Project Description
Detailed design and implementation of a pricing and promotions roadmap to optimize pricing, improve margins, and achieve significant financial benefits.
The Client
A $1B+ multi-channel, multi-banner retailer specializing in plus size apparel.
The Challenge
After defining a comprehensive pricing and promotions roadmap, client leadership asked Parker Avery to perform detailed design and implement four workstreams:
- Review and update the promotion frequency strategy to improve the customer experience while minimizing negative impacts on business performance
- Define, document, and communicate new regular pricing procedures
- Perform an elasticity study of regular prices for a group of pilot categories and, eventually, an entire brand
- Define, document, and communicate markdown management policies and procedures
The Parker Avery Solution
The Parker Avery Group coordinated workshops across the four workstreams, drawing on a cross- functional team of the client’s internal experts to develop solutions that adapted leading industry practices to the company’s unique business model. The teams developed new processes and methods for planning and controlling pricing throughout the product lifecycle.
Working with Antuit / Prognos, Parker Avery’s allied data analytics firm, the team sourced transaction-level sales data, which was combined with product cost and market basket information to form the basis for optimized price recommendations.
This price optimization approach was incorporated into the future state pricing design to yield improved financial performance.
The Result
Parker Avery’s recommendations for markdown management and regular pricing approaches were applied to the business during the project. The optimized pricing method was piloted across 11 key items, yielding financial benefit of $172K over 11 weeks – a 21.3% improvement. The same method was used to derive prices for an entire brand and is conservatively projected to produce increases of 3.5% in sales and 1.5% in gross margin dollars.