SQINCH WHYS & HOWS
Fun and Profit from your Square Inch Analysis Report
First published on RetailOnlineIntegration.com blog August 2014
© 2014 Susan J. McIntyre
Planning your spring catalog? Your Sqinch (Square Inch Analysis) Report is one of your most important tools. And more enjoyable than most reports too. Even your creative team will like it, to help guide pagination, space allotment and product placement decisions.
Sqinch works best from a marketer's perspective if it summarizes data into "depictions."
So what's a depiction? It's one graphically distinct product space that sells single or multiple SKUs (Stock Keeping Units). Examples:
- A single photo of a chocolate cake with a single copy block.
- A tea sampler photo plus inset photos of each flavor, plus a copy block explaining all flavors and the sampler, plus SKU lines for the sampler AND for each flavor (all sold separately).
- A single photo of an outfit with adjacent copy and SKUs for the jacket, the blouse, and the skirt, all in multiple sizes and colors.
A Depiction-related report differs from a strictly SKU-related report, in that it shows you sales by designed product area regardless of how many or few SKUs reside inside that depiction.
Sqinch also shows how many square inches per depiction, marketing costs per depiction, cost of buying and fulfilling each depiction's products, and therefore if each depiction was above or below BE (Break Even) — important to know!
A Sqinch report is more complex to put together than a standard Sku-level product sales report. But is rich in information that helps your marketing team to allocate space and position for each product and create building blocks for design.
Let's look at how to put a Sqinch report together. Here are the steps:
Nowadays the easiest way is to use Adobe Acrobat's measure tool on a PDF of the mirrored catalog (that is, to work on your upcoming Spring catalog, measure last year's Spring catalog).
Or use old-fashioned manual measuring. Rule a blank sheet of paper in 1/2" squares, then copy it onto a transparent acetate sheet. Lay that acetate over your depiction and count how many 1/2" squares you see. Don't worry about being exact, "close" is fine.
Give each depiction a number, such as "2A" (page 2's first depiction), "17C" (page 17's 3rd depiction), etc.
Calculate Catalog Cost
- Total selling square inches in the catalog: add together all square inches for all depictions (ignore non-selling space like editorial and inkjet areas) .
- Total marketing cost: add together all the costs to create the catalog and get it to the customer (photo, design, copy, production, print, bind, mail, postage, management).
- Divide total catalog costs by total selling square inches in catalog to get the average cost/SellingSquareInch.
Calculate Other Costs
- COGS (Cost of Goods Sold): raw materials + inbound freight + receiving labor + labeling, kitting, packaging, etc. (i.e. costs to get SKUs onto the warehouse shelf ready to pick). Use cost per SKU if you know it, or use an average % of sales.
- Order-taking cost as an average percent of sales: call center, order entry, etc.
- Fulfillment cost as an average percent of sales: pick, pack, ship, shipping cartons, etc.
In a spreadsheet (or in your order management system, if it has sqinch reporting), log for each depiction:
- Page number
- Depiction number
- Square inches in that depiction
- Every SKU number — and its description — being sold in that depiction (hopefully, you can pull this info right out of your regular sales-by-SKU report).
- Sales for each SKU.
With all data in hand, your report can now be built by your Order Management System, or by a helpful programmer, or by hand right in the spreadsheet.
The resulting report is great, can be sorted many ways, and you can see summaries and top 10's, or drill down to detail. Best of all is summarizing key data onto labels you can stick right in the catalog to see at a glance each depiction's sales and percent over/under BreakEven. That lets you visually correlate $ and BE to presentation, page position and space, and start getting creative on your next presentation and design.