Catalog Merchandising: Five Steps for Easy Square Inch Analysis, part 1 of 2
Because catalog space costs you money, you need to know which products are paying a return on investment and those that aren’t. However, square inch (squinch) analysis can be used to determine the relative strength of your customers’ demand for each and every product.
This invaluable information then is used to make decisions about the catalog, such as featuring high-demand products and eliminating those with little or no demand. More importantly, however, squinch analysis 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. By featuring the products your customers are most interested in, you make the entire catalog more attractive.
The mechanics of producing a squinch analysis are time consuming, but not difficult:
1. Measure how much space each product takes up on each page including both image and text.
2. Measure all editorial and white space so you account for every inch of space on page. The editorial and white space is weighted back to each product and the total is entered into one column on a spreadsheet.
3. Place the sales for each product into another column.
4. To find sales per square inch, divide each product’s sales by the space it takes on the page. For a complete picture of each product, include columns for units sold, profit per item, profit per inch, item number and product description.
5. Finally, include an index column. In this column, divide the sales per inch of each product by the average sales per inch for the entire catalog. An index of 1.00 indicates the item is performing equal to the average; whereas, results greater than or less than 1.00 indicate the item is performing better than or less than average, respectively. This provides an instant gauge of the relative strength of each product.
The goal is to compare the sales per inch for each product both to the book average and to breakeven. Items that are above average should be allocated more space in the next catalog. Items that perform below average should get less space or be 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.
Ultimately, squinch analysis allows you to do three things:
1. Reduce all products in your catalog to a single common denominator, square inches of space occupied.
2. Equitably and precisely compare sales per product and the cost associated with the space each product occupies.
3. Rank your products by sales dollar per inch.
Comparing sales per square inch with the cost per square inch for every product 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.
Squinch analysis 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 for a poorly located product compares favorably with the figures for other best-selling products, featuring the newly discovered winner can increase its sales dramatically –- without spending more money.
Part 2 of this discussion will appear in the Dec. 19 edition of Catalog Success Idea Factory.
Bill Licata is president of LCH Direct Inc, a direct marketing agency specializing in catalogs and e-commerce. He can be reached at (505) 989-9451 or via email at email@example.com.