Catchment Area Analysis: Finding the Right Place
Catchment analysis is originally a study to identify an ideal location for establishment of a new retail outlet but it can be helpful to identify potential customer base in any geographical area for existing retail outlets. This study includes study about various geo-demographic factors like occupation, mother tongue, education standard etc. and help in understanding customer preferences, accessibility in buying, purchase intentions buying patterns and likelihood of buying for the group of products that the retailer deals with and level of competition in that area.
The final outcome of catchment area analysis provides the retailer an idea about number of customers who can visit the store and kind of products that will be in demand and the stock he need to maintain in order to meet the demand in selected location. Importance of catchment can be seen in the point that if all retail companies are offering same products and services within same price range and quality standards than we can easily say that the population within the catchment will do all its purchasing at the nearest centre. However in practicality it’s not possible that different retail companies are same and people have to travel to their preferred destination for purchasing instead of their nearest one.
Differences between similar stores can affect the spending pattern in the present time, but it is important to see how changes in various demographic factors and infrastructure development in competing locations will have impact on such store in future. Catchment analysis pre-launch will ideally decide the product mix and formats of the stores, catchment analysis done from time to time will give information about what is happening and where to concentrate marketing energies to get more walk-ins.
The total catchment area, of a store is useful information to decide a store location and post store opening marketing energies focus. The catchment analysis is usually done to study the profile of consumers likely to visit in terms of income profile, current shopping destinations and the likely visit to the new store, which further can be helpful for business predictions and also useful in the " yes " or " no " decision.
Generally it can be considered that major retailers like department stores, furniture warehouses will be destination sites. These sites can attract people from greater distances because the items are not common purchases, are expensive or provide the opportunity where a number of purchases can be made from the one location. For these destination sites it is possible for consumers to travel more distance. Similarly a small neighborhood store, or a small departmental store, would have a catchment near very small area which can be no more than 1 or two kilometer distance. For retailers that offer the same or very similar products as their competitors are offering, unless there is very strong pricing differences a customer may not be prepared to travel pass the competition, he or she may select the nearest destination. Catchment analysis is useful like any other market research in showing retailers the opportunity and the direction to be taken.
Factors that influence consumers' decisions on where to shop include:
Presence of various retailers
• Volume, quality and product mix of retail offerings
• Additional services and facilities
• Leisure provision
• Accessibility
• Parking
• Shopping Environment and ambience
Catchment Analysis is important due to following factors:
• Prime consideration of customer‟s store choice, based on nearness to home/work, linked with other domestic work
• Strategic importance for sustainable competitive advantage. Merchandise, price, assortments can be changed but not location of a store. Competitors can‟t easily copy as they are precluded from locating there.
• Entry of more and more companies in organized retail making difficult to find suitable location within budget.
• Forms an important P of place for a long time for adequate assurance for a success.
• It also influences the merchandise mix and interior layout of store.
• It provides information about establishment of warehouse for online retailers.
Besides demographic factors, economic and infrastructural, cultural and competitive environment prevailing in catchment area also needs to be analyzed. Following are the factors which are analyzed for catchment area analysis.
1. Land Area
2. Schools
3. Population
4. Income Types
5. Age Distribution
6. Poverty Status
7. Household Size And Type
8. Departure Time For Work
9. Marital Status
10. Occupation
11. Family Size And Type
12. Working Women
13. Owner Occupied Housing
14. Fertility Rates
15. Rental Status
16. Vehicle Owners
17. Language Spoken
18. Telephone Subscribers
Above variables help location decision and also product line potential e.g. toys shop location for children, economic factor i.e. unemployment will affect purchasing power in that area, per c