Retailers Turn To Software For Discounting HelpRetailers Turn To Software For Discounting Help

Upscale retailer Saks Inc. and supermarket chain Winn Dixie Stores Inc. have joined the growing list of retailers using optimization software to squeeze more profit out of discounted merchandise and special promotions. Both companies signed software licensing deals last week at the National Retail Federation conference in New York.

Saks in Birmingham, Ala., hopes Spotlight Solutions Inc.'s optimization software will let it sell discounted goods more quickly. The software will help Saks move inventory and free cash for new merchandise, CIO Bill Franks says. "Retail goods aren't like wine; they don't get finer with age," he says.

The Spotlight Markdown Optimizer applies mathematical formulas to sales, inventory, and other data to recommend markdowns at specific stores. It also might suggest shorter sales with greater initial discounts.

Winn-Dixie will use similar software to discount merchandise in ways that yield the greatest sales increases. The Jacksonville, Fla., grocery chain is adopting the Retail Revenue Management suite from KhiMetrics Inc. to predict how lower prices affect sales, margins, and consumer perception of discounts before implementing them.

"The big benefit," says Dale Achabal, director of the Retail Management Institute at Santa Clara University, "is getting rid of [discounted] stuff so you have room to sell new stuff at full price."