Spatial interaction models in retail location

Choosing a location for a new retail outlet in a trade area involves an in-depth analysis of the market in this area. Such analysis requires an understanding of the competitive environment and the market share of the individual outlets in the area. Spatial interaction models are widely used for this purpose. In this paper we demonstrate how to combine some developments based on spatial interaction models to evaluate the market in an area in terms of its potential market and competition level. This evaluation has been tested by applying it to the study of the trade area and the spatial competition among the three big stores of the city of Murcia (Spain).