Markdown Enhancements Drive Improved Profitability Case Studies

CLIENT: A multi-billion dollar national retailer

The challenge

After many quarters of declining sales and profits, this national retailer needed nothing short of transformational change to reverse downward trends. They selected PwC Canada’s Retail Consulting Services to drive a multi-year merchandising program. Markdown Optimization (“MDO”) was selected as the first priority to realize rapid ROI and help fund longer- term initiatives. In 3 months, we implemented an interim solution - rules based markdowns - to drive almost immediate benefit, while planning the MDO initiative.

Our approach

PwC Canada’s Retail Consulting Services played a lead role in the MDO project, spanning markdown strategy, business process, organizational changes, testing, and training while leveraging our deep expertise in many previous MDO projects. Key activities included:

• Introducing Rules-Based Markdowns as a means of rapidly realizing benefits, several months in advance of the rollout of MDO
• Defining Future State operating processes, accountabilities and timelines for the introduction of performance-driven markdowns
• Developing a pricing zone strategy for markdowns that reflected different consumer demand by zone
• Creating and leading business-focused training covering markdown concepts, business process changes, application usage, and the markdown decision process
• One-on-one coaching with Planners, Buyers, and executives during initial markdown cycles to ensure proper use and adoption of the new markdown approach

The result

The Markdown Project has been a resounding success:

• Business strategy, not budget, drives acceptance or rejection of markdown recommendations
• Well over 95% of firm Markdowns were accepted through MDO in the first season
• Gross Profit results exceeded plan by a significant margin
• Sell-through also increased significantly