Choosing the right item start is a critical factor in successful merchandise managemet in a seasonal retail business landscape. In this document we will describe ways to achieve this important success factor when working with Oracle Retail’s Markdown Optimization solution.
In the above chart, we see the end date of the item represented by the blue line is 31 weeks into future. The item has almost negligible sales post 27 – June – 10 (20 weeks from the start date) and the lull continues for the rest of its life (another 11 weeks). With setting an exit date of 25 weeks into future and MDO recommending markdowns at the appropriate time to support this shorter cycle (represented by the blue red line), we see that most inventory has been cleared in the 25 weeks, making way for newer merchandise on the shop floor, at the same time reducing the overhead costs associated with holding the item in inventory. There is a fine balance maintained by MDO on clearing the inventory at markdown prices and at the same time maintaining a healthy gross margin.
If you would like to know more about how to determine the best end date for your items please check out the document below.
End Date and its Impact
For a retailer end date defines the date beyond which an item ceases to exist – consequently the date until which an item must be sold out.Choosing an End Date
Choosing an end date is one of the most important decisions thet a retailer must take. It defines the life cycle length for an item. The end date is chosen on the basis of the retailer’s merchandising strategy. Fashion items retained on the shop floor for a long time (late exit date) will affect the ook and fell of the store, increase the operation cost e.g.: holding cost, labor, etc. Also, the retailer could bring in fresh items generating more gross margin rather than continue selling items whose natural demand is much lower, thus high alternative cost is also an issue. Choosing a too early exit date might not always tap the potential gross margin that the item would otherwise generated. E.g.: The retailer could cease to sell the item while there is still some demand in the market reslting in lower sales numbers.
In the above chart, we see the end date of the item represented by the blue line is 31 weeks into future. The item has almost negligible sales post 27 – June – 10 (20 weeks from the start date) and the lull continues for the rest of its life (another 11 weeks). With setting an exit date of 25 weeks into future and MDO recommending markdowns at the appropriate time to support this shorter cycle (represented by the blue red line), we see that most inventory has been cleared in the 25 weeks, making way for newer merchandise on the shop floor, at the same time reducing the overhead costs associated with holding the item in inventory. There is a fine balance maintained by MDO on clearing the inventory at markdown prices and at the same time maintaining a healthy gross margin.
If you would like to know more about how to determine the best end date for your items please check out the document below.