i2 Shoe Horn

Payless ShoeSource taps SCM, CRM software to optimize markdowns of seasonal merchandise

New York  January 15, 2002  Retailer Payless ShoeSource has tapped supply chain management (SCM) and customer relationship management (CRM) software from i2 to optimize markdowns of seasonal merchandise in its nearly 5,000 stores.

Payless maintains an average of 800 different footwear styles and colors in its stores. Because most of its footwear is seasonal, the company needed a solution that allowed it to quickly plan for and react to changing demand, allowing Payless to maximize revenue and achieve margin and clearance objectives.

To meet this need, Payless purchased i2 Demand Planner from the company's SCM suite, and i2 Markdown Optimizer from i2 CRM solutions. i2 Demand Planner is designed to allow Payless to predict, manage and optimize future demand. The solution creates forecasts based on rate of sale and on-hand inventory. The information is then integrated into i2 Markdown Optimizer, which has been developed to examine product sales and inventory positions and determine the optimal markdown schedules for maximizing revenues and minimizing inventory write-offs. i2 Markdown Optimizer incorporates price elasticity of demand into the optimization and supports what-if analysis to evaluate alternative markdown strategies.

"The growing need for us to manage our seasonal inventory led us to evaluate solutions from a cross-section of suppliers," said Darrel Pavelka, senior vice president for merchandise planning and distribution at Payless ShoeSource. "Our current i2 solution, Merchandise Planning, is a critical part of our overall strategy for improving assortments in our stores. We anticipate that by expanding to Demand Planner and Markdown Optimizer, we will be able to derive significant value from the integration of i2's merchandising optimization tools."

Payless believes that with these solutions in place, the company can improve margins and better meet customer demand for its products. Payless anticipates that the global implementation will be completed in the second quarter of 2002.