MARKDOWN OPTIMIZATION SCORES 6% INCREASE IN
GROSS MARGIN AND BOOSTS SELL-THROUGH BY 10%
The Dilemma
To increase sell-through for slow moving
items while minimizing the negative
impact on margins.
Markdown pricing has traditionally been viewed as
a means for minimizing losses resulting from slow
moving goods and high inventory carrying costs. Yet
markdowns remain an integral part of the pricing life
cycle.
A global footwear and sports apparel retailer had been
using historical sales data and merchant intuition to drive
its pricing strategy and markdown decisions. Prices were
not localized or adapted to market conditions, creating
excessively aged inventory. The companys leadership
team searched for a fact-based solution to optimize their
markdown strategy. Specific requirements included:
Identify and quantify the financial
impacts of existing markdown practices
Negate the negative impact on margins
Increase sell-through velocity
Extend solution globally
The information contained in this document is proprietary.
2016 Antuit. All rights reserved.
Program Highlights
Program Highlights
Challenge
Retailer needed to improve sell-through to reduce
aging inventory and recapture lost margins.
Solution
Prognos, an Antuit company, developed a data-
driven markdown strategy that supported business
processes in both the United States and Europe. The
markdown optimization solution featured integrated
forecasting and elasticity models that optimized
markdown pricing based on a number of variables
including trends, seasonality, life cycle, price,
promotions, sell-through and inventory position.
Outcome
Increased sell-through by 10% while boosting gross
margins by 6%. The markdown pricing solution
also reduced the workload required for effectively
managing markdowns.
www.antuit.com
Markdown Pricing Optimization

In the first year of execution, the retailer increased sell-

through of its clearance merchandise by more than 10%.
The retailer also expanded the number of markdown levels
from two (30% and 50%), to four (20%, 30%, 40% and
50%). This enabled the client to reduce its tendency to
prematurely offer the steepest markdowns and capture lost
margin while increasing the average unit retail by 2-3%. In
addition to increasing margin and sales velocity, the retailer
significantly reduced the time, effort and workload required
to effectively manage markdown pricing. Today, the Prognos
team continues to work with the retailer as they continuously
expand their analytical capabilities.
Last year, we only had two price reductions 30%
and 50% and there was no discernible difference
in sell-through between the two. This year we
have four main buckets (20%,30%,40% and 50%)
and have found that the two discount levels that
drive the best sell-through are 20% and 40%
it could mean that potentially we do not need to
markdown at 50% at all.
- VP of Pricing

Weekly Performance Graph

Wk1 Wk2 Wk3 Wk4 Wk5 Wk6 Wk7 Wk8 Wk9 Wk10 Wk11 Wk12 Wk13 Wk14 Wk15 Wk16

Revenue Inventory

In less than 5 weeks, Prognos markdown pricing solution reduced inventory carrying costs while significantly increasing revenue.

About Antuit
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of industry sectors, developing and deploying analytics solutions that
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quickly respond and react to business changes. Armed with Antuits
analytics-powered sales, pricing, marketing and supply chain solutions,
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The information contained in this document is proprietary.

2016 Antuit. All rights reserved. www.antuit.com