Gravity Model
The Question
Section titled “The Question”“How much total customer flow comes from each residential/office area to our store?”
The Formula
Section titled “The Formula”Gravity Model (Reilly 1931, calibrated by Birkin & Clarke)
Tij = k · (Oi · Dj) / dijβ
Tij = flow (customers/spend) from origin i to destination j
Oi = origin mass (population × income × dining-out frequency)
Dj = destination attractiveness (size × cuisine score × price match)
dij = distance or travel time
k, β = calibration parameters
Why This Formula
Section titled “Why This Formula”The gravity model reveals where customers come from and in what volume. Not all nearby people are equal: a zone with 5,000 people at HKD 60K income sends more customers than 10,000 people at HKD 25K.
Source: Birkin, M. & Clarke, G. — Retail Geography
How Company Input Changes It
Section titled “How Company Input Changes It”- Dj depends on your business profile — cuisine uniqueness and concept
- Oi is filtered by your target customer — office workers vs residents vs tourists have different weights
- Price-income alignment from your pricing strategy determines how effectively you convert each zone’s population
Origin Zones for Sheung Wan
Section titled “Origin Zones for Sheung Wan”| Zone | Population | Income | Dining Freq | Flow Strength |
|---|---|---|---|---|
| Sheung Wan core | 24,000 | HKD 41,400 | 4x/week | High |
| Sai Ying Pun | 35,000 | HKD 38,000 | 3x/week | Medium-High |
| Central offices | ~80,000 workers | HKD 55,000+ | 5x/week lunch | Very High |
| Mid-Levels West | 15,000 | HKD 65,000 | 2x/week | Medium |
| Kennedy Town | 28,000 | HKD 35,000 | 2x/week | Low-Medium |