Optimizing New Chain Retail Store Area by Using Voronoi Diagram Technique
Wen-Hsiang Lai, Kei-Zhang Hung
Graduate Institute of Management of Technology, Feng Chia University, Seatwen, Taichung, Taiwan
Abstract--This study probes into a large-scale retail chain
store in the central business district (CBD) and discusses how
chain stores avoid competitors and its own market fields to
explore availabilities of commercial opportunity and economic
development. This study adapts Voronoi diagram technique,
which is applied as a new method in the field of technology
management, in order to optimize the selection of new locations.
In this study, the concept of center place theory (CPT) provides
an important value of studying industrial market development of
Voronoi technique using geographic information system (GIS).
This study constructs an algorithm to optimize the
decision-making in the selection of new chain store location.
According to the literature reviews, three most important factors
affecting the decision-making of selecting a new location for
stores are transportation, population, and site. It is necessary to
calculate the optimal service ranges and conduct the
comprehensive analysis of weighted Voronoi diagram (WVD) for
these three critical factors. The biggest weight in WVD is chosen
in this study as the general goal area of a new chain location, and
then using the concept of Cone of Influence to find a smaller area
for the specific store location within the WVD areas. This
optimized new store location should be the ideal selection for
business development of large-scale retail chain stores.
I. INTRODUCTION
Retailing is symbolized as a catalyst for economic
development, and thus perhaps no areas of marketing and
economic development are more popular than the retailing
[17]. Market facilities can be divided into three categories
according to their geometric characteristics on maps, i.e. point,
linear, and areal [31]. This study focuses on point facilities (i.e.
establishing a new geometric point for the new site location of
a retail store).
According to the literature review of retail store locations,
most researchers adapt the concepts of Converse’s (1949) [13]
retail gravitation and Huff’s (1964) [22] trade area attraction
for estimating new market of retail stores. This study adapts
the concept of center place theory (CPT) as the base of
establishing the decision on choosing new locations for retail
stores of Carrefour in Taiwan. The main concept of CPT is to
choose and build the urban business district. However, it is
not easy to evaluate the new locations by only using CPT.
This study also uses Voronoi technique and geographic
information system (GIS), which attempt to articulate some
of the insights gained from the analysis of markets, to help
estimate the commercial locations of retail stores. Voronoi
diagrams have been utilized as a technological tool to solve
spatial distribution problems in various disciplines from
astronomy to geography, and it is also applied to construct
solutions for location objectives and competitive facility
locations. In the strictest sense, GIS describes the information
978-1-890843-21-0/10/$26.00 ©2010 IEEE
system that integrates, stores, edits, analyzes, shares, and
displays geographic information. In a more generic sense, GIS
is an application tool that allows users to create interactive
queries (user created searches), analyze spatial information,
edit data and maps, and present the results of all these
operations.
II. LITERATURE REVIEW
A. Retailing and business district pluralism on the
commercial position
Retailing consists of the activities involved in the
marketing of goods, which directly serve consumers for their
personal, family, or household use [19]. All of those activities
performed by merchants offer goods and services for selling
products to ultimate consumers [25]. Activities are
categorized as a sub-set of land-use planning, and it is rare for
them to find governmental usage as an instrument of
economic development or social engineering [14]. The
function of a retailing system is to supply goods and services
to meet customers’ needs, wants and desires. However,
observers in the retailing area have often mistaken changes in
the facade of events for real changes in the structure and
performance of retailing [29].
According to the theoretical foundations of dividing
districts as economic geography and space [11], it is
necessary to have the basic concept of the commercial
position of business district, and the business district can be
classified as the global base of macroscopic commercial
position [2], the urban base of middle commercial position
which includes trading areas and retail site selection [19] and
optimize operate efficiency by various ways [39], and stand
on the store base of microscopic commercial position which
adjust the displaying ways [23] and comply with different
classification [9] of goods to improve probability of
customers’ purchases. These researches can carry on the
classification of the goods according to the consumers’
shopping habit, and it is more convenient for consumers to
compare with the goods price and quality.
B. Voronoi diagrams and geographic information system
In order to solve the problems of dividing districts,
geographical and social economic researchers also adapt the
concept of Voronoi diagram. Voronoi diagram [37] as
computational tool, also known as a Dirichlet tessellation,
Dirichlet regions, Thiessen polygons, or Voronoi polygons, is
one of the most fundamental data structures in computational
geometry. Computation geometry is concerned with the design
and analysis of algorithms for geometrical problems. Voronoi
diagrams tend to be involved in situations that a space should
be partitioned into "spheres of influence", including models of
crystal and cell growth as well as protein molecule volume
analysis. Although the spectrum of specific disciplines that
include interest in the Voronoi diagrams is broad, three aspects
have been emphasized in [1]. They are:
a. The use in modeling natural phenomena.
b. The investigation of their mathematical, in particular,
geometrical and stochastic properties.
c. The computer construction and representation in solving
seemingly unrelated computational problems.
Currently, efficient and reasonably simple techniques have
been developed for the computer construction and
representation of Voronoi diagrams. The basic idea of Voronoi
diagrams is to have some given points in a plane, and the
Voronoi diagram divides the plane according to the
nearest-neighbor rule; that is, each point is called “site” which
is associated with the region of the plane closest to it in Figure
1.
Figure 1: Voronoi diagram for eight sites in the plane
Economic geography and urban geography problems are
major application areas of Voronoi diagrams in geography,
for example, modeling retail trade areas and solving location
optimization problems. Since the 1990s, Voronoi diagram has
received increased attention as a spatial data model in
geographic information system (GIS). GIS is a system
designed to store, manipulate, analyze, and output map-based
(or spatial) information [34]. It is also linked to the location
that data are applied to be captured, managed, and presented.
GIS is the science underlying the geographic concepts and
providing a wide range of opportunities for examining
relationship in space. GIS is a powerful set of tools for
constructing Voronoi diagram and collecting to displaying
spatial data from the real world.
C. Central Place Theory (CPT)
CPT focuses on the concerned space and size of nucleated
settlements (central place). CPT is constructed and based on
the “ideal ground surface”, which each point on the ground
surface is equidistant to each other. Regardless to the
direction of point vector, every point is proportional to the
distance of relative accessibility. Also, the neo-classical
economics is adapted to enhance CPT to include product
producers and consumers. This concept shows that producers
will extend their fields for maximum market, and consumers
are intended to reduce traffic costs and prefer to purchase
products from the nearest stores. According to the important
concept of CPT, this study combines CPT with field-specific
logical deductions [10], and the logical deductions of CPT are
shown in Table 1.

TABLE 1: LOGICAL DEDUCTIONS OF CPT

Item
The central place
Central good and service
The same market price
The cost of buying good or
service
Cost of transportation
Customers minimize
Centrality
Service area
Illustration
People live around the central market which celebrates instance occurs in geography
The goods produced in the ground of centre and service offered separately under
consideration
For customers, the price of the goods and service (excluding the transportation cost) is the
same at all central places
It is equal to the market price plus the transportation cost to the central place
It is calculated by the unit cost of time distance
The cost of purchasing the good or service
A point as a central point standing for the area with equal radius on the area
Goods and services have their own variation area

D. Consumer choice of hexagonal market areas
As mentioned above, CPT is relevant in modeling service
areas of facilities and providing public services [10]. In
Figure 2(a), there are 7 circular trade areas with radius r, and
some vacancies exist between circles. The vacancies refer to
the areas not being served by stores. In order to eliminate the
problems of vacancies, the circles should be overlapped, as
shown in Figure 2(b) [24], and thus the overlapped circles
create areas of stores’ competitions due to the difficulty of
evaluating the belongingness of services. If the consumers are
rational beings who prefer to consume as much as they can,
they will visit the closest store in order to save transportation
costs [24]. In order to solve stores’ competitions and the
ambiguity of service belongingness, the overlapped areas can
be bisected, and the market areas of consumer’s choice lead
to the hexagonal market areas as shown in Figure 2(c).
 r
(a)Tangent circles
Figure 2: market area of consumer choice
This solution is one of imperfect or monopolistic
competition since “the plain is served by a maximum number
of identical, minimum-scale businessmen offering goods at
identical prices or hexagonal trade areas of identical
minimum size, and no surplus profits are possible [24]”. In
classical CPT, it contains regular hexagons with the ‘dual’
Delaunay triangles shown in Figure 3. These triangles
represent the most direct route from one central place to the
next. As mentioned above, the considerations of dividing
districts are relevant to a Voronoi-based optimization of
facility layout [38]. The fundamental concept of CPT shows
Figure 3: Voronoi polygons and Delaunay triangles in CPT
III. RESEARCH METHOD
A. Generating multiplicatively weighted Voronoi diagrams
(WVD)
Weighted Voronoi diagrams (WVD) include four types of
multiplicatively weighted diagram, additively weighted
diagram, compound weighted diagram, and power diagram
[30]. This study focuses on multiplicatively weighted
Voronoi diagrams. Given two generators of A and B with
weights W and W (W 0, W   0) shown in Figure 4,
(a) W = W
Figure 4: Distance surfaces for Euclidean distance [15]
B. Cones of Influence
Before constructing Voronoi diagrams, it is important to
understand the concept of “cone of influence” since it can be
used to simplify the infinite bisectors and those "unnecessary"
intersections. Unnecessary intersections are the intersections
which are not considered in the region of the Voronoi diagram,
or the intersections caused by those bisectors which are
(b) Overlapping circles (c) Hexagonal region
that spatial arrangement of stores requires optimal
distribution of goods to populations. In [24], Lobley (1967)
indicates that rather than treating cities as simple hierarchies
or entities, CPT considers cities as distribution systems. CPT
pays close attention to the demands of retail business and
service activity with respect to the business layout and scale
and space model, and it improves the understanding of
geography of retail and service business. In order to obtain an
overall solution, this study also considers the demand of
consumers since human activity creates the complexity and
irregularity of markets.
Legend
─── Voronoi polygon
------- Delaunay triangles
two upside-down right circular cones are based on the
Euclidean distances to A and B (as if two companies A and B
are competing with each other for canopy space). The two
cones touch each other at Q. For simplicity, let the raster cell
value at point Q be equal to unit length 1 (PQ 1). If W =
W , the two equal rasters represent “ordinary Euclidean
distance (OED)”, shown in Figure 4(a). Otherwise, the
unequal rasters represent “weighted Euclidean distance
(WED)”, shown in Figure 4(b) and 4(c) [15].
(b) W > W (c) W < W
intersected with the other bisectors more than once. That is,
from a practical point of view, it has the benefit of shortening
bisectors which result in less useless intersections between
bisectors. Figure 5 shows the cone of influence of a circular arc
and a straight line [27]. The cone of influence of a circular arc
is the closure of the cone bounded by the pair of rays
originating in the arc’s center and extending through endpoints.
Similarly, the cone of influence of a straight-line segment is
given by the closure of the strip bounded by the normals
through its endpoints. Additionally, the cone of influence of a
point is the whole plane. Because the concept of bisectors is
(a) Cone of influence of a circular arc
Figure 5: Cones of Influence [27]
IV. ALGORITHM AND RESULT ANALYSIS
A. Location decision making
Site selection and evaluation have already been
comprehensively discussed on the benefits and limitations of
various models [6-8], and these models are separated into two
main groups of forecasting store turnover and finding
appropriate location with a suitable socio-economic structure.
Site selection is as crucial as the choice of a retail area. The
studies of [12, 20] provide a suitable framework of
decision-making of locations by using GIS. This study
establishes and demonstrates the effectiveness of selecting a
new location for retail chain stores. This study involves a
well-known retail company in Taiwan, Carrefour. There are
64 Carrefour chain stores in Taiwan. This study adapts the
method of analytic hierarchy process (AHP) to employ
pair-wise comparisons and determine weights and priorities
with respect to various variables and sub-variables. The AHP,
developed by Saaty in 1971[33], is efficient for the
measurement of multiple criteria decision-making. The basic
assumption is that decision makers are able to structure a
complex problem in the form of a hierarchy where each
variable or sub-variable can be identified and evaluated with
respect to other related variables and sub-variables. The
optimal decision at the highest level can be selected from
pair-wise comparisons of sub-variables. Thus, the analytical
aspects of the AHP stimulate the creation of new dimensions
for the hierarchy. The AHP is a process that induces
cognitive awareness, and it has been used for various
decision-making problems with a multitude of quantitative
and qualitative variables and sub-variables.
The factors of store location have been discussed by many
researchers. In [36], the selection of site locations is based on
internal and external multiple regression analysis. In [21], the
authors utilize two criteria factors of store location condition
and personal condition for the selection of site locations. Also,
researchers adapt population units as indivisible elements
widely used in the Voronoi diagram, it is important and
convenient to express the bisector as functions of their offsets
to the geometrical boundaries.
(b) Cone of influence of a straight line
[18], use simplified one-dimensional distribution of
population to maximize the total volume of demand for a
newly opening store [28], and select different ways to
estimate population of sub country [35]. “Housing Unit
Method” is the most common technique for preparing sub
country population and housing estimates of optimal
commercial locations [35].
One site selection parameter is especially for stores
relying on customer transportation patterns to generate
business [3]. Transportation which should contain public
transportation networks [32]. However, empirical methods of
retail sales forecasting suffered from an excessive
subjectivity of analysis, as well as an inability to consider
simultaneously the impacts of multiple variables at the same
time for one manager [26]. There are too many factors to
consider when the retail store managers make a decision. This
study selects the really direct useful critical factor to measure.
AHP is ineffective when applied to ambiguous problem. Each
level criterion is listed below:
1. Population: one sub-criterion of consumer number.
2. Transportation: three sub-criteria of parking, public
transportation, and level of traffic.
3. Site: two sub-criteria of protected area type, and area type.
The hierarchy structure includes 3 levels with interrelated
decision criteria: level 1 is the top goal, selecting the
optimum chain store area; level 2 includes three most
promising factors for selecting new chain retail store; level 2
is 6 sub-criteria for level 2. Figure 6 illustrates the AHP
model used in this study. This study calculates CI and CR
values for 19 experts, and the results are all smaller than 0.1.
Table 1 lists AHP weights. According to the result of AHP
weights, although the factors of population (w=0.278) and
transportation (w=0.269) are the common factors of
considering the competitors for new location of chain retail
stores, managers are still interested in the factor of site
location (w=0.454).
 Level 1: Top goal

Level 2: Criteria

Level 3: Sub-criteria

Figure 6: Hierarchical structure of AHP

TABLE 1: EACH LEVEL OF AHP WEIGHTS

Criteria Sub-criteria
Goal criteria Sub-criteria
weigh weight
Population 0.278 Consumer number 1.000
Parking 0.548
Selecting the new
Transportation 0.269 Public transportation 0.213
chain retail store
Traffic level 0.239
area
Competitor 0.284
Site 0.454
Area type 0.716

In criteria column, population is w_population,

transportation is w_ transportation, and site is w_site; in
sub-criteria column, consumer number is w_consumer
number, parking is w_parking, public transportation is
w_public transportation, traffic level is w_level of traffic,
competitor is w_competitor and area type is w_area type. This
study uses these weighted factors to construct an algorithm
with respect to the Carrefour retail stores in Taichung,
Taiwan, shown in Figure 7. This study segments 6 locations
by using Voronoi technique to build a new area measure for Figure 8: Voronoi diagrams of six retail stores
the Carrefour retail stores shown in Figure 8.
B. Algorithm and phase structures
The validated flowcharts of the algorithm provide a
process for the selection of new store locations. Figure 9 is an
algorithm for one retail store company to explore the new
location of a new retail store. The phase can be characterized
in terms of inputs and outputs; each phase has a major
purpose, as well as a milepost to be achieved. The phase of
counting weight value includes considerations of parking,
public transportation, traffic level, consumer number,
competitor locations, and area types. Table 2 shows the phase
Figure 7: 6 Carrefour retail stores location in Taichung, Taiwan
structures in this study.

TABLE 2: THE PHASE STRUCTURES

Stage phase Illustrate
Concept phase Deliver questionnaires
Counting weight value phase Counting weight value
Comprehensive analysis phase Construct WVD
Location phase Optimizing by cones of influence
Figure 9: Phasing the Algorithm of new chain retail store area
C. Counting the weight of factor values
This study adapts the data of population, transportation,
and site dated on October 2009.
Population: Consumer Numbers
Assuming that consumers are the population of each
sub-district, this study sums the population of each
sub-district of Voronoi regions. However, since some
Voronoi edges cross two or more sub-districts (i.e. Si-Min
sub-district shown in Figure 10a, Table 3, and the total
population is 2,025, and the area is 188936.28 m ), it is
essential to separate the area, Figure 10(a), into two sub-areas,
Figure 10(b) and Figure 10(c). The population can be
calculated proportionally by using equation (1), shown in
Table 3. Each Voronoi store data is shown in Table 4, and A,
B, C, D, E, and F represent 5 retail stores in this study.
Ratio weight value (1)
∑

TABLE 3: AREA RATIO OF SI-MIN SUB-DISTRICT

Figure 10a Figure 10b Figure 10c

Area value 188936.28 39304.38 149631.90
Ratio weight value 1 0.208 0.792
Population 2,025 421 1,604

TABLE 4: RATIO WEIGHT VALUE OF POPULATIONS

Store A B C D E F
Population value 56,475 104,448 107,076 229,096 192,800 363,893
Ratio weight value 0.054 0.099 0.102 0.217 0.183 0.345

Transportation: Parking
Instead of considering nearby parking lots, this study only
considers Carrefour's parking place. In this study, due to
more passenger-portable capabilities for 4-wheel vehicles, the
weight for 4-wheel vehicle is defined as 0.6, and thus the
weight for 2-wheel vehicle is 0.4. In Table 5, the parking
values are computed by (numbers of 4-wheeled vehicles × 0.6)
+ (numbers of 2-wheeled vehicles × 0.4), and the parking
rations for stores A, B, C, D, E, and F are 0.177, 0.119, 0.163,
0.177, 0.235, and 0.129, respectively.
roads, which are near to Carrefour stores. For example, C
store has four important roads close to C. After the
proportional calculation, the ratios of traffic level for stores A,
B, C, D, E, and F are 0.133, 0.2, 0.267, 0.2, 0.067, and 0.133,
respectively, shown in Table 6.
Transportation: Public transportation
The public transportation of buses to the sites of Carrefour
stores are listed in Table 7. The numbers for the routes are
route numbers.

Transportation: Traffic level

This study considers traffic level based on the number of

TABLE 5: WEIGHT OF PARKING

Store A B C D E F
4-wheeled vehicle 700 481 650 688 750 430
2-wheeled vehicle 400 250 360 420 550 410
Parking value 580 388.6 534 580.8 770 422
Parking ratio 0.177 0.119 0.163 0.177 0.235 0.129

TABLE 6: WEIGHT OF TRAFFIC LEVEL

Store A B C D E F
Number of roads 2 3 4 3 1 2
Ratio of traffic level 0.133 0.2 0.267 0.2 0.067 0.133
 TABLE 7: WEIGHT OF PUBLIC TRANSPORTATION
Public transportation (route) A B C D E F
Taichung Bus 105, 45, 109, 115 33 60 131
G Bus 555
Ren-You Bus 6, 101 89
U Bus 79 73, 85 81 77
Fengyuan Bus 11, 21
ChungHang Bus 65 65
Train Station *
Transportation value 7 2 2 3 5 2
Transportation ratio 0.333 0.095 0.095 0.143 0.238 0.095
The star sign (*) represents the train station, which is able to directly access to Carrefour stores.

Site: Competitor locations classification defined by Taichung regional government. The

Regarding to the similar stores of Carrefour, Table 8 lists weight values in Table 9 are obtained from AHP
the numbers of competitors and the competitor rations for questionnaires, which interviewees need to rank these area
stores A, B, C, D, E, and F are 0, 0.2, 0.2, 0, 0.2, and 0.4, types from 1 to 9. Table 10 shows the weights of area types.
respectively. Table 11 shows the overall calculations of weight ratios in
this study. Table 12 lists the final comprehensive weights in
Site: Area type this study.
10 area types are selected in this study using the area
TABLE 8: COMPETITOR NUMBER AND RATIO WEIGHT VALUE
Store A B C D E F
A.mart 0 1 1 0 1 0
RT-MART 0 0 0 0 0 1
Save & Safe 0 0 0 0 0 1
Competitor number 0 1 1 0 1 2
Ratio 0 0.2 0.2 0 0.2 0.4

TABLE 9: AHP DATA OF AREA TYPE

Area type Weight value Weight Ratio value
Residential area 161 0.178
Business area 138 0.153
Industrial area 100 0.111
Administrative area 124 0.138
Cultural district 132 0.147
Scenic spot 103 0.114
Protection zone 62 0.069
Farming region 39 0.043
Other 41 0.046
Total value 900 1

TABLE 10: WEIGHT OF AREA TYPE

Store A B C D E F
Area type Industrial area Residential area Residential area Residential area Residential area Residential area
Area type value 0.111 0.178 0.178 0.178 0.178 0.178
Ratio weight 0.111 0.178 0.178 0.178 0.178 0.178

TABLE 11: COMPREHENSIVE ANALYZING OF RATIO WEIGHT VALUE

Criteria w_population w_transportation w_site
0.278 0.269 0.454
Sub- w_consumer w_parking w_public w_level of w_competitor w_area
criteria number transportation traffic type
1.000 0.548 0.213 0.239 -0.284 0.716
A 0.054 0.177 0.333 0.133 0.000 0.111
B 0.099 0.119 0.095 0.200 0.200 0.178
C 0.102 0.163 0.095 0.267 0.200 0.178
D 0.217 0.177 0.143 0.200 0.000 0.178
E 0.183 0.235 0.238 0.067 0.200 0.178
F 0.345 0.129 0.095 0.133 0.400 0.178

TABLE 12: FINAL COMPREHENSIVE WEIGHTS

Store A B C D E F
comprehensive weight 0.238 0.129 0.160 0.281 0.186 0.091
D. Construct Weighted Voronoi Diagram (WVD)
According 6 Voronoi areas and weighted Voronoi
diagrams (WVD), this study inserts the comprehensive
weighted values into the attributes table of GIS, as shown in
Figure 11. Figure 12 shows the result of WVD of 6 Carrefour
retail stores.
Figure 11: Table of Attributes of Carrefour weighted values
Figure 12: WVD of 6 Carrefour retail stores
E. Site location segment by cones of influences
After obtaining the WVD result from 6 Carrefour retail
stores, it is needed to apply the concept of cone of influence,
in order to plot a straight-line between Carrefour and its
competitors, as shown in Figure 13, so then a final optimal
location can be found.
(a) Step one of Using cone of influence (b) Step two of using cone of influence
Figure 13: Steps of cone of influence
In the wake of segment the shaded are is targeted segment
criteria, the shaded area may includes one or more
competitors. The way obtained results suggest a target
segment criteria from the shaded area which allows for
adopting a positive attack strategy, thus the company might
protect its trade area. As a principle from this study, the
company should consider building a new store in the shaded
area. This way takes place in the company Management’s
agenda to be applied as an effective strategy of new chain
store area.
V. CONCLUSIONS
Retailers usually understand that the location is a crucial
factor for establishing a new chain store, and recent studies
have confirmed the location selection as the pre-occupied
advantages [16] and as the spatial retail growth of geographic
strategies [4].Although formal techniques of location analysis
have been available for over 50 years, it is seldom for
retailers to employ them since most retails only rely on their
intuitions guided by experiences and common senses [20].
This study suggests a more effective algorithm of location
selection for retail chain stores; however, several areas still
remain uncovered and need further explorations.
While Euclidean distance was used in this study, other
metrics, such as the Manhattan, may be also appropriate in
different circumstances [30]. Although this study adapts a
multiple weighted scheme, other additive and compound
weighted schemes [5, 30] and physical and psychological
barriers on consumer movement are also possible for future
study. The management of chain retailer could follow this
prescription to build up their blue map.
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