Invent.ai helped a leading apparel retailer in Europe increase its revenue, lower markdown loss and achieve higher sell-through. Using invent.ai's AI-powered Markdown optimization solution, the retailer optimized its products’ markdown path through the season and directly improved its margin.
The retailer serves its customers with 400 stores in more than 20 countries. Its range of products includes high-quality fashion for the whole family, from footwear to accessories. To excel at markdown strategies and achieve profit optimization throughout the season, the retailer turned to invent.ai, a global provider of AI-powered inventory and price optimization solutions dedicated to the retail industry.
Invent.ai's customer; a leading European retailer, wanted to accelerate its margin growth with markdown optimization throughout the product cycle. Following extensive market analysis, invent.ai was chosen as the best fit with the retailer’s ambitious goals. Invent.ai's proven fashion-retail industry-specific approach and expertise were the other reasons behind this leading retailer’s decision.
During a three-month period, invent.ai proved the benefits of its profit-optimal markdown solution with pre-go-live simulations and rigorous A/B testing. As a part of the A/B test, invent.ai and the retailer shared the categories and markets in a cross-matrix format to establish identical sets.
During this period, invent.ai’s Markdowns achieved 6.9% higher sell-through with 2% lower markdown loss.
Following that, the company implemented the full markdown optimization solution. Invent.ai delivered speed to value and allowed the retailer to take advantage of option-level, machine learning-based markdown decisions.
Invent.ai applied customized algorithms to meet the customers’ different demand patterns and operating models. For instance, a “clearance strategy” was used for several product categories at the end of the season, which had a high “first markdown week” effect when the markdown started. The customized algorithms that take into account the diminishing markdown impact, also known as the “aging effect,” enabled the retailer to increase their sell-through in the following weeks, until the subsequent markdown increase.
For some specific categories a “markdown and clear as you go strategy” was applied for the products that didn’t perform well after the initial sales period, so that the retailer could start markdowns and continue to the end of the season.
With Markdown Optimization, the retailer can maximize its overall profit by optimizing its markdown strategy for each item over its lifetime. The solution using markdown-specific forecasting also accurately predicts seasonal demand for the retailer’s new products with a limited history.
"Invent.ai's forecasting model based on the statistical analytics of factors such as price elasticity, seasonality, special days and broken assortment impact provides the optimum frequency, depth and timing for us. Thanks to invent.ai, we can now find the answers to important questions such as:
- What is the optimal markdown path for each and every SKU over its lifetime?
- When should each product be discounted based on the sell-through and inventory levels?"Director Merchandise Planning & Controlling, Leading Apparel Retailer
Speak with an expert in AI for retail to find out how the apparel retailer improved its revenue by 2.4% and lowered markdown loss by 2%.