicators.