Why Measuring Square Inches Still Matters
As catalog companies have become increasingly web-centric, the role of the catalog has evolved. For many cross-channel retailers, the catalog now functions primarily as a traffic driver to an e-commerce site. This operational shift raises many questions for evolving companies, including whether there's still a need to perform merchandise and demand analysis by catalog page and product.
At Direct Tech, I’ve had the opportunity to view this firsthand with clients. Whether it's a traditional catalog marketer adapting to cross-channel marketing or an internet retailer who's testing catalogs to drive web traffic, one thing is certain: they’ll spend millions printing and mailing catalogs. Regardless of the catalog’s primary role, it’s a significant financial investment.
Given the significance of the cost and potential impact on product-level demand and profit, it's vitally important to capture and report individual product space allocations and the corresponding advertising expense. Specific benefits of tracking this information include the following:
- From a marketing perspective, it’s useful to know which products were featured and how much space they were given in order to analyze the top-line demand performance of each marketing activity.
- From a merchandise planning perspective, it’s important to monitor individual item profitability. Items that are featured in print marketing materials, including catalogs, will benefit from increased demand and sales, but they should also be charged with the corresponding advertising expense to accurately measure actual product profitability and the return on the incremental costs. Future product assortment planning is highly dependent on the quality of profitability reporting for each product.
- From an inventory planning perspective, the allocation of catalog space to a product has a significant impact on a product’s demand and resulting inventory level. Lack of visibility to a product’s historical marketing exposure or planned future exposure will materially affect lost sales, back orders, overstocks and cash flow.
I think we can all agree that any company’s long-term success depends in part on its ability to perform quality product-level profit analysis and accurate demand and inventory planning. Your product marketing, merchandise planning and inventory planning functions can all benefit from detailed square-inch analysis. So, regardless of the primary purpose of your catalog, you’ll be best served if you have the tools and processes in place to capture and report your product-level advertising exposure and expense.
Joe is Vice President of Product Solutions at Software Paradigms International (SPI), an award-winning provider of technology solutions, including merchandise planning applications, mobile applications, eCommerce development and hosting and integration services, to retailers for more than 20 years.
Joe is a 34-year veteran of the retail industry with hands-on experience in marketing, merchandising, inventory management and business development at multichannel retail companies including Lands’ End, LifeSketch.com, Nordstrom.com and Duluth Trading Company. At SPI, Joe uses his experience to help customers and prospects understand how to improve sales and profits through applying industry best practices in merchandise planning and inventory management systems and processes.