How TORFS is able to get end-of-season discounts right

Introduction

Schoenen Torfs is a well-established player in the Belgian retail industry and is perceived as a frontrunner by many. Deciding on end-of-season discounts was performed using a process rooted in tradition. Learn how we enabled the merchandising team to achieve staggering results, setting price markdowns with the help of our AI-driven markdown assistant.

An end-of-season price markdown challenge

Schoenen Torfs is a well-established player in the Belgian fashion retail industry and is perceived as a frontrunner by many.

Having regularly won prizes as a 'great place to work', the company is eager to embrace innovation but not without losing track of the human factor. Yet, it is not blind to any challenges the organization faces when it comes to profitability.

That such profitability is under pressure is no secret. It is a clear-cut given for any shoe retailer having to cope with new market entrants like Zalando or Amazon.

Deciding on end-of-season discounts (markdown pricing) was done using a traditional process that proved ample opportunity for improvement.

Torfs invited us to challenge its current way of performing end-of-season discounting, yet with one caveat. We needed to prove the business case. We needed to prove one can do better assisted by an AI-driven assistant.

A proof-of-concept to prove the business case.

That is why during the 2020 Summer Sales, we set up a proof-of-concept. A pilot of the Crunch Markdown Assistant to prove that our algorithm-driven toolkit could outperform a human decision-maker setting end-of-season discounts.

By introducing the proper tooling, the team could increase revenue and margins while reducing the time spent on the entire process.

The markdown assistant was used both before and during the sales season. The tool suggests the proper price markdown for every item in the catalog. An optimal discount that should sell the item out just in time while generating more revenue and a higher margin.

How did it work?

Before the start of the sales season, the merchandising team can verify strategic scenarios and their impact across different categories, channels & countries. They can share such info to better plan and prepare promotional efforts, ensuring that marketing efforts generate even more traction during an imminent sales season.

During the season, the tool enables the team to adjust a chosen strategy and adapt selected markdown levels based on real-time performance and analysis.

Moreover, the tool helps to decide what level of impulse is needed without sacrificing too much margin. Or it can even prevent the team from applying a general markdown to an item that will clearly sell out in just time without any discount.

"We were able to achieve a +30% revenue & +8% margin increase, applying the price markdowns suggested by the solution”."
Luc DE BAETS - TORFS

How successful was it?

During the 2020 summer sales, the test case demonstrated that products for which this algorithm controlled the price had a 30% higher revenue on average, creating an 8% margin increase. Time spent on the process was cut in half, and waste was significantly reduced.

The client was, of course, pleasantly surprised by the achieved results in a proof-of-concept setup. The fact that we were able to prove the business case made it much easier for the team at Torfs to proceed with a full implementation of Markmi.