Reilly’s Law

Reillys’ Law

The purpose of Reilly’s law of retail gravitation (1931) is to find a point of indifference between two locations, so the trading area of each can be determined. This point is assumed to be a function of the distance between two locations pondered by their respective size (population often used for this purpose). A location can thus be more attractive than the other.

In the above figure, two locations are 75 km apart. According to the Hotelling principle, the point of indifference should be halfway in between (35 km). However, since location A has a larger population (more weight), it is assumed to draw more customers. Under such circumstances, the point of indifference is 45.9 km away from location A.