The last few weeks have been a blur of travel. Mostly work, some personal (Parents weekend!) Lots of lessons, and lots of opportunity to learn. And now finally time to look back and make some sense, and try to put the pieces together.
First trip was to a Revionics Insight conference. A great conference as always, but this year was especially interesting to me as we are ‘seasoned’ in base and optimization, and piloting a markdown. ( And I always enjoy when my team gets recognized as industry leaders by their peers as well, so an award was cool to receive as well)
Listening to the vendor, other progressive retailers, and some genius data science people (and there were a lot running around in one place), I had an epiphany that the way we handle MD is really wrong. It should not be an ‘event’, but an ongoing process. And the way we have viewed these as a negative is also a little backwards.
Who said a discounted item has to be bad? We should be smarter. so here are That Planning Guys Super Secret Markdown Money Making Methods!
First: Lets not call them markdowns or ‘clearance’ or even discounted. Lets call the items being ‘promoted’ Great positive word. Who doesn’t want a promotion?
Next, stop filtering out goods or vendors based on an opinion of the goods. Words like ‘Basic’, ‘core’, ‘current’ really are hurting the process. I want to take all items to evaluate effectively as groupings (or clusters, but more on that at a different time)
Lets spread the time frame of the promotion goods. They don’t need to be gone in 6 weeks… lets make it a process that can take time. The secret to making great food in a smoker is time and patience. A turkey takes 8-12 hours at low heat to be outstanding. A markdown cycle may well be 8-12 weeks, but the results can be outstanding as well.
Let the optimization & analytics tell you what to do and when. Then the merchant decisions can factor in. If the math says to promote (note: NOT MD!) an item, then the merchant can look to a RTV, stock balance, or other means. And if no means available, take the price change as prescribed.
In short… take all the goods that you have, and determine the exit date at the time of arrival, or even creation. Evaluate as a whole group, whats the goals, whats the desired outcome? Then let the math dictate the ‘smoke’. Don’t get hung up on items considered ‘core’, as if the math says to promote, maybe they aren’t really meant to be core.
Selling items faster and more profitably do not have to be mutually exclusive goals. If the goal is to liquidate fast, OK… But the goal should be to make money, more money, and lots of money. Be smarter.
-That Planning Guy
PS- Next post will be talking about clustering and advanced analytics, another fun conversation from my travels.