Retailer Improves Margins and Competitive Position with New Markdown Capability

A $15B+ specialty retailer of hardlines and softlines with multiple channels, store formats, and brands was transforming its $500 million softlines business. A large component of the business benefit was expected to come from implementing a new markdown optimization solution. Specifically, the markdown optimization analytics would not only enable the retailer to shift a larger percentage of sales revenue into regular/promo sales at higher margins but also improve their remaining clearance margin rates. ​

Challenges in the current retail pricing and markdown process included:​

• No seasonality visibility​
• Limited markdown rules in place​
• No integration to merchandising or marketing calendars​
• Markdowns at a national level​
• No visibility or control at the item level after the first markdown​
• No “what if” capability​

After thoroughly assessing the retailer’s existing pricing and markdown capabilities, Parker Avery helped the client address the challenges identified in the current state by recommending several initiatives:​

• Establish a markdown rules framework by product type​
• Add markdown rules to the assortment planning process​
• Improve reporting to provide visibility to markdown performance​
• Implement a new markdown optimization solution, including rule-based, localized markdown capabilities​
• Establish a markdown training program for merchants and planners with clarified roles and responsibilities​