The 500m competition radius is not an arbitrary number. It is based on a consistent finding in pedestrian behaviour research: within 500m, competing businesses become daily alternatives in your customer's decision-making.
Why 500m is the critical competition radius
A competitor 600m away requires a deliberate detour. A competitor 200m away is passed every time your potential customer walks to the train station. Pedestrian behaviour research shows that within 500m, competing businesses with similar offerings draw from the same customer pool. Beyond that, most customers have already made a category decision before encountering the second option.
Within 500m, competitors actively compete for the same foot traffic. Beyond that, they begin drawing from different customer pools.
What actually goes into the competition score
Competition scoring is not a simple count. We pull business data and classify by category. For a café, that means all cafes, bakeries and takeaway operations. For a gym, all fitness businesses including yoga, pilates and CrossFit. We then weight by proximity and category overlap — a direct competitor 100m away scores higher impact than a similar one 450m away.
Why high competition is not always a bad sign
This is counterintuitive but important. A high competition score in a high-foot-traffic area can still produce a GO verdict. Multiple competing cafes on a busy street signals proven demand — clearly the volume is there to support multiple operators. The question our model asks is not just "how many competitors are there?" but "does the demand exceed the supply?"
Competition scoring in context
We look at competitor count, proximity, category overlap and estimated foot traffic together. 6 cafes with 200 people/hour gets a very different score to 6 cafes with 40 people/hour. Context is everything — raw count without demand is meaningless.
When competition becomes a genuine risk
The market gap opportunity
Low competition combined with strong demographics can be a significant opportunity — particularly in growing suburbs or areas where a specific cuisine or format is underserved. This is the sweet spot that Locatalyze's scoring is designed to surface: demand that exceeds local supply.
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