Welsh Government policy establishes town centres as central places of community activity and local prosperity, recognising the positive impact towns have on the local economy and the well-being and cohesion felt amongst local communities. In light of this, recent declines in the usage of town centres are a major cause for concern. These have not been experienced uniformly across all towns, with some towns out-performing others. This paper applies principles outlined in Welsh Government’s Planning Policy Wales to develop a tool which classifies a sample of 71 towns and cities in Wales based on their centre and catchment characteristics. Catchment areas have been delineated using a Spatial Interaction Model to account for complex consumer behaviours and competition between centres. The tool identifies six distinct types of towns alongside key socio-economic catchment area characteristics. Once developed, we demonstrate our tool’s application by exploring variations in town centre performance between and within each town type. Case study examples exemplify how policymakers may use this tool to benchmark between towns, evaluating the suitability of a town’s retail offering based on its performance relative to the benchmark, guiding decisions relating to the types of businesses and uses a town should pursue to improve its appeal to its catchment community. In conclusion, several recommendations to policymakers are suggested.