Profitable Markdown Management Through Advanced ETL Services

The Case

The retail chain’s management realized that better understanding of inventory and pricing, can empower individual stores to improve their markdown management while driving higher sales. An Optimizer application and corresponding data feeds were integrated to assess the profitability, pricing and discounting models for all stores. As a next step our client needed advanced ETL development in order to unleash the full capabilities of this newly integrated application.

ETL Development Services

ScaleFocus provided ETL development services by delivering meaningful data for IBM Optimizer and performing 2 ETL processes. The first one is based on weekly REST service calls. The source data is extracted in JSON format and then transformed into CSV files, which are compatible with IBM optimizer. The second one relies on regular data extraction (CSV files) from local directories, followed by transformation to other CSV files. The data transformation in both processes was made through custom Java functionality, developed in the Spring framework with the additional usage of Apache Camel.

IBM Optimizer is an advanced predictive analytics tool, which empowers quick and profitable markdown. This helped our client’s stores management to consider all the factors which affect prices, based on their markdown strategy (optimized by profit, or by inventory reduction), and proactively suggests the optimal actions.   The Optimizer app provides time-sensitive metrics on how previous markdowns performed and recommends the most advantageous price strategy for every product down to the individual store level. This is done through robust algorithms, what-if analysis, etc., by taking into account store location, seasonality, inventory, price elasticity and more.

The ETL development, provided by ScaleFocus, enabled client stores’ management to:

 

  • Select most profitable markdown assortment, based on customer behavior.
  • Identify price rates, which drive the most sales of a product.
  • Analyze specific product’s price elasticity and reach optimal margins.
  • Incorporate promotions in plans and forecasts.
  • Avoid product cannibalism by analyzing how lower prices on certain products affects the sales of others.

 

ScaleFocus’ contribution to the fast project completion is based on:

 

  • Profound know-how in the cutting edge technologies used for implementation.
  • Speed and quality of development.
  • Fast R&D with newly proposed and adopted technologies.

The Achievements

 
  • Advanced forecasting capabilities on future markdowns
  • Improved inventory turnover and profit goals
  • Optimized sell-through rate

About the Client

Our client is an American department store, operating more than 1150 stores in 49 states. The company is currently the largest department store chain in its country of operation by number of stores. Our client also offers online shopping through its website.