Increase sell-through
Move more units within the season.
Markdown
Optimize markdown in retail with AI
SKU-level markdown optimization software gives merchandising teams suggestions, so they can say goodbye to hours spent in spreadsheets.
The UiPath solution for Merchandising
Optimize markdown in retail with AI
SKU-level markdown optimization software gives merchandising teams suggestions, so they can say goodbye to hours spent in spreadsheets.
Stop leaving profit on the table. Bring AI to markdown optimization in retail.
Retailers around the world invest more than $1 trillion in markdown programs. Stop leaving profit on the table and out-of-season inventory in the stockroom. It's time to add AI and optimize your markdown.
See markdown capabilities in action
Increase gross profit
Get more margin out of every markdown decision.
Clear stock within season
End the season with less inventory left in the stockroom.
Reduce manual decision-making
Free merchandising teams from spreadsheet-driven markdown work.
More agentic AI for retail
See how UiPath also optimizes promotions and inventory management across the merchandising cycle.
Under the hood
UiPath applies AI models to your inventory, transaction, and pricing data, taking into account business-specific targets and constraints, to give you SKU-level markdown suggestions for any location or channel.
Enabling multiple users across your merchandising and demand planning organization
Merchandisers
Demand planners
Trading analysts
Buyers
Pricing specialists
Applying demand forecasting and price elasticity models to your data
Forecast demand at SKU level, gaining an unparalleled understanding of future sales.
Access individual product price elasticity models, allowing you to understand the effect of price on demand at a granular level.
Configure guardrails specific to your business, such as exit prices, price rounding, product versioning, and intra-product relationships.
These allow you to understand not only what demand would be without a markdown, but also give you different options with a markdown.
Create campaigns over discrete time periods to maximize your relevant KPIs.
Driving, on average, improvements of 3% in margin uplift over the same markdown period
Real-time visibility of markdown campaigns, with a granular view of current markdown levels and forecasting at the SKU level.
View markdown suggestions by product.
Plan and monitor campaigns over the full markdown period.
Plan for different scenarios by changing targets such as: Sell-through of all close-out units; Weeks cover for each product; Revenue or units sold; Average selling price or margin
Enabling multiple users across your merchandising and demand planning organization
Merchandisers
Demand planners
Trading analysts
Buyers
Pricing specialists
Applying demand forecasting and price elasticity models to your data
Forecast demand at SKU level, gaining an unparalleled understanding of future sales.
Access individual product price elasticity models, allowing you to understand the effect of price on demand at a granular level.
Configure guardrails specific to your business, such as exit prices, price rounding, product versioning, and intra-product relationships.
These allow you to understand not only what demand would be without a markdown, but also give you different options with a markdown.
Create campaigns over discrete time periods to maximize your relevant KPIs.
Driving, on average, improvements of 3% in margin uplift over the same markdown period
Real-time visibility of markdown campaigns, with a granular view of current markdown levels and forecasting at the SKU level.
View markdown suggestions by product.
Plan and monitor campaigns over the full markdown period.
Plan for different scenarios by changing targets such as: Sell-through of all close-out units; Weeks cover for each product; Revenue or units sold; Average selling price or margin
Read more on markdown optimization in retail
Blog
The margin is in the pricing. So why is so much of it left on the table?
Why retailers leak margin between the pricing decision and the markdown that actually goes live in store.
Blog
The retail blind spot that turns pricing decisions into margin leakage
Find out how the gap between inventory and pricing decisions drives hidden margin loss.
Blog
Retail markdown is not a strategy. It’s a symptom.
Connect pricing and inventory decisions to make smarter markdown decisions with greater precision.
Markdown optimization: common questions
How markdown optimization works in retail, where AI adds value, and how to think about markdown pricing strategy across a season.
Markdown optimization is the strategic approach retailers use to maximize the effectiveness of markdown pricing strategies and drive sales while minimizing the impact on profit margins. A markdown is a reduction in the original selling price of a product, typically used to clear excess inventory, stimulate demand, or respond to market dynamics.
Key aspects of markdown optimization include:
1. Data analysis. Retailers analyze historical sales data, customer behavior, and market trends to identify opportune moments for implementing markdowns. This data-driven approach informs decisions about when and how much to discount each product.
2. Timing and seasonality. Markdown optimization takes into account product lifecycle, seasonality, and market demand fluctuations to time price reductions for maximum impact.
3. Segmentation and targeting. Discounts tailored to specific demographics, buying behaviors, or geographic locations make each markdown more relevant and increase customer engagement.
4. Dynamic pricing. Retailers adjust prices in real time based on inventory levels, competitor pricing, and customer demand. This flexibility keeps the pricing competitive throughout the markdown window.
5. Clearance and inventory management. Markdown optimization clears excess or slow-moving inventory efficiently, preventing overstock and freeing up resources for newer products.
6. Promotion integration. Coordinating markdowns with broader marketing programs amplifies impact and creates a cohesive approach to sales promotion.
7. Profitability analysis. Retailers measure the impact of markdowns on profitability, including the cost of goods sold (COGS), gross margins, and overall financial performance to assess whether the strategy worked.
8. Customer experience. Effective markdown optimization delivers value to customers without compromising brand perception, loyalty, or perceived product quality.
Done well, markdown optimization combines advanced analytics, AI, and strategic planning. Retailers use tools that facilitate dynamic pricing, monitor market conditions, and provide insights for informed decision making.
Markdown optimization offers several key benefits for retailers seeking to maximize sales, manage inventory efficiently, and improve overall profitability:
1. Efficient inventory management. Strategic markdowns clear excess or slow-moving inventory, prevent overstock situations, and minimize carrying costs.
2. Maximized sales performance. Discounts timed to customer behavior, market trends, and seasonality drive incremental sales without leaving margin on the table.
3. Improved profit margins. Although markdowns reduce price, optimized markdowns balance discount depth against margin protection so profitability holds across the season.
4. Enhanced customer engagement. Targeted discounts based on segmentation and preferences make each markdown more relevant to the customers most likely to convert.
5. Clearance of excess inventory. Markdown optimization prevents the accumulation of obsolete stock and frees up space for new products.
6. Dynamic pricing adaptability. Real-time price adjustments based on competitor pricing, inventory levels, and market demand keep retailers competitive throughout a markdown campaign.
7. Strategic timing of discounts. Seasonal shifts, holidays, and market trends become inputs to the markdown calendar rather than guesswork.
8. Data-driven decision making. Historical sales, customer feedback, and market trends replace gut-feel choices about when, where, and how much to mark down.
9. Balanced customer perception. Carefully planned markdowns protect the perceived value and quality of the brand while delivering attractive pricing.
10. Competitive advantage. Retailers that get markdowns right gain share against those that overshoot on discount or react too late.
A practical example of markdown optimization is a fashion retailer clearing a surplus of winter apparel as the season turns to spring. To clear inventory efficiently and protect margin, the retailer applies a markdown optimization strategy across these steps:
1. Data analysis. The retailer analyzes historical sales data, focusing on which winter items sold well, customer preferences, and the typical duration of previous clearance sales.
2. Segmentation. Shoppers are segmented by demographics, buying behavior, and geographic location, so discounts can be tailored to specific customer preferences.
3. Dynamic pricing. Pricing tools adjust prices in real time based on inventory levels, competitor pricing, and market demand, keeping discounts competitive while protecting margin.
4. Timing. The clearance is timed to coincide with peak demand for spring apparel. This not only clears winter inventory efficiently but also attracts customers already in the store for the new season.
5. Multi-channel integration. The clearance runs across physical stores and online platforms, so the customer experience is consistent regardless of where the customer shops.
6. Promotion integration. Price reductions are paired with email marketing, social media promotions, and in-store displays to create awareness and drive traffic.
7. Customer engagement. Targeted discounts on the winter items each customer is most likely to want deepen the relationship with existing shoppers and attract new ones.
8. Feedback and adjustment. Throughout the sale, the retailer monitors customer feedback, sales performance, and inventory levels, making real-time adjustments such as deeper discounts on slow-movers or replenishing popular items.
9. Profitability analysis. After the event, the retailer analyzes the impact on profitability, including the cost of goods sold (COGS), gross margins, and overall financial performance during and after the promotion.
Together, these moves clear winter inventory efficiently, engage customers across channels, and protect profitability through what would otherwise be a margin-eroding clearance event.