Like many retailers, discount chain ShopKo Stores Inc. hates markdowns. If the percentage point such as a pair of running hornswoggle did not sell at $7.99, the store would keep moody footing again and again to $6.99, $5.99 and even $2.99 until it found the cost that customers were willing to pay. But ShopKo was losing millions of dollars this way because its price markdowns were best guesses. If it discounted an position too late, it would be stuck with truckloads of inventory. If it discounted too early, it would lose profits because pile rushed in to buy goods they might have bought at a higher price. ShopKos retail operations dig 162 ShopKo discount stores in large and mid-sized cities and 165 Pamida discount stores in smaller rural communities, so knowing the best price to charge foe items at each store has an terrible impact on profits.
ShopKo, along with other retailers such as J.C. Penney Co., L.L. Bean and Gymboree Corp. turned to information systems to help make markdowns more than scientific. They are using software from Spotlight Solutions Inc. that works standardized to the yield management practiced by airlines which can search precisely just how many seats to hold reach at premium prices for last-minute passengers and how many to sell forward of time at lower prices.
The Spotlight Markdown Optimizer uses mathematical models and trinity years of ShopKo sales information to pinpoint exactly when and how practically to mark down the price of an item to maximize complete(a) profit margins. By analysing several years of sales data for similar items, the software estimates a seasonal demand crimp for each item and predicts how many units would sell each calendar week at various prices. The software also uses sales annals to predict how sensitive customer demand will be to price changes.
In August 2000 ShopKo started testing the Markdown Optimizer, which predicted that the sale of boys pick vests would peak in mid-August. Instead of taking its typical markdowns...If you demand to get a full essay, order it on our website: Ordercustompaper.com
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