To an ever-increasing extent, the retailers fall into the ploy of using markdown as an evaluating approach. This method was on full-fledged display during the 2016 Christmas season. The chief expert of retail pricing, Boomerang Commerce reported that average discounts from major retailers during Thanksgiving week increased substantially and reached up to 16 percent when compared to only 5 percent growth in the year 2015.
Likewise, Boomerang revealed that Target’s average markdown for commodities listed for Black Friday sale peaked an extra 27 percent from previous year’s 43 percent, an astounding 17 percent growth. Walmart’s median discount on listed products increased from 28 percent to 33 percent.
The primary reason for the markdown by the likes of Walmart and Target is the leading online store Amazon. On Nov 26, 2016, Boomerang studied various shopping sites and took a sample of top 200 deals from Target, Best Buy, GameStop, and Walmart and found out that the same list of all the items was comparatively priced low in Amazon. Amazon also changes the prices of their products every 15 minutes depending upon the competition, whereas the other retailers adjust their price only 5-6 times each day.
This markdown strategy is not only active during holiday seasons; it is a constant fight between different stores throughout the year. The markdowns are quite high and at their worst levels when they have to get rid of unwanted products. These products are the ones that don’t meet consumer’s desires or requirements, or maybe the retailer didn’t have the proper sizes and colors. Or possibly another trending product came along, and the demand for the old product came down. If the manufacturing mistakes are kept minimal, then the massive markdowns to move unwanted products wouldn’t take place and the retailer’s profit will remain intact.
Apart from discounts to move unwanted inventory and beat the rivalry, the retailers have significantly molded customers to expect markdowns. According to a report published by NRF in Jan 2017, one in every three customers said that almost all of their purchases meant for gifts were available on sale. Another review by First Insight and Li & Fung found out that consumers will pay only 76 percent of seller price from an extensive range of ladies’ wear apparels. They also reported that 45 percent of women had to perceive a markdown of minimum 41 percent to consider even entering a store.
Sensing the demands of customers quantifiably and analytically is quite imperative. Other productions have made the renovation to win their consumers. It is high time sellers get educated and then relate analytics to innovate their business and decision-making skills. It is clear that Amazon has been at it for some time, and the race has just started.
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