Revionics helps retailers shift COVID-19 markdown strategy for store closures and online sales
With customers around the world, the Revionics pricing strategists and scientists have stayed busy in the pandemic analyzing new data and advising retailers through ways to adapt. One area that has consistently needed guidance is markdowns. Constant changes in the market require constant adaptions around pricing strategy. At Revionics, our team has been here to help retailers adjust their COVID-19 markdown strategy for every landscape shift.
The first major issue our markdowns retailers faced was having to close their stores. For many of our general merchandising retailers, forced store closures not only hurt sales, but also created a huge disruption for their markdown strategy. While much of consumer demand shifted to eCommerce, markdown items rely heavily on in-store traffic.
“Markdown products aren’t a destination shopping experience,” said Adam Rutledge, Revionics Customer Success Director. “A more typical scenario would be a consumer walking by the clearance bin at the store and deciding to browse, but they really came for something else.”
Seasonality also contributed to the problem. While some markdowns could just be placed on hold until brick and mortar locations reopened, that option wasn’t available for seasonal items. With most of the major shutdowns occurring in March, several of our retailers suddenly found themselves stuck with excess Easter and spring merchandise, and limited options for clearing it.
“One of our retailers especially has a lot of space in store for seasonal and clearance items. It’s an important part of their overall business,” said Doug Bean, Revionics Senior Price Strategist, Customer Support. “So they really felt pressure to keep product moving and clear space out.”
Expanding eCommerce Ahead of Schedule
Part of the immediate focus to clear inventory was to help our retailers move their markdowns and extra product online. For some, that meant developing a new online markdowns strategy optimized for changing consumer behaviors. For others, the goal was to balance out additional store inventory and provide consistency across all open channels.
Regardless of the tactic, the Revionics team met with each customer weekly to interpret the data, walk through scenario forecasts, and ensure the retailers were moving forward with their best possible plan for success.
Revionics had already been working closely on an online pricing strategy with one customer in the sporting goods space when COVID hit its regions. Suddenly, eCommerce became priority number one, including the markdowns process.
The Revionics team played a crucial role in helping this retailer collect all the correct inventory and sales data and map out the process for ensuring online markdowns would flow accordingly. Normally this process could take a few months, but with the urgency of the situation, the Revionics team was able to get the retailer up and running with markdowns for a new channel in about a month.
More Markdown Challenges with Reopening Retail
As we all know, COVID is an ever-evolving landscape. After the initial scramble, stores eventually started to reopen with new safety measures in place. However, this introduced another wave of challenges, especially for national retailers with locations spread across the United States. With levels of severity and regulations varying by state and sometimes city, many Revionics customers had the difficult task of coordinating strategies for stores opening at different times and at different capacities.
This was particularly tricky for executing markdowns. “The way it works is, you start by marking an item down say, 50%. Then we monitor and optimize. If the data shows you didn’t sell anything at 50%, that tells us the markdown needs to go deeper,” Rutledge said. “But if a store is closed, it’s not going to sell anything. So, when you do get to the store reopening, a lot of the merchandise could potentially be heavily discounted unnecessarily.” Therefore, the goal was to guide our customers on how to maximize the inventory throughput for open stores while not creating a bad scenario for the locations still closed.
Ultimately, the solutions varied depending on overall pricing strategy and retailer capacity. For several customers, the Revionics team worked to create a custom solution that would enable the system to distinguish between the open and closed stores, and hold off the markdowns where needed. This new workaround allowed for retailers to continue optimizing markdowns at shoppable locations without disrupting others.
Other Revionics customers required a solution that prioritized ease of use. Forced by COVID to conduct furloughs and layoffs, more than a few retailers were operating with severely reduced pricing teams. When it came to managing markdown strategy for a mixture of open and closed stores, these retailers simply didn’t have the manpower to completely change processes.
Instead, the Revionics team worked very closely with remaining staff to ensure retailer pricing operations continued. Our strategists guided each customer towards the best approach for mitigating the markdown problem without causing too much disruption to retailer processes. In most cases, this included helping retailers set guidelines in the Revionics system that would prevent too steep of a markdown jump. The extra hands-on assistance was crucial to many of our retailers to keeping their businesses running.
Advancing Your COVID-19 Markdown Strategy
If there is a silver lining for our retailers, it is that the current discord in the market has given them the chance to learn more from the knowledge and experience of the Revionics team. Through the ongoing conversations around the pandemic, our pricing strategists have helped retailers leverage markdowns on new channels, revisit and improve markdown schedules, and understand how to maximize different functionalities not previously used to the full advantage. Much like our consumables retailers, these markdowns customers are now equipped for greater success in and beyond COVID-19 because of their partnership with Revionics.