Markdown Optimization Demands Precision – Are Fashion Retailers Ready To Drive Results?

The recent years have seen a growth of fashion retailers utilizing various forms of Markdown Optimization (MDO) and retail analytics tactics to make some sense of and generate more results during the SALE periods. But when retailers are faced with tough competition, combined with the slow economy – they tend to sideline their MDO tools and revert to gut-feel-based broad promotional approaches. But these unplanned tactics are not predictable and can work either way. With accurate use of MDO techniques and precise application round the year, retailers can give way to optimized SALE as well as SEASON cycles that generate profits and enable hyper-targeting as well.

Retailers must first understand that markdown optimization is not a one-off Band-Aid activity that should be done right before the SALE season starts to get better results when the basic decision-making premise and processes are faulty. MDO plans should be a part of the overall business strategy, pre-season as well as in-season. True markdown optimization can be achieved with a change in organizational attitude. Instead of supporting old habits – where retailers made decisions for all the styles, all the stores, and all the customers based on guess-work – and moving towards exploiting the tool to integrate all the processes and data, to see the bigger picture, and utilizing technology to forecast the trends and predict purchase patterns based on localized demand is the holy grail for markdown success.

Fast-fashion retailers such as Zara and H&M are constantly changing their assortments and have few in-season promotions. This creates a bigger challenge as there are no historical price points for various articles of unsold inventory. Till 2007, Zara was using manual decision-making system for markdowns, but then it implemented a forecasting and optimization solution that increased the clearance revenues by about 6% and more over the years.

In the world of omni-channel marketing, MDO insights have become even more potent. For instance, ship-from-store trend is gaining popularity and many big retailers like Macy’s and Nordstrom are utilizing it to optimize inventory management; but some other tech-forward retailers are going so far as fulfilling orders from the stores least likely to sell without deeper markdowns. The tie-in of MDO with inventory management and supply chain is essential, and the next step is to align MDO insights with inventory distribution across the stores. In this way, MDO will not only be about the SALE period, but will become an essential part of decision-making throughout the product lifecycle and will impact product assortment, pricing, margins, order-fulfillment, and placement.

Adroit management of the supply chain is indispensable for fashion retailers

To stay on top of the chain, fashion retailers must keep their supply chains malleable, efficient, and well-coordinated.

The Pentagonal Pillar That Supports The Omnichannel Edifice In Fashion Retail

Fashion retailers are moving quickly towards formulating a solid omnichannel strategy. Here are the top five elements to consider.

Virtual Fitting Rooms: Changing Rooms Going Virtual To Lay Fit-Related Doubts To Rest

Virtual web-based fitting rooms are making the shoppers be sure of the fit of a garment before they order it online.

‘Try At Home Before Buying’ Is Blurring The Lines Between Online And In-Store Fashion Retail

Online fashion retailers are welcoming the trend of trying at home before buying to activate shoppers and boost sales.

Analytics For Fashion Retail

Analytics can make an incredible difference in the way Fashion Retail works, right from choosing the best pricing and markdown strategies to predicting the next season trends.

Endless Aisles In Fashion- Blurring The Line Between In-Store And Online Shopping

Fashion Retailers can trim the store while increasing the assortment, reduce the inventory while never going out-of-stock and above all boost the customer experience with ‘endless aisles’.

Using stores for order fulfillment: Optimizing inventory across the retail spectrum

We explore ship-from-store trends and discuss how retailers are using their stores to fulfill online and regional orders, in a move to compete against pure play ecommerce giants like Amazon and eBay.

Connect and re-connect with shoppers through O2O marketing

Omnichannel retailing is opening new opportunities for apparel brands to create shopping differentiation by connecting customer journeys from clicks to bricks and vice-versa.

Are fashion retailers exploring big data to make granular targeting decisions?

Targeting the new fashion customer requires integrating a wider set of big data across store, digital, social and mobile interactions, and stitching together a picture of the customer journey that opens up new possibilities for personalized and highly relevant marketing.

Data-driven Strategies to Control Margin Erosion in Fashion Retail

Read this Manthan whitepaper titled 'Arrest Margin Erosion by Optimizing the 5Ps of Fashion Retailing' to learn how Fashion businesses can use data-driven strategies to control their season’s success and significantly impact the bottomline.

Fuel your retail multi-channel strategy with advanced analytics

What transaction and customer information should you track as part of your multi-channel retail strategy? How can you use this information in your strategic decisions?

3 Secret Ingredients of the Fast-Growing Retailer Recipe

Fast-growing retailers with well-defined value propositions are being celebrated as modern retail success stories. This article looks at three of these bright retail sparks and the elements that make them so appealing to customers.