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MARKDOWN OPTIMIZATION - A CASE STUDY
Typical retailers carry thousands of style-colors at each store. When multiplied by the various sizes, the combination becomes even larger. Retailers, under pressure to move inventory while trying to maximize gross margins, have to struggle with the proliferation of these combinations. To make such a daunting task manageable, and to keep costs under control, retailers typically implement pricing, promotion and markdown decisions for a stylecolor uniformly for the whole chain or for groups of stores. Retailers have realized for a while that this jack-hammer approach may work for some stores but results in dilution of margin for some stores while it is too conservative for others leading to excess left over inventory.
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