Catalog space costs you
money. A company needs to know which products are paying for their space and
which are not. Square Inch Analysis (Sqinch) is an analytical tool used (too
infrequently these days) to determine the relative strength of your customers’
demand for each and every product.
This invaluable information is then used to make decisions about the catalog
. . . featuring high-demand products and eliminating those with little or
no demand. More importantly, it provides a guide for correcting marginal items
and shows you how to make them winners. The result is often an increase in
total sales per catalog – not just products featured. Why? Because by
featuring the products your customers are most interested in, you make the
entire catalog more attractive to them.
SQUARE INCH ANALYSIS . . .
• Reduces all
products in your catalog to a common denominator, square inches of space
• Equitably and precisely compares sales per product and the cost
associated with the space
II each product occupies
• Ranks your products by sales dollar per inch
Analyzing sales per square
inch for each product and product category in your catalog helps you pinpoint
the winners, losers, and marginal products. And comparing sales per square
inch with the cost per square inch gives you a measure of which products are
yielding the best results for the money spent . . . and which aren’t
pulling their weight. It tells you how strong or weak each product is relative
to the other products in your catalog.
Sqinch can reveal surprising potential for improvement in products that have
been selling adequately, but not impressively, in a small amount of space
or in a mediocre location in the catalog. If sales per square inch compare
very favorably with the figures for other products, featuring the newly discovered
winner can increase its sales dramatically – without spending more money.
Perhaps none of the products in a particular category is a best seller. But
when you add together the sales for all the products in the category and compare
them to the space you have allotted to the category you may discover that
the category itself contributes a larger percentage of sales and profit than
you realized. An analysis of sales per square inch by product category will
tell you which categories yield the best results for the dollar.
THE PROCESS. . .
The mechanics of producing a square inch analysis are time consuming but not
difficult. First, measure every product on every page (image and text). Next
measure all editorial and white space so you account for every inch of space
on every page. The editorial and white space is weighted back to each product
and the total is entered into one column on your spreadsheet.
Sales for each product are put into another column and the calculation of
sales per inch is a simple division. Units sold, profit per item, profit per
inch, item number and product description each have their own columns.
Finally an index column, where the sales per inch for each product are compared
to the average sales per inch for all products, is an instant gage of the
relative strength of each product. An index of 1.00 is average.
The goal is to compare the sales per inch for each product to the book average
and to breakeven. Items that are above average are candidates for more space
in the next catalog and items below average get less space or are deleted
entirely. A good rule of thumb is to expand the space and improve the presentation
of the top one third of the products, eliminate the bottom third and individually
examine each of the products in the middle third; some will get more space
and others less.
Along with the basic rank of Sales per inch, the Square Inch Report is re-sorted
for further analysis.
• Rank by Item
• Rank by Category by Sales/inch
• Rank by Category by Profit/inch
• Rank by Page by Sales/inch
• Rank by Page by Profit/inch
PROFIT PER INCH.
Many available programs,
especially those that accompany catalog tracking software feature profit per
inch analysis but ignore sales per inch. Certainly profit is important, but
sales per inch measures the customer demand for each product regardless of
its profitability. Armed with this demand data as well as your profit data
you are in a position to make better decisions.
If one paginates based solely on profit, low demand/high profit items will
be featured in prominent positions. That’s usually a mistake. Conversely
high demand/low profit items will be minimized or eliminated. Since the real
benefit of Sqinch is to utilize the data to build a catalog that appeals to
your customer, profit driven decisions alone can defeat you before you start.
Profitability of each product is obviously an important consideration in the
catalog pagination process, but demand is equally important.
Resorting your square
inch data by category can be an eye-opening experience. All merchants believe
they have a good handle on the relative strength of each category and many
of them do, but analytically examining the data in terms of sales per inch
often reveals previously underappreciated categories. Categories with modest
sales and modest space can score near the top in terms of sales per inch.
This is an indication that the space allocated to this category can be increased.
In addition to pagination decisions, Sqinch also provides valuable merchandise
information. It tells which categories are customer favorites that can cost-justify
more SKUs and which should be shrunk or eliminated.
PAGE RANKING. . .
Page rank is the final critical element to examine. The ultimate reason for
Sqinch is to provide hard data on which to develop a catalog pagination that
appeals to your customer and improves sales. We do this by determining an
average sales target per page and then building the pages to meet that target.
This means that pages are built with differing product densities determined
by the strength of the individual products on the page. Best sellers generate
more sales per item so they cost-justify fewer products per page, but weaker
sellers require more products per page to generate the same sales. (By the
way, this variation in page density, also know as pacing, is aesthetically
a good thing. It keeps your catalog fresh and interesting as the shopper flips
from spread to spread.) The page ranking lets you know how well your pagination
worked page by page.
Sqinch is an important analytical tool that every cataloger should use prior
to pagination. It is a guide and not a bible, however, and cannot replace
the knowledge or intuition of savvy merchants. It can help merchants and creatives
construct a more profitable catalog.