Payless Steps into Improved Service

Footwear retailer Payless ShoeSource, Inc. will add products from i2 Technologies, Inc.’s Supply Chain Management (SCM) and Customer Relationship Management (CRM) suites to the already implemented Merchandise Planning application in order to optimize markdowns of seasonal merchandise in its nearly 5,000 stores. Global implementation is expected in the second quarter of 2002.

“The growing need for us to manage our seasonal inventory led us to evaluate solutions from a cross section of vendors. We chose i2 because of its long-term retail strategy and its commitment to our industry,” said Darrel Pavelka, senior vice president, Merchandise Planning and Distribution, Payless ShoeSource.

Payless’s inventory of approximately 800 different seasonal footwear styles and colors necessitates a quick reaction to changing demand. Customers have the ability to make purchases through one of the North American stores or via the company’s Web site, where inventory replenishment and management are critical to consumer satisfaction. Customers are also able to purchase shoes online and pick them up at the closest physical store, eliminating shipping and handling charges.

The i2 Demand Planner from the company’s SCM suite is designed to allow Payless to predict, manage and optimize future demand. This solution creates forecasts based on rate of sale and on-hand inventory. The information is then integrated into i2 Markdown Optimizer from the i2 CRM suite, 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. Markdown Optimizer incorporates price elasticity of demand into the optimization and supports what-if analysis to evaluate alternative markdown strategies.

“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,” said Pavelka.

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