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Strategic Markdown Management // Clear Old Stock Without Losses

How to Optimise Markdown Strategy for Maximum Profit
In the world of fashion retail, keeping up with the latest trends and constantly refreshing inventory is key to success.

However, to make room for new collections, retailers often find themselves with excess stock that needs to be cleared out.

The challenge lies in finding a way to effectively markdown these items without heavily discounting and sacrificing profit margins.

This is where strategic markdown management comes into play.
The Problem: Unlocking the Power of Markdowns

Retailers face a common dilemma - how to determine which items to mark down, by how much, and when to markdown them.

This complex problem poses several challenges that can hinder a retailer's success:
Balancing Act
Determining the right balance between keeping inventory and clearing out old stock can be a challenging task. Retailers need to find the right moment to markdown items to maximise sales without sacrificing profit margins.
Brand Image
Markdowns, if not executed thoughtfully, can negatively impact a brand's image and reputation. Heavy discounting might be perceived as a sign of low-quality products, leading to decreased customer trust and loyalty.
Profit Margins
Markdowns are intended to boost sales by offering discounted prices, but if not carefully orchestrated, they can erode profit margins. Retailers need to find the optimal amount to markdown to entice customers while still generating a healthy profit.
Stock Clearance
Excess stock can tie up valuable resources, preventing retailers from introducing new collections and generating revenue. Clearing out old stock efficiently is crucial for maintaining a lean inventory and maximising profitability.
Data Overload
Retailers have access to vast amounts of data, from sales history to customer behaviour, but making sense of this data can be overwhelming. Effectively leveraging data analytics to inform markdown strategies requires expertise and advanced tools.
Embracing these challenges head-on and finding innovative solutions is crucial for retailers who want to thrive in today's competitive fashion industry.

This is where our fashion retail consultancy can provide invaluable assistance.
Take Control of Markdown Management with Existing Solutions
Leveraging Advanced Analytic Tools

One approach that merchandisers can use to solve the challenges of markdown management is by leveraging their own advanced analytic tools. By analysing past sales data, customer behaviour, and market trends, merchandisers can gain valuable insights into which items to markdown, when to markdown them, and how much of a discount to offer.

This data-driven approach allows for strategic decision-making, ensuring that markdowns are executed at the right time, optimising sales while protecting profit margins. By utilising their own tools, merchandisers can unlock the power of advanced analytics and make informed markdown decisions with confidence.

Empower Your Markdown Strategy with AI-Powered Optimization

Another approach that merchandisers can take is to utilise their own AI-powered tools for markdown optimization. By combining AI algorithms with machine learning capabilities, these tools can analyse vast amounts of data and generate optimised markdown plans.

Merchandisers can input their specific goals and constraints, such as desired profit margins or stock clearance rates, into these tools, which will then provide tailored markdown recommendations. By leveraging AI-powered tools, merchandisers can streamline their decision-making process, save time, and achieve maximum profitability in their markdown strategies.

Foster Collaboration and Enhance Communication

Collaborative planning and communication platforms bring together various stakeholders, such as buyers, planners, and store managers, to tackle markdown management challenges.

Real-time data sharing and effective communication facilitate alignment in markdown strategies across different departments. By collectively assessing inventory levels, sales performance, and market trends, merchandisers can make more accurate markdown decisions. With collaborative tools, merchandisers can optimise markdown strategies, drive sales, and effectively clear out excess stock.

In summary, merchandisers can overcome markdown management challenges by leveraging their own tools and resources. Whether through advanced analytics and data-driven insights, AI-powered markdown optimization, or collaborative planning platforms. Merchandisers can streamline decision-making processes, maximise profitability, and clear old stock without sacrificing customer trust.

The Power of Advanced Analytics in Pricing

At our fashion retail consultancy, we understand the complexities of merchandise planning, assortment planning, inventory optimisation, and pricing management.

We have developed capabilities in advanced pricing and sales analytics, empowering retailers with the tools they need to make data-driven decisions to solve the challenge of markdown management.
Our Solution: A 3-Day Workshop for Optimal Profit

To address the problem of strategic markdown management, we offer a comprehensive 3-day workshop that analyses stock age, sales velocity, and determines the best markdown strategy for optimal profit.

Our team of experts will guide you through the process, leveraging our expertise in demand forecasting, merchandise planning, and retail assortment planning.
Benefits of Our Solution: Clearing Old Stock for Increased Revenue

By partnering with us and harnessing the power of strategic markdown management, retailers can expect significant benefits:
Effectively Clear Old Stock
Our advanced analytics enable retailers to identify the right items to markdown, at the right time, and by the right amount. This ensures a streamlined and effective clearance process.
Preserve Profit Margins
By leveraging data-driven insights, our solution enables retailers to strategically markdown items without negatively impacting profit margins. This means you can clear out old stock while still maintaining healthy profitability.
Enhance Brand Image
A well-executed markdown strategy focuses on maintaining a brand’s image and reputation. With our expertise, you can strike the perfect balance between attracting customers with discounts and preserving the value perception of your brand.
Unlock the potential of strategic markdown management

Book your 3-day workshop
Unlocking the Potential: How Much Can You Gain?

The result of implementing our strategic markdown management solution can be truly transformative.

By effectively clearing old stock and optimising your markdown strategy, retailers have the potential to increase end-of-season revenue by up to 10%.

Imagine what this could mean for your business - potentially an additional $2.5 million in revenue on a $25 million annual revenue.
Embrace the Power of Strategic Markdown Management

In the competitive world of fashion retail, clearing out old stock is a necessity. However, doing so without sacrificing profit margins can be a significant challenge.

With our strategic markdown management solution, you can unlock the power of data-driven insights and make informed decisions about which items to markdown, by how much, and when.

Don't let outdated inventory hinder your growth and profitability.

Take advantage of our expertise in advanced pricing and sales analytics, coupled with our deep understanding of merchandise planning and retail assortment planning.

Together, we can enhance your brand image, maximise clearance revenue, and optimise your business for success.

Contact us today to book a 3-day workshop and unlock the potential of strategic markdown management.

Let's collaborate to unleash your brand's potential and drive your fashion retail business to new heights of success.

About the Author

Giorgio Loiodice brings over 20 years of global supply chain expertise to fashion, luxury, and consumer goods industries.

He's a trusted advisor to leading retailers and fashion brands, shaping their omnichannel success.

Explore his insights in this article.

Giorgio Loiodice

Chief Innovation Officer

At KIVALUE we cover end-to-end
fashion retail processes
From connecting merchandising, buying, and planning processes to omnichannel inventory and markdown management

We offer FREE assessment of your current solution requirements.