After a web-based pricing optimization software system helped improve profit margins in its Old Navy stores, Gap Inc. will roll out the ProfitLogic Markdown Optimization system for all of its products in more than 1,300 stores in its Gap division, the company said today.
Gap took about 12 weeks last fall to deploy the ProfitLogic system for its 800 Old Navy stores, then realized improved margins during the holiday shopping season. "We are now using it as the standard merchandising tool that helps us with promotional price and markdown decisions," says Rose Huerta, vice president of planning at Old Navy. "The system delivered significant benefits without causing major disruptions to our organization during implementation."
The ProfitLogic system applies algorithms against historical and real-time data on pricing, sales and inventory records to recommend prices expected to produce the highest margins within planned selling schedules. Gap and other retailers say the system enables them to better manage pricing strategies for thousands of SKUs.
Tom Cawley, Gap`s senior vice president of finance, says Gap decided to expand the ProfitLogic system throughout the Gap division after realizing how quickly it could improve financial results. "We were impressed by the financial benefits and quick return on investment we saw at Old Navy," he says. The Gap division includes Gap, GapKids, babyGap and GapBody.