Original Huff model
The original Huff model provides a simple tool to estimate sales potential of an area. It takes into consideration your proposed site location, competitor locations, sales potential data, and attractiveness field. The sales potential data is often a geography layer (that is, block group or tract) containing a sales potential field such as consumer expenditure on furniture, apparel, auto repairs, and so on. Business Analyst geography contains consumer expenditure fields. The attractiveness field shows how attractive the competitor is to its customers. The most commonly used attractiveness attribute is Gross Leasable Area (GLA).
A person's perception of how far a destination is may not be a linear function of distance. Customers are more likely to shop closer to home than far away. In other words, distance is viewed as a nonlinear deterrent to movement. This phenomenon can be modeled by using a distance-decay function. The use of a power distance-decay function is borrowed from Newton's law of gravitation from which the term gravity model is derived. A distance-decay parameter, symbolized by the Greek letter beta, can be used to exaggerate the distance to destinations. Some activities, such as grocery shopping, have a large exponent indicating that customers will travel only a short distance for such things. Other activities, such as furniture shopping, have a small exponent because customers are willing to travel farther to shop for furniture.
The exponential function is typically used for computing interactions over a small distance, such as within a city.
All Huff model inputs, exponents, trade area sizes, and results require detailed analysis by someone who is well versed in the operation of such a model. Some calibration is always required to account for other factors such as leakage (when people don't buy all their groceries at supermarkets, some of that spending leaks to other trade areas such as convenience stores, farmer's markets, and mail order services).
Learn more about the Original Huff model.