Early customer feedback through product testing helps retail businesses reduce markdown & improve results.
In the current retail market reducing markdowns is the top priority for retailers and brands. Continually discounting stock is the biggest single threat to your profitability and risks generating a vicious circle with customers being conditioned to expect discounts and sales. When a markdown doesn’t clear a product, there is also the threat of terminal stock strangling the ability for a business to trade.
How do you avoid or reduce markdowns on key lines? By using product testing early in your product development lifecycle, you will make better stock decisions, understand customer preferences and set a sustainable pricing strategy for your products from day one.
Managing your markdown strategy effectively ensures that your brand and business can thrive, while keeping customers happy and your bottom line profitable. The key steps to reduce or avoid product markdowns are:
The crucial question for any new product is whether your target audience will actually like it or do you just believe they will? Testing your product in front of audiences early in the development process gives you insight into their reactions - are you right in your assumptions, or are there factors you haven’t foreseen that mean that your customers will love or pass on your upcoming releases.
Having authentic customer insights removes guesswork from your product buying process and bias created by historical performance or personal preference. Through no ill intentions all teams involved in creating new product lines carry their own expectations and biases which can impact their decision making. By combining buying team expertise with performance data from product testing, your team will make better decisions and achieve better results.
Poor-performing collections or individual lines that are unpopular are the biggest impact on overall profitability. It doesn’t take a high number of products to not achieve their targeted sell through rates to drag down your average markdown rates, even if the rest of the collection has fantastic sell-through rates. Knowing which lines to reduce or avoid before you invest heavily in your stock buys means that you can purchase more of the better performers and avoid being left with large amounts of heavily discounted stock that just won’t sell.
With product testing, you can get an early indication about whether your products are likely to sell out, and whether they are priced at the right level through our market leading benchmarking index. By knowing which price points are right for individual product lines you can avoid unnecessary markdowns, and maximise profits from your collection - from the start.
With product testing from Mallzee, you not only test your own products - we benchmark product performance against similar products from direct competitors, allowing you to see how your products perform in comparison to the wider industry. This way, you can understand how similar products have performed for your competition in the past and currently - enabling you to learn from their mistakes as well as emulate their successes before any stock decisions are made.
Markdowns have the potential to kill retail businesses in the current retail market but there is another way. By understanding early which products will be a market success, and which lines you should reduce or remove from your collection you can get ahead of the competition and drive improvement to business performance from the bottom line.
Fashion is a combination of creativity, consumer preference, analytics and data, and by strengthening your understanding of the product performance by testing them with audiences early in the buying process, your teams will make better buying decisions, reduce markdowns and ultimately improve your bottom line.
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