Markdown Optimization Solution: Saving Profit Margin

Markdown optimization:
saving profit margin

The apparel retailer Intertop used Competera platform to maintain profit margin

Intertop manages 114 brick-and-mortar stores and 14 mono and multi - brand apparel chains across 25 cities in Eastern Europe. Launched in 1994, the apparel retailer offers over five million SKUs. In 2014, the company entered the e-commerce scene.
Sixteen brand managers are in charge of over 60 brands offered by the retailer.

Intertop used Competera’s platform for its summer sales 2019 campaign to hit three goals within a six-week market test:

  • Liquidate excess inventory while keeping the gross profit and profit margin
  • Test Competera pricing platform’s effectiveness
  • Speed up repricing

Challenge

High pressure to clear off shelves fast while maintaining the gross profit and profit margin

Repricing takes too much time

Solution

Regular elasticity-based markdown suggestions

Analytics for well-informed pricing decisions available with one click

Results: Intertop reached all the set goals

The company is planning to scale Competera’s solution to optimize its offers for its upcoming collection.

  • 200 b.p.

    Profit margin saving

  • 10.3%

    Gross profit saving

  • 15 min

    Repricing time

«When using machine learning in repricing, we set business goals and constraints. Machines do the rest of the job. In other words, we do not do repricing per se, but we set the rules of the game and control the results. Technology does boost the financial performance of your company.

As technology takes up routine tasks, pricing managers need to boost their analytical skills and business thinking. We have to learn to see the big picture and make not tactical, but strategic decisions»

quote picture
Ilona Baskova
Ilona Baskova
Brand Manager at Intertop

Starting Intertop's journey with Competera

Markdown optimization
Regular prices optimization + New entry cold start problem
The most accurate price recommendations based on automatic feature extraction from texts and images
Scaling across
the whole assortment
Coherent pricing approach across the geography of presence

Challenge

Intertop used "blanket" discounts
  • Profit margin and gross profit margin losses

    When crafting prices, managers do not consider demand elasticity and thus do not create optimal offers for every item.

  • Brand managers are overloaded with data

    They need to analyze dozens of parameters, including business goals and KPIs.

  • Repricing takes hours

    Managers need to monitor sales dynamics manually.

Solution

Tailored pricing and discounts allowed increasing gross profit and profit margin

The market test featured 420 lines of 4 brands: Timberland, Clarks, Geox, Tommy Hilfiger

Test group

Managers used elasticity - based markdown recommendations for weekly repricing cycles.

Control group

Managers continued pricing manually with the same regularity.

Competera factored in all of Intertop's business rules: thresholds, repricing steps, rounding rules. The platform analyzed millions of data points of historical data to craft markdown suggestions.

Results: Profit margin saving 200 b.p.

Both the test and control group offered the same average discount price, which means that the brand and price positioning remained intact.
profit margin
  • clarks
  • tommy hilfiger

The test group exceeded the control group by three parameters

increase sales revenue
  • Control Group
  • Test Group
  • Performance boost

The test group exceeded the control group by three parameters

increase profit
  • Control Group
  • Test Group
  • Performance boost

Download PDF file to share it with your colleages or friends

A consumer electronics retailer maximized revenue without losing their margins

Download PDF file

Competera Pricing Platform helps retailers to craft optimal offers

Get to know how FMCG, giftware, and consumer electronics retailers use Competera to earn more
Consumer electronics
Foxtrot
Maximazing Sales Without Risking Profit Margins
Giftware
Find Me A Gift
Find Me A Gift
Health & beauty
Kosmo
Maximazing Sales Without Risking Profit Margins

Want to know more or leave a comment? Email us at [email protected]