Intelligent Price Automation

Markdown Optimization Proof of Concept in Shoe Retail

Markdown Optimization Proof of Concept

The Problem

Before implementing the Intelligent Price Advisor, our customer used an Excel-based solution for markdown optimization on the basis of which the prices in merchandise management were adjusted. Prices were changed at great manual expense on the basis of a rigid set of rules. Price adjustments were often carried out with little differentiation, resulting in a loss of sales and earnings.

In a joint preliminary project (Value Validation), intelligent algorithms were developed with the help of which the effectiveness of markdown optimization and the efficiency of the processes can be significantly increased. The aim of the proof of concept was to prove the expected benefit and to confirm the usability of the solution.

The Solution

In the six-month pilot project, proof was provided that the calculated potentials could be realized. In advance, the general conditions with regard to the scope of the product range and locations were jointly defined. At first, the pilot concentrated on a range of products that was particularly suitable due to its high potential. The innovative onboarding process ensured the necessary acceptance of the users and a dedicated customer success manager was available for advice and support throughout the entire test phase. A suitable test concept (A/B tests) also guaranteed a transparent measurement of success. In the background, aifora Data Scientists continuously developed pricing models and proactively monitored the results. Together we gradually increased the automation of the processes and were finally able to automate the pricing of over 80% of the articles.

The Result

The results of the test were impressive: Thanks to intelligent price management, the customer was able to increase sales, turnover and earnings within the first month. In addition, the cost and effort of markdown management was noticeably reduced. Over the entire test period, the expected targets were even clearly exceeded.

The Intelligent Price Advisor is now being used successfully in all relevant product ranges and is being rolled out further.

See also:

aifora Intelligent Price Automation

aifora Dynamic Pricing

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