Catalog Merchandising: Five Valuable Square Inch Analysis Metrics (Part 2 of 2)
In last week’s feature, I discussed the basic process for square inch (squinch) analysis and how the sales per inch metric can determine which products in your catalog deserve more space and which can be eliminated from the catalog entirely. This week, I’ll discuss other squinch metrics that can be tracked and those worth pursuing.
Five additional metrics you can add into your squinch analysis spreadsheet are:
* Profit per inch by item;
* Sales per inch by category;
* Profit per inch by category;
* Sales per inch by page; and
* Profit per inch by page.
Profit per inch: Although it’s available in many software packages, especially those that accompany catalog tracking software, profit per inch analysis isn’t always as useful as sales per inch analysis. Certainly profit is important, but the 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, and you can make better decisions.
But if you paginate based solely on profit, then low demand/high profit items will be featured in prominent positions, which is usually a mistake. Conversely, high demand/low profit items will be minimized or eliminated. Since the real benefit of squinch is to use the data to build a catalog that appeals to your customers, profit-driven decisions alone can defeat you before you start. The profitability of each product is an important consideration in the catalog pagination process, but demand, as measured by sales per inch, is equally important.
Category rankings: Resorting your squinch data by category is an eye-opening experience. Most merchants believe they have a good handle on the relative strength of each category. But an analysis of the category 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, squinch analysis by category provides valuable merchandise information. Categories with high sales per inch are customer favorites, providing justification for adding more SKUs to that category.
Page rankings: Page rank is the final critical element to examine. The ultimate reason for squinch is to provide hard data on which you can develop a catalog pagination that appeals to your customers and improves sales.
To do this, determine an average sales target per page, then build each page to meet that target. Pages should be 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.
Incidently, this variation in page density, also known 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.
Part 1 of this discussion appeared in the Dec. 12 edition of Catalog Success Idea Factory, accessible by clicking here.
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.