As the world moves into a new phase of the COVID-19 crisis, customer demand patterns will continue to shift, and reopening retailers might find themselves with leftover seasonal and out-of-date inventories that are higher than usual. Due to this challenge, now is a critical time to implement a consistent, forecast-based markdown optimization strategy that uses automation to identify opportunities to maximize margins and sell through these high-inventory items.
In a June 2020 roundtable webinar, Make Better Use of Your Inventory and Maximize Your Sales, retail experts from RELEX and Party City got together to discuss:
- The value of having a clear markdown process and strategy in place
- How to increase efficiency and automate your markdown process
- The benefits of optimizing markdowns and increasing supply chain cohesion
- Best practices when starting with markdown optimization
According to Rachel Dutton, Solution Expert at RELEX, many retailers currently handle markdowns manually, often with individual store managers using disconnected spreadsheets to make their plans. Even when retailers use an automated system for markdown management, it may not be connected to their broader inventory data, leading to inconsistent and ineffective pricing decisions.
Dutton further explains that retailers need to ensure that they are maximizing the effectiveness of their markdowns within a product lifecycle. This is best accomplished by clearly defining a primary goal – to clear out inventory or to maximize margins – and then using integrated, automated software to review assortments, identify candidates for markdowns, and implement strategic pricing changes.
An automated markdown process can improve a business’s bottom line while reducing the amount of manual work required at the store level, says Mira Rehnman, Project Manager at RELEX. She shares that RELEX customers using the company’s automated markdown software have seen 94% higher sales than projected with no markdown and a 133% increase in inventory turnover.
Cynthia Beiermeister, Director of Merchandise Planning for Party City, notes that her company needed to develop a strategy that would allow them to manage their aged inventory. She explains that implementing automated markdown software “affords us the opportunity to apply science in exiting the product and managing our products’ lifecycle in a much more efficient and financially responsible manner.”
To learn more about the benefits of using automated software to manage a markdown strategy and for more information about the RELEX markdown optimization solution, check out the full presentation.