STORES Magazine - April 2008 - (Page 28)

COMPETING AS A 21ST CENTURY RETAILER When it comes to deal shopping, stores have their customers well trained. For decades, retailers have simply cut prices across the board instead of looking at inventory and sales on a per-store basis. Customers now know exactly how many weeks before a particular season’s golf shirts or sweaters will be marked down 50 percent. The result is that merchants are getting stuck with too much inventory and giving up proﬁt on marked-down items. This is clearly an opportunity for decision process automation. After all, what merchant has time to ﬁgure out how many size-12 black capris are left in the ﬂagship New York store vs. the ﬁve suburban mall stores? Merchants should be buying next season’s clothes, not trying to ﬁgure out whether a 40 percent reduction will get those cargo shorts out the door at the right time. MAXIMIZING PROFITABILITY IN A CONSUMER-CENTRIC WORLD With rules, costs and constraints built in, the data is analyzed automatically to determine the perfect pricing scenario. This is the same strategy gas stations use to price gas higher on the weekends without losing business. Markdown optimization can bring that kind of precision to thousands of SKUs across hundreds of stores. DRIVING PRODUCTIVITY FROM YOUR INVENTORY INVESTMENT Markdown optimization solutions allow retailers to be proactive. So, instead of reacting to ﬁxed business rules (school has started, so mark down the backpacks 50 percent), demand forecasts help retailers adjust for variance (school started one week early this year, which means the shopping patterns are off, so don’t mark down drastically yet). The SAS solution automatically and continually analyzes price points, selecting optimal pricing to maximize proﬁtability and achieve sell-through goals, making it a great tool for decision process automation. Busy merchants love the automated aspect, freeing them from having to make markdown decisions. Because SAS makes markdown decisions easier to analyze and implement, merchants can focus on clearance exceptions and other critical tasks at the beginning of the merchandising life cycle. Store managers say they like the fact that their markdowns are tailored to their customers. How often have managers complained that a markdown wasn’t quick or steep enough for a product that was a poor seller? Or, conversely, how often have they felt frustrated when corporate pushes a price markdown on a product that was selling out quickly at full price? CREATING SIMPLE SOLUTIONS FOR MAXIMIZING MARKDOWNS Retailers who use automated markdown optimization solutions, such as SAS Markdown Optimization, consistently say they provide a two to three percent margin boost while increasing inventory sell-through by 10 percent or more. SAS Markdown Optimization is just one component of a larger revenue optimization platform, which uses advanced analytics– detailed forecasting capabilities and optimization routines – to determine prices down to a store or even an SKU level. Markdown optimization solutions build a detailed demand model using demand history and other factors (holiday dates and the traditional start of school, for example) to generate detailed forecasts that are run weekly by item. Merchants can run numerous scenarios and avoid unnecessary and unproﬁtable markdowns. With the SAS Markdown Optimization solution, retailers can base this analysis on critical factors such as inventory levels, base sales volume, price elasticity and local demand or preferences. ® ® ACHIEVING ROI QUICKLY AND EASILY Along with size optimization, retailers who use the SAS Markdown Optimization solution say it is one of the simplest and quickest ways to get ROI – the kind of ROI that can help fund additional technology, such as performance management, advanced assortment planning and merchandising solutions. Markdown optimization requires no more than the kind of data that most retailers already have. SAS Markdown Optimization can be used in various retail segments, including general merchandise, apparel and footwear; grocery, department and discount stores; and home goods and home improvement retailers. Implementations typically take four to six months and can be undertaken at any point in the year, because they aren’t tied to pre-planning schedules. One customer SAS worked with described it as the easiest IT implementation the company had ever worked on. SAS® REVENUE OPTIMIZATION SUITE, THE ONLY SOFTWARE SUITE THAT HELPS RETAILERS MANAGE REVENUE AND MARGIN THROUGH THE ENTIRE MERCHANDISE LIFE CYCLE. THIS SUITE INCLUDES THREE INTEGRATED COMPONENTS: ® ® ® SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. ® indicates USA registration. Other brand and product names are trademarks of their respective companies. © 2008 SAS Institute Inc. All rights reserved. 485085US.0308

Table of Contents Feed for the Digital Edition of STORES Magazine - April 2008

STORES Magazine - April 2008 Contents Executive Editor's Page President's Page More Retailers Bagging Monthly Comp-Store Reports Time-Warner Center's Economy-Defying Results What Shoppers Think 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Eating Locally Grocery Concept2Watch Restaurants Online Services Marketing Human Resources Product Lifecycle Management E-Commerce: Peer Reviews Drive Online Buyers Kiosks Recycling Operations Payment Systems POS Logistics E-Commerce: Getting Personal Website Management LOEB Retail Letter Arts Update Point of View NRF News Retail Industry Calendar Last Laugh

STORES Magazine - April 2008

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