INVENT MARKDOWN

Maximize Inventory Profitability with Lifecycle Price Optimization

Markdown planning provides a critical opportunity for retailers to maximize revenues during the later part of the product lifecycle. Optimizing markdowns is a complex decision for retail managers as ‘too much too soon’ markdowns reduce the revenue potential and ‘too little too late’ markdowns increase the risk of ending the season with high levels of inventory. The process is confounded by the complexities of short-term budget targets, cannibalization of other products’ sales, and bundles or product sets.

Invent’s markdown optimization system Invent Markdown detects unproductive inventory early in the season, simulates the inventory performance of each product and recommends optimal weekly price schedules for each product. Invent Markdown integrates advanced analytics, latest scientific forecasting and optimization methods into its decision algorithms to generate maximum profit from the available inventory.

ACCURATE FORECASTING

Invent Markdown generates demand forecasts for each product for the remaining season. The Invent forecasting engine prepares the data by taking care of outlier detections and effects of one-time events for robust and reliable forecasts. Invent Markdown calculates price sensitivity parameters for each product to create more accurate predictions of future demand.

Big Data In addition to historical sales data, Invent Markdown utilizes publicly available data, such as weather forecasts, and customer-specific data such as marketing calendar and product features.

Product Segmentation Segment your products by volume, demand and lifecycle stage and manage its forecasting and replenishment tailored for each segment.

Markdown Sensitivity Clusters stores and products by level of sensitivity to price changes. Estimates separate price sensitivity parameters for each product category, cluster for each category and for each time period.

Robust Forecasting Invent Markdown generates demand forecast at SKU/store level while taking care of outlier detections and effects of one-time events for robust and reliable forecasts. The system learns from its past performance and improves its accuracy every day.

Adaptive Markdown sensitivity of each product is calibrated every week based on the product’s actual response to markdowns.

Lost Sales Correction Monitors and reports lost sales and stock-outs; incorporates this information into demand forecasting for more accurate estimates of future demand.

 

MARKDOWN OPTIMIZATION

Invent Markdown determines the profit maximizing markdown levels for each product by taking into account the demand trajectory, markdown sensitivity, and the short-term objectives of the retailer for the product category. The system relies on proprietary optimization algorithms that are capable of recommending different markdown strategies for different store clusters, regions and countries, subject to business and pricing constraints.

Customized Solution Invent Markdown’s features are customized to fit the unique needs of the clients. Custom features include pricing rules, product sets and bundles, network topology of the retailer.

Product Relationships Invent Markdown estimates and takes into account the effect of one product’s markdowns on other products – both for competing products and complementary products such as product sets.

Omnichannel Invent Markdown forecasts omnichannel demand at store/region/SKU level and plans markdowns in order to maximize profits over an omnichannel network.

Multi-Region, Multi-Country When allowed by the retailer’s business rules, Invent Markdown can set different optimal prices for each store cluster, region or country. This approach enables retailers take advantage of its global network to generate maximum profit out of its inventory.

 

LIVE SCIENTIFIC TESTS AND CONTINUOUS LEARNING

Invent Markdown’s implementation results are tested using Invent’s proprietary testing methodology. Fully controlled scientific experiments are conducted to measure the impact of our solution on net profit and other KPIs and compare it with the legacy system. The forecasting and optimization algorithms continuously learn from system performance and tailor the system parameters by location, product, and customer to create maximum impact.

INVENT MARKDOWN CHECKLIST

  • • Maximizes category profit
  • • Detects unproductive stock early and clears it profitably
  • • 2-4% increase in revenue
  • • 5-10% increase in gross margin
  • • Lower markdowns

SYSTEM FEATURES

Cloud Invent Markdown leverages cloud for agility, flexibility and maximum return on investment. Invent Markdown requires no IT investment and is offered as a pay-as-you go plan.

Smart Reports on Tableau Invent Markdown provides the users with customizable reports of the product’s lifecycle for monitoring performance and gaining insight. Well-designed and interactive data visualization makes Markdown a flexible and intuitive tool.

What-if simulations Invent Markdown allows users to simulate and compare alternative pricing scenarios in real-time.