Markt Case

PRICE OPTIMIZATION AT NORTHERN GROUP RETAIL Presented By Ashok

Deepa Jayaprakash.K Girish Raman.N

Shankar

HOW THE SOFTWARE PAYS  Gross

margin of $60000  Traditionally a low price seller  To go for full pricing  Comment by Anthony Karabus  Inability to make huge profits  Profits from each SKU by selling at higher prices

BACKGROUND  Set

up in 1985  Subsidiary of FW Woolworth Company.  Woolworth founded in US in 1911.  5-10 cent store selling general merchandize.  Business peaked in 1950 &1960.  Woolworth founded a discount chain “WOOLCO” in 1962.

BACKGROUND  In

1994,144 stores were sold to Walmart  It operated retail chains-Foot Locker, Champs sporting goods, Kinney Shoe & Northern Group apparel shops.  It ran into trouble becoz of increased competition & outdated business methods.  1994,Roger Farah undertook restructuring  Company name changed “VENATOR

BACKGROUND  1990

performance declined.  Decline reasons – outdated pricing inventory management increased competition • Company name changed “VENATOR” to “FOOTLOCKER INC” • Northern Group sold clothing in 3 brands - Northern Reflections

THE NORTHERN GROUP UNDER YORK 



York conducted research to analyze the reasons for the poor performance of the stores Research Findings : • Advantages • Northern Group Brand had a Loyal Brand Following • Good Brand recognition in Canada

NORTHERN GROUP UNDER YORK



Disadvantages

Inefficient Internal Processes • Too many Retail locations which diluted the brand • They followed a nation wide pricing strategy which proved to be ineffective as the pattern of demand for the group products was not uniform • Variations in climate & other conditions •

NORTHERN GROUP UNDER YORK 

Steps Taken by YORK to Re-structure Northern Group •

Re-structure of Pricing Strategy ( Implemented Zonal Pricing)

•

Implemented Technological initiatives to make the pricing decisions of the Company more Scientific

NORTHERN GROUP UNDER YORK Realized that having a logical scientific system to base pricing & mark down decisions would yield better pay-off in long run  York tied up with Karabus in 2002 to identify the best possible alternative to be implemented in the store 

NORTHERN GROUP UNDER YORK Karabus performed a merchandise ROI review an analyses of alternative improvements initiatives and how long each would take before benefits are delivered  Implementation of a Price Optimization System 