ArcGIS Business Analyst

Customer Derived Trade Areas: Now with threshold methods!

This is the fourth article in a six-part blog series that highlights new capabilities in the Business Analyst extension for ArcGIS Pro 2.6 release from July 2020. Be sure to read the other blog articles about the 2.6 release.

The Generate Customer Derived Trade Areas tool allows users to create trade areas around business locations based on the number of customers or volume of sales among customers. Many users incorporate this tool into their work when evaluating a business location or planning for a new location. It is particularly useful for understanding the specific area where most of your business is conducted. This popular tool has long helped users examine the geography of their businesses, and now it will feature new methods: Threshold Rings and Threshold Drive Times. These add to the existing techniques called: Simple, Amoeba, Detailed, and Detailed with Smoothing.

The 2.6 release of the Business Analyst extension for ArcGIS Pro includes Threshold Rings and Threshold Drive Times as part of the Generate Customer Derived Trade Areas tool. These new methods can be used to create trade areas, starting at a business location and expanding outward until the areas reach a threshold—an amount of customers or sales volume—that you define. This 2-minute video provides a good overview of these methods.

As the video illustrates, Threshold Rings and Threshold Drive Times improve users’ ability to generate trade areas. Let’s walk through these methods to learn more.

Threshold drive times method

Within the Generate Customer Derived Trade Areas tool, the Threshold Drive Time method generates trade areas based on driving time from business locations to customers’ homes. These shapes, which are called drive-time polygons, are based on routes available in the selected distance type (either walking or driving). Drive-time polygons offer accurate visualizations with shapes unique to each location.

Example of Threshold Drive Times Method Output

Threshold rings method

The Threshold Rings method is also introduced and functions similarly to the previous method. However, threshold rings, create uniformly shaped rings rather than uneven polygons. Because the Threshold Rings method does not rely on driving or walking routes, their shape is consistently circular and their size is determined by the radius you define (most often in terms of a percentage of customers or sales).
Example of Threshold Rings Method Output

Thresholds using a weighted value

Both of these methods also allow the user to calculate threshold trade areas based on volume rather than number. Instead of basing trade areas on 70% of customers, you could create trade areas that contain the customers who generate 70% of a weighted variable, such as sales. You can use a weighted variable by changing Customer Aggregation Type from Count to Weight and then selecting a Customer Weight Field.

Example of Threshold Rings Method Created with Weighted Value

We’re excited to share these new capabilities with you. Additional information about these enhancements can be found in the ArcGIS Pro documentation for the Generate Customer Derived Trade Areas tool. Please reach out and let us know if you have any questions about these two new tools or any other capabilities in ArcGIS Business Analyst.

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Additional Resources

About the authors

Darren is a Product Engineer on the Business Analyst team. He enjoys the collaborative process of creating features that enable Business Analyst customers to model their vision of success.

Gemma is a writer at Esri, focusing on content for the ArcGIS Business Analyst team.

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