Commercial cannibalisation: how to stop your shops eating into each other

The new shop opens, fills up, the queues reach the street and everything looks like a success. Three months later you check the numbers across the network and find something uncomfortable: total revenue has barely moved. The new shop is doing well, yes, but the one two streets away has dropped by almost exactly the same amount. You haven't added new customers, you've split the ones you had. That is commercial cannibalisation, and it's one of the most expensive (and most silent) mistakes when expanding a chain across several European cities.

What commercial cannibalisation is

You have cannibalisation when you open a point of sale so close to another of yours (or to one that already served the same people) that instead of winning new customers you simply take them from the first one. The new shop's sales look brilliant, but the net incremental sales of the network are small, because a large share of those customers were already yours.

The cause is almost always geographical: the catchment areas (the trade areas of each shop) overlap. Two shops that share the same neighbourhood, the same walking route or the same metro exit compete for the same people. The customer doesn't appear out of nowhere when you open: they simply choose whichever shop is closest to hand.

It's worth telling two cases apart. Unintended cannibalisation (two of your own shops too close together without having planned it) is almost always a mistake that destroys margin. Controlled cannibalisation (deliberately densifying a high-demand area to crowd out a competitor or gain share) can be a strategy, but only if you decide it with your eyes open and the numbers in front of you, not by accident.

Why it hurts more when expanding a chain or franchise

When you have a single shop, cannibalisation doesn't exist: there's no one to share customers with. The problem is born precisely when you start to grow, and it multiplies when you jump between cities and countries. When you expand a network across Madrid, Paris, Lisbon, Milan or Berlin, each opening is often decided in a hurry, with a unit that happens to come free and a lease that has to be signed right now. It's the perfect moment to open on top of your own catchment area without realising it.

In a franchise the cost is double. It's not only the brand that loses margin: the franchisee of the old shop sees their sales fall the day you open the new one, feels betrayed and stops being an ambassador. And an unhappy franchisee is the worst possible advertising in the eyes of the next candidates. That's why avoiding cannibalisation isn't just about protecting sales, it's about protecting the trust the whole network grows on.

The mechanism: why a packed shop can add nothing

The trap of cannibalisation is that it disguises itself as success. A new shop with a queue at the door gives an unbeatable feeling, but the feeling isn't the data. What really matters is how many incremental sales it has added to the network, not how many sales that shop has on its own.

The mechanics, step by step:

• The isochrones overlap. Each shop has an area reachable on foot, by bike or by car in X minutes. If the new shop's area overlaps the old one's, they share territory.
• The customer is split, not created. The people in the overlapping zone already bought from your brand; now they just switch doors. Your chain's market share in that area doesn't grow, it's redistributed.
• Incremental sales are low. The new shop turns over a lot, but much of that figure is revenue you've subtracted from the old one. The sum of the two barely beats what you already had, and now you pay two leases, two payrolls and two sets of fixed costs.

The honest indicator isn't "how much does the new shop sell", but "how much has revenue across the whole area risen since I opened". If that figure is small, you've cannibalised yourself.

How to avoid it before signing the lease

The good news is that cannibalisation can be seen coming on a map, and it can be seen before you sign anything. You don't need to wait until you open to discover the overlap: you draw it. The method is simple and rests on official data, not on hunches.

1. Draw the catchment area of each existing shop

For each shop you already have in that city, trace its isochrone: the area reached in, say, 10 minutes on foot or 15 by car, depending on how your customer gets there. That's the territory you're already serving.

2. Draw the candidate shop's area

Do the same with the location you're considering. Now you have two patches on the same map.

3. Look at the overlap

The zone where the two isochrones overlap is the disputed territory. The larger that overlap, the more shared customers and the greater the risk of cannibalising yourself. Here the eye already warns you.

4. Read the demographics of the net new zone ONLY

This is the step almost everyone skips. Don't look at the total population the candidate shop reaches, look only at the part of its isochrone that does not overlap with the existing network: the net new zone. How many people live there? What income do they have? Do they fit your customer? That, and only that, is the population the new shop genuinely adds.

5. Rank candidates by incremental reach, not gross reach

A location that reaches 80,000 people sounds better than one that reaches 50,000. But if of those 80,000 you already served 60,000 from another shop, its real contribution is 20,000. The second one, although it looks smaller, may be the one that adds the most. Always rank by the incremental population, the one you genuinely add.

The POINOVA approach

POINOVA is built precisely for this kind of decision. With Pro you upload your locations, plot the reach of each one in one go, and the map shows you where they overlap and which part of your audience they're competing for. With Advanced you subtract one area from another to keep only each candidate's net new zone, read its population, income, age, density and competition, and compare candidates by their incremental reach to rule out the ones that would only cannibalise your own locations.

Population, income and age come from official statistical sources wherever we have local data; elsewhere we give you an estimated population and say so. Businesses come from open sources and the isochrones follow the real street network: that's what you need to measure overlap and net reach rigorously.

An illustrative, made-up example

Let's take an illustrative, made-up case (the figures are round and invented purely to teach the method; the real ones always come from each city's official sources). A bakery chain with its own bakehouse has 4 shops in a mid-sized European city and is considering opening its fifth. It has two candidates:

• Candidate A, right in the centre: its 10-minute walking isochrone reaches, in this made-up example, around 70,000 people. It sounds spectacular. But the chain's shop number 2 is three streets away, and when you overlay the isochrones you see that the overlap eats up about 45,000 of those people. Real incremental reach: around 25,000.
• Candidate B, in a residential neighbourhood with no shop nearby: its isochrone reaches around 40,000 people, fewer on paper. But when you overlay it with the current network the overlap is almost nil. Real incremental reach: close to 38,000.

Gross reach would say "open in A" (70,000 against 40,000). Incremental reach says the opposite: candidate B adds nearly 38,000 new potential customers, while A only adds about 25,000 and, on top of that, sinks the sales of shop number 2. Decision: open in B. What matters isn't the made-up numbers, it's the change of question: from "how much does it reach?" to "how much does it add?".

Checklist before opening your next shop

• Draw the isochrone of each existing shop in that city, with your customer's real mode of transport.
• Draw the candidate's isochrone on the same map.
• Measure the overlap and compare it against your sector's acceptable threshold (stricter for convenience purchases, more relaxed for destination services).
• Read the demographics of the net new zone, not the total: population, income and fit with your customer.
• Work out the incremental reach and rank the candidates by that figure, not by the gross one.
• If you cannibalise yourself, decide it on purpose or don't do it. Densifying can be a strategy; stumbling into it never is.

Doing this before signing the lease takes minutes and avoids the most expensive mistake in any expansion: paying for two shops to sell almost the same as you sold with one.