CHALLENGE: ENHANCE MARKDOWN STRATEGIES TO CAPTURE MARGIN AND IMPROVE SELL-THROUGH
A leading footwear and apparel retailer had been using historical sales and merchant intuition to drive its pricing strategy and markdown decisions. The company required a more effective approach to increase sell-through velocity and minimize the negative impact on margin.
SOLUTION: AN ANALYTICS-BACKED MARKDOWN MODEL
Prognos, an Antuit company, developed a data-driven markdown strategy that supported business processes in both the United States and Europe. For the company, Prognos:
- Developed an advanced forecasting and elasticity model incorporating multiple variables including trends, seasonality, lifecycle, price, promotions, and inventory effects
- Introduced a pricing algorithm to maximize revenue, sell-through, and margin using localized pricing
- Developed an "analytical cockpit" to constantly monitor system performance and financial impact
- Provided an intuitive user interface that enabled merchants to setup their own business rules
RESULTS: 10% SELL-THROUGH IMPROVEMENT, 6% MARGIN BOOST
In the first year of execution, the client improved sell-through by 10%, increased Average Unit Retail (AUR) by 2-3%, and improved margin by 6%.