AI-Powered Markdown Optimization
Traditional markdown is guesswork. Our AI agents analyze stock health, predict clearance risk, and prescribe optimal discounts—answering what to discount, how deep, and for how long. Typically delivers 10-20% margin uplift on markdown sales.
Why Traditional Markdown Fails
Most retailers struggle with markdown because they make high-level discount decisions without considering the nuances of individual stores and products. This means that for many specific product-store combinations, those blanket discounts end up being too high (clearing too quickly, leaving money on the table) or too low (leaving stock at season end, requiring write-offs).
- Over-discounting clears too quickly, sacrificing recoverable margin
- Under-discounting leaves inventory requiring costly write-offs
- Lack of holistic view across stores, DCs, and replenishment
- Markdown decisions don't feed back into allocation processes
- Uneven inventory means same discount clears some stores early, others late
Why Traditional Markdown Fails
Clears early, leaves money on table
Clears at season end
Stock remains, requires write-off
Always Working: Our AI continuously monitors stock health and prescribes markdown actions—you don't have to ask.
AI Agents That Prescribe Action
Unlike traditional tools that wait for you to ask, our AI agents proactively monitor your inventory and prescribe recommended markdown actions. Engage with the agent in a conversational interface to understand recommendations, adjust constraints, and approve actions—all in human-readable language.
- Constant analysis of business performance throughout the season
- Proactive recommendations when products need attention
- Ask questions: 'Why does this product need 40% off?'
- Adjust constraints: 'Limit to 35% maximum discount'
- Approve actions with confidence and full understanding
Identify What Needs Discounting
Not every product needs markdown. Our AI reviews stock levels and rate of sale to identify which products will not clear at current prices. A clear visualization shows you exactly which products need action and how deep the discount should be.
- Products with high stock and low demand get flagged for deep discounts
- Products with low stock and high demand are protected from unnecessary markdowns
- Data-driven selection replaces gut feel and blanket rules
- Actionable pick lists your teams can execute immediately
Stock vs. Demand Analysis
Insight: Products in the upper-left (high stock, low demand) have high stock cover and need deep discounts (30-60%) to clear. Products in the lower-right (low stock, high demand) have low stock cover and will clear naturally.
Choose Your Objective
I've modeled two strategic scenarios for your winter clearance. Each optimizes for different business objectives:
Maximize Clearance
Prioritize inventory liquidation to free up space and capital
Maximize Profit
Optimize margin recovery while accepting some residual stock
AI Recommendation: Based on your warehouse capacity constraints and Q1 buying plans, I suggest the Maximize Clearance scenario to ensure floor space availability.
Balance Clearance vs. Profit
Every markdown decision involves trade-offs. Do you prioritize clearing inventory to free up space and capital? Or maximize profit recovery even if some stock remains? Our AI models different scenarios so you can make informed strategic choices.
- Model scenarios with different objectives and constraints
- Understand trade-offs: clearance rate vs. profit impact
- Consider operational constraints like store re-tagging capacity
- Choose granularity: store-level or national discounts
- AI recommends based on your business priorities
Know How Deep to Discount
Markdown elasticities are 2-4x higher than regular pricing elasticities—meaning discounts drive significant demand response. Our AI calculates elasticity for every product, answering the critical question: how much discount is needed to clear this inventory?
- AI-calculated markdown elasticity for every product
- High-elastic products need smaller discounts to clear
- Low-elastic products may need deeper cuts or alternative disposition
- Precision discounting maximizes margin recovery
How Deep Should You Discount?
Insight: Markdown elasticities are typically 2-4x higher than regular pricing. A 30% discount on a high-elastic product can drive +90% demand uplift—knowing this tells you exactly how deep to discount.
De-Averaged Discounts Over Time
Insight: As natural demand declines through the season, discounts must increase to maintain clearance velocity. AI optimizes this curve for each product—starting lower and ramping up only as needed.
De-Average Discounts Over Time
A single discount for the entire season leaves money on the table. Our AI uses advanced forecasting to de-average discounts throughout the clearance period—starting lower when demand is strong and ramping up as natural demand declines.
- Start with lighter discounts when seasonal demand is still high
- Increase discounts progressively as demand naturally declines
- Slow sellers and bad sizes get deeper cuts as season ends
- Maximize margin recovery while ensuring full clearance
How It Works
Connect Inventory Data
We ingest your inventory positions, sales history, and seasonal calendars to build a complete picture of your clearance challenge.
AI Analyzes Stock Health
Our agents continuously monitor stock cover, sell-through rates, and demand forecasts to identify products at risk of not clearing.
Prescribe Optimal Discounts
AI recommends specific discount levels for each product based on elasticity, strategic objectives, and operational constraints.
Execute & Iterate
Review recommendations in a conversational interface, approve markdown actions, and let AI adjust as the season progresses.
Frequently Asked Questions
Stop Leaving Margin on the Table
Traditional markdown is guesswork. With Hallon's AI agents, you'll know exactly what to discount, how deep, and for how long—maximizing profit recovery while ensuring clearance.