DemandTec

Markdown Optimization

Plan and Optimize Pricing, Profit, and Inventory Levels for Items Leaving the Assortment

• Optimize markdown timing and depth to achieve inventory, profit, and revenue objectives
• Develop plans for each store, zone, or chain based on store-specific consumer demand
• Automate and streamline the weekly markdown pricing process

The traditional approach many retailers take to markdown pricing involves using a standard set of markdown percentages implemented on a standard schedule across all stores. Unfortunately, this arbitrary approach to markdowns fails to take into account store-specific price elasticity, store-level inventory on hand, and the sales velocity of each store. Such a sub-optimal approach to markdown has a negative effect on a retailer’s bottom line.

DemandTec’s Markdown Optimization software service uses the science of Consumer Demand Management to help retailers design optimal plans that set markdown timing and depth to maximize profitability or meet inventory on-hand objectives for every clearance item in every store.

Optimize Markdown Timing and Depth to Achieve Inventory, Profit, or Revenue Objectives

Markdown Optimization supports a wide range of markdown types, including seasonal, short product lifecycle, event and holiday, category reset, cycle refresh, and standard discount markdowns. Using Markdown Optimization, retailers are able to set primary and secondary goals to minimize inventory, maximize profit, or maximize revenue. Retailers can also specify a maximum number of markdown price changes, the depth of each change, and other constraints to ensure that markdown plans can conform to retailers’ policies and can be executed with retailers’ existing processes and infrastructure.

Develop Plans for Each Store, Zone, or Chain Based on Store-specific Consumer Demand

DemandTec science helps retailers design markdown plans based on the unique price elasticity and inventory position at each store, while also providing retailers with the flexibility to either allow all stores or zones to share the same schedule, or have each store execute its own unique schedule to maximize overall plan performance. Retailers can also create, forecast, compare, and evaluate multiple markdown pricing scenarios to fine tune their markdown strategy before prices hit the shelves.

Automate and Streamline the Weekly Markdown Pricing Process

Markdown Optimization streamlines many of the manual tasks that have traditionally been part of the markdown process.  Through an automated workflow process, Markdown Optimization can automatically create and initiate new markdown plans and scenarios based on category-specific rules defined by a retailer so that merchants can simply log into the system to review the results of planned optimizations. Markdown Optimization can then enable retailers to closely monitor the performance of their markdown plans through comprehensive reporting capabilities. It also allows retailers to automate the process of weekly re-optimizations to adjust markdown intervals and tactics midway through a markdown plan, based on sales performance, to ensure each markdown plan ultimately meets its objectives.

Markdown Optimization: Part of a Comprehensive Solution for Managing Pricing Across the Entire Product Lifecycle

Markdown Optimization is a software service in DemandTec Lifecycle Price Optimization™, a solution that includes related software services that enable retailers to price items at any stage in their lifecycle – including new items, regular retails, promoted items, and clearance items. All software services reside on the DemandTec Platform™, and are available through a single, personalized portal.

Get Started Today

Are you ready for markdown optimization? Take the next step. For more information, call 1-888-676-3626 or request information online.