Price optimization strategies to help retailers maximize sales

26 Aug '10

4 min read

For example, a 40 percent markdown on new summer apparel at mid-season might increase sales and prevent the potential losses, as compared to offering a 70 percent markdown on summer apparel at the end of the season when shoppers have already set their sights on fall collections. Advanced technology that enables retailers to use a set of business rules that control minimum/maximum price reductions, the number of reductions and the price formats for each product will help close the gap on lost sales.

Link pricing strategies to space and labor management. Typically, the three greatest expenses for retailers are inventory, labor and real estate. Even if localized assortments and optimized pricing help move inventory, mismanagement of the store space and labor can still hurt net profitability.

This has led some retailers to shift to smaller stores, leaner assortments and faster logistics. Hence, product replenishment has moved from two to three times a week to enhance shelf productivity. Additionally, markdowns and product promotions may create extra activity in the store. A store staffed with the right number of associates to meet store-specific traffic demands can help retailers save on labor costs and capture revenue opportunities.

JDA Software Group, Inc., The Supply Chain Company, is a leading provider of innovative supply chain management, merchandising and pricing excellence solutions. JDA empowers more than 6,000 companies of all sizes to make optimal decisions that improve profitability and achieve real results in the discrete and process manufacturing, wholesale distribution, transportation, retail and services industries.

JDA Software Group Inc

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