Prompted Markdowns - How to Cut # of Date Checks by 85%

Retailers have been increasingly adopting prompted markdown systems to optimise pricing strategies for near-expiry products while enhancing operational efficiency.

Our recent discussion with retail leaders highlight how technology-driven markdown solutions have transformed store processes, improved financial margins, and minimised waste.

The Key Insights from Retailers on Prompted Markdowns

1. Operational Efficiency and Time Savings: Prompted markdowns significantly reduce the time required for markdown processes. Retailers in the meeting reported an 85% reduction in the number of product checks compared to manual methods. By integrating automated systems, stores now check only 5% of their total stock daily instead of scanning all products manually. The introduction of real-time, digital audits eliminated the need for paper-based compliance checks, with one retailer reporting a savings of 58,000 sheets of paper annually.
2. Data-Driven Decision-Making: Many retailers leverage AI-driven markdown algorithms to adjust discounts dynamically based on product demand, store location, and competitor pricing. Many retailers highlighted the importance of integrating markdown data with ERP and inventory management systems for seamless execution. Real-time analytics help retailers forecast demand and adjust replenishment decisions to prevent surplus food that lead to excessive need for markdown work.
3. Waste Reduction and Sustainability: Several retailers, reported reduced food waste by approximately 29% by optimising markdown timing and pricing. AI-powered markdown tools optimise discounts to ensure better sell-through rates. For example, a retailer moved from flat 50% markdowns to a variable markdown model (20%-40%) based on sales patterns. Collaborations with food waste reduction platforms like "Too Good To Go" also help to ensure that surplus food is repurposed instead of thrown / wasted.
4. Improved Customer Experience: Customers benefit from a more structured markdown system where all discounted products are placed in a dedicated area, preventing disruption in regular shopping zones. retailers report that their shoppers are now actively seek markdown zones, this is helping retailers drive higher sell-through rates while reducing the cannibilisation of full price / margin sales.
5. Technology and Automation Enhancements: Many retailers have moved from manual markdowns to mobile-based systems with handheld scanners or integrated PDA devices. Retailers have also introduced electronic shelf labels (ESLs) to make markdown tracking more efficient, even incorporating flashing LED signals to highlight to stores associates the items that need a discount applied.
6. Challenges and Considerations: Retailers faced challenges in product mismanagement when customers moved marked-down items to different shelves. Some retailers had to adjust markdown placement strategies to ensure seamless customer navigation and prevent confusion. Ensuring compliance and proper execution required dedicated store teams to oversee markdown strategies and prevent errors.

Key Questions for Retailers:

1. Do you invest in AI-driven markdown solutions to optimise discount rates dynamically and improve sell-through rates?
2. Should you integrate markdowns with existing stock and sales data for real-time inventory tracking?
3. Is it now the right time to move towards digital audits and paperless compliance to improve sustainability and efficiency?
4. Should you consider and establish a dedicated separate markdown section to enhance customer experience, increase sales, reduce the risk of lost margin and minimise misplaced markdown items?
5. How do you organise your business to constantly monitor markdown trends and customer behaviour to refine discounting strategies further?