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PRICE OPTIMIZATION AT

NORTHERN GROUP
RETAIL
Presented By
Ashok

Deepa

Jayaprakash.K

Girish
Shankar
Raman.N
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 Wal-
mart
 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competition & outdated business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 Decline reasons – outdated pricing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