Your merchandising team makes markdown decisions every season that affect millions in margin. Each decision compounds across thousands of SKUs, hundreds of stores, and at least two seasonal cycles per year. The cumulative impact? For a typical €500M fashion retailer, these decisions generate approximately €67M in gross margin during markdown periods.
But here's the question most CFOs and commercial directors can't answer: What's the ROI of optimizing those decisions?
Manual markdown management, Excel-based planning, and merchandiser's intuition leave significant margin on the table through two mechanisms: over-discounting items that would sell with lighter markdowns, and under-clearing slow-movers early enough to salvage value.
The gap between current performance and optimized performance is measurable. And for most fashion retailers, it's substantial.
We've built a calculator based on A/B tests across European fashion retailers. It uses a three-step framework validated through controlled experiments where retailers split their collections 50/50 and compared traditional markdown methods against AI markdown management.
Here's what the numbers show for a mid-market €500M fashion retailer:
Step 1: Size the markdown opportunity
Step 2: Apply the improvement factor
Step 3: Calculate ROI
The question now is: what are your numbers?
We've turned this framework into a free Excel calculator. Plug in your revenue, adjust the assumptions for your business model, and see your specific fashion retail ROI.
The calculator includes:
No email required. No sales pitch. Five minutes to understand a potential seven-figure EBITDA improvement.
The markdown management improvement you can expect depends on two factors: your current sophistication and your operational flexibility.
Use the 5-7% improvement range if:
Your current process is largely manual or Excel-based, relying on merchandiser's intuition and simple rules of thumb. You have operational flexibility: you can update prices 2-3 times during markdown periods, and you can set prices at the product-item level with different pricing by region and channel.
Use the 3-5% improvement range if:
You already have a sophisticated markdown methodology in place (data-driven approaches, analytics capabilities), or you face operational constraints like only one markdown moment per season or only category-level pricing.
Critical constraint:
If you cannot set prices at the product-item level AND apply different prices by region/channel, the expected impact drops by approximately 50%. AI markdown management's power comes from precision: discounting the red dress more than the blue dress, marking down Amsterdam inventory differently than Valencia.
The calculator guides you through these factors to estimate your specific markdown management cost versus return.
The 5-7% improvement isn't theoretical. It comes from controlled experiments where fashion retailers split their seasonal collections into two groups with similar characteristics, managed one group with traditional methods and the other with markdown optimization software, then measured the results at season-end.
The markdown-optimized group consistently performs 5-7% better on gross margin while achieving the same sell-through target. This improvement comes from two mechanisms: reducing excessive discounting on items with sufficient demand, and clearing slow-movers more effectively with better-timed, deeper discounts.
The consistency across retailers is why this has become the benchmark for evaluating markdown optimization financial return.
Learn more about the features that enable Markmi to achieve such results, here.
Five minutes with the calculator will show you whether markdown optimization makes financial sense for your organization.
For most fashion retailers with seasonal collections and meaningful markdown activity, the numbers are compelling. The question isn't whether markdown optimization delivers returns, the A/B tests prove it does. The question is whether your organization is ready to move from reactive, intuition-based markdown decisions to proactive, data-driven pricing strategies.
Start with your own numbers. Download the calculator and see what's possible.
