Markdown Strategy

Markdown Strategy

Improving margin by establishing better markdown management through rule-based framework, training and reporting

The Client

A $15B+ specialty retailer, of hardlines and softlines through multiple channels, store formats and brands. Focus was on the softlines business.

The Challenge

The retailer was transforming its softlines business and a large component of the expected business benefit would come from shifting clearance margin to regular/promo, and increasing the clearance margin rate through better markdown management. Challenges in the current markdown process included:
− No seasonality visibility
− Limited markdown rules in place
− Markdowns taken at national level
− No integration to merchandising or marketing calendars
− No visibility or control at item level after first markdown
− No 'what if' capability

The Parker Avery Solution

Seasonal 20XX Pricing Parameters

The Parker Avery Group helped the client address the challenges identified in the current state by recommending six initiatives:
1) Establish a markdown rules framework by product type
2) Add markdown rules to the assortment planning process
3) Improve reporting to provide visibility to markdown performance
4) Implement rule-based, localized markdown capabilities
5) Establish a markdown training program for merchants and planners
6) Implement markdown optimization

The Result

As a result of the project, the client expects to achieve the following benefits,
• +3% shift from clearance to reg/promo margin
• +1.3% clearance selling margin rate
• Maximized sales
• Improved sell-thru

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