Gravity Model

The gravity model is a spatial interaction model that predicts the volume of movement—such as shopping trips, commuter flows, or trade volumes—between locations. Its core principle, borrowed from physics, states that interaction between two places is proportional to their 'mass' (a measure of attractiveness or size) and inversely proportional to the distance or travel time between them. In retail applications, mass is typically represented by store size (square footage), product assortment, or brand strength, while distance is measured in travel time or cost.

The basic gravity model formula is: Tij = k × (Mi × Mj) / Dij^b, where Tij is the predicted interaction between origin i and destination j, Mi and Mj are mass variables (e.g., population and store size), Dij is the distance or travel time, b is a distance-decay exponent, and k is a calibration constant. The distance-decay parameter b controls how sensitive consumers are to travel effort—higher values mean trips drop off more steeply with distance. Analysts calibrate these parameters using observed customer data to ensure the model reflects actual shopping behavior in a given market.

David Huff adapted the gravity model specifically for retail trade area analysisTrade Area AnalysisTrade area analysis defines and evaluates the geographic zone from which a retail location draws its customers, asses... in the 1960s, creating the Huff ModelHuff ModelThe Huff Model is a probabilistic spatial interaction model that estimates the likelihood a consumer will choose a pa.... While the general gravity model predicts total flows, the Huff Model calculates the probability that a consumer at a given location will choose a particular store over competing alternatives. The two models are closely related and are often used together in site selectionSite SelectionSite selection is the analytical process of evaluating and choosing optimal physical locations for new stores, facili... workflows.

Retail analysts use gravity models to forecast sales for proposed store locations by estimating the share of surrounding demand each store will capture. Transportation planners use them to predict traffic volumes between zones. Urban economists apply gravity models to study commuting patterns and regional trade. International economists use variants to model bilateral trade flows between countries.

Gravity models are intuitive, well-researched, and supported by decades of empirical validation. They can be calibrated with relatively modest data requirements and produce outputs—such as predicted sales and market share—that directly inform business decisions.

The model's simplicity is also its limitation: it assumes rational, distance-minimizing behavior and may not capture brand loyalty, habitual shopping patterns, or the influence of trip chaining. Accurate calibration requires representative customer origin data, which may not be available for new markets or formats. The gravity model remains one of the most enduring and practical tools in location intelligence. Its ability to quantify the trade-off between attractiveness and distance provides a rigorous foundation for trade area analysisTrade Area AnalysisTrade area analysis defines and evaluates the geographic zone from which a retail location draws its customers, asses..., sales forecasting, and network optimization.