February 25, 2014
GGR252 Lecture 7
- Thiessen polygon method
o What ought to be now?
o What if something changed? Where to potentially locate a new store?
Consider locating a new store at a vertex where there are large polygons first because
the market is relatively distant from the store within the polygon
Small polygon trade area means that most people are walking or biking to the store
Is there sufficient demand (relative to all other stores) to justify putting a new store?
o Will the new store be viable?
o Will the existing stores remain viable?
o You still need to consider the impact on the other stores even if the other stores are the
o Must get municipal approval
o Unable to determine what the market is, only what it could potentially be
o Not all vertices are viable sites, which is where site selection comes into play
o Works well for retail chains that are all essentially the same
o Meets the basic assumption that distance is the only variable
- Converse breakpoint method
This simple gravity model is a modification of Reilly’s law of retail gravitation.
o If the places do not vary in size, then it is useless to apply a converse breakpoint method
Reilly’s law of retail gravitation
o Two cities attract trade from an intermediate town in the vicinity of the breaking point
approximately in direct proportion to the populations of the two cities and I inverse proportion
to the squares of the distances from those two cities to the intermediate town.
The converse breakpoint method makes it possible to predict the point between two
centres (e.g., shopping centres) where the trading influence of each is equal. We can
think of this point as the point or line of indifference (i.e., where the utility of the two
centres is equal). It is also the market boundary between the centres.
The method uses distance and size to calculate the line of indifference (i.e., the market
ͳ ටܣ ▯
D_Y = distance of breakpoint from Y
D_XY = distance between centres X and Y
A_X = attraction (size) of X
A_Y = attraction (size) of Y
The converse formula requires data on distance between centres and. Size of centres.
Together these two variables are thought to adequately measure the relative utility of
the centres. The formula suggests that the utility of the centre decreases with distance