September 3, 2002, 12:00 AM

Squeezing profits out of retail apparel markdowns

Canadian retailer Northern Group Retail will use ProfitLogic’s Pricing4Profit web-based software to set clearance-pricing in its more than 278 specialty apparel stores. The goal: More profitable and timely markdowns, the company says.

In an effort to maximize profits while moving merchandise, Canadian retail company Northern Group Retail Ltd. will use ProfitLogic’s Pricing4Profit web-based software to set clearance-pricing in its more than 278 specialty apparel stores.

Northern Group will use Pricing4Profit markdown optimization software from Boston-based ProfitLogic to help manage about 10,000 stock-keeping units throughout its Northern Reflection, Northern Traditions and Northern Getaway retail stores.

"We anticipate that Pricing4Profit will have an immediate impact on improving gross margins this year by helping us make more profitable and timely markdown decisions and by creating space for new merchandise," said Michael Stanek, CFO of Northern Group. He added that Northern Group also expects the Pricing4Profit software to be scalable to support the retailer`s growth plans.

The software, compiling data over the Internet from a retailer’s in-store point-of-sale system, provides an automated recommendation regarding markdown pricing to buyers and merchandising planners at corporate headquarters, who can then accept or reject the recommendation. To help managers decide on a recommendation, the system also provides detailed merchandising and pricing information for different products, including a comparison of sales performance against plan, an evaluation of the impact of pricing on profitability, and the effect on costs if markdowns are delayed. Pricing4Profit is part of ProfitLogic’s Merchandising4Profit suite, which also includes modules for purchasing merchandise and for allocating it to stores.

The system, designed to act like its own merchandising expert, is intended "to make every merchandiser your best merchandiser," says a ProfitLogic spokeswoman. She adds that managers at times may reject the system’s recommendation based on unusual information that the system would not be designed to consider, such as a popular movie that could help drive sales of a particular type of product.

The decision from headquarters on accepting or rejecting the system’s markdown recommendation is then forwarded via the web through a pricing execution system that integrates with the markdown optimization software. In-store managers can then retrieve the pricing information via their own browser access to the pricing execution system.

Northern Group is owned by the Canadian affiliate of York Management Services Inc., Somerset, NJ.


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