Do the benefits of a new markdown pricing optimization system outweigh the costs?
Bloomingdale's, one of the nation's premier department stores, has just completed a pilot test of ProfitLogic's pricing optimization system. Bloomingdale's CFO believes that automating markdowns could help the retailer improve its gross margins. But the software program has a $1 million license fee, and implementing the system would involve considerable costs and risks. This case puts students in the role of Daniel Gabbay, an analyst in Bloomingdale's finance division, as he reviews the company's sales data and carries out an independent investigation of the results of the pilot test.
Case ID: 070203
Supplemental Materials: Excel Spreadsheets , 2004 Key Sales Days , data_ctrl_final-for-exhibits , data_p4p_final-for-exhibits , Top 10 Vendors , Variable names