Finding the optimal markdown approach can improve cost and time effectiveness. It can maximise sales volume and reduce stock write-off and waste.
But it’s not easy.
Retailers continuously search for ways to reduce the cost of fresh food waste, deletions and end-of-season lines, as waste costs can easily exceed 5% of fresh food sales. Markdowns, or reduced to clear, puts increasing pressure on slim food margins, so it’s vital to find ways to cut the cost to maximise operating margins. From seasonal changes and carrying the wrong stock, to ineffective markdown pricing, it’s easy to lose revenue unnecessarily.
Governments, charities and public opinion are putting increasing pressure on grocery stores to reduce the amount of waste going to landfill. But as fresh food sales account for a significant amount of a store’s revenue and are a top reason to shop for customers, it’s vital that products are available and shelves are well stocked. Accurate demand forecasting, forecast accuracy, dynamic weather conditions and finding the balance between food waste and customer satisfaction throughout the day are perennial challenges, and excess stock will always occur. So it’s important that retailers have a safety net to manage end of life products.
Up to 60% of a grocery retailer’s sales can come from fresh produce, yet there are few robust and proactive approaches to minimising waste, minimising labour costs, and maximising sell-through before end-of-life. Many retailers look to their data for help, but analytics is only half the solution: accurate price reductions are only valuable if implemented. Too often decisions are made at the discretion of store managers.
The UK arm of a global retailer saved over £20m a year in direct costs by implementing new markdown optimisation pricing and processes optimised for time, store, and stock
A top grocer identified $47.9m of immediate opportunity in a pre-roll out trial of our waste and markdown optimisation solution
The world’s largest retailer realised a $0.27Bn cost saving in its lead market, with a reduction in store labour