AI markdown optimization for retailers: maximizing margin for a luxury fashion brand
By Jon Taylor on May 6, 2025In the world of luxury fashion, timing and precision are everything — especially when it comes to managing seasonal stock.
One leading global luxury fashion retailer, with over $6.5 billion in revenue, faced a familiar challenge: how to clear end-of-season inventory efficiently without sacrificing profitability.
Historically, the retailer had taken a traditional approach to markdowns, applying blanket discount rates across sale items at set points in the sales calendar. While effective at moving stock, this strategy lacked the nuance needed to maximize margins across different markets and product categories — which often meant missed opportunities to be more profitable with its markdowns, throwing away margin unnecessary by discounting too heavily or not at the optimal time.
That’s where Peak’s Pricing AI solution came in.
By adopting Peak’s AI for markdown optimization, the retailer transformed how it managed end-of-season stock. Rather than relying on fixed discount schedules, Pricing AI analyzed real-time demand patterns, inventory levels and product lifecycles to recommend dynamic discounting at SKU-level. Every product was treated individually, with pricing decisions tailored to its specific sales behavior and surrounding market conditions.
Retailers have historically been forced into making sweeping, one-size-fits-all discount decisions because they didn’t have the tools to do anything else. AI changes that. It gives brands the ability to be targeted and strategic, without adding complexity for their teams.
Tom Summerfield
Retail Director, Peak
The results spoke for themselves. Within 12 months of implementing Pricing AI, the retailer achieved a 3% (300bps) increase in profit margins — all while continuing to clear inventory effectively and preserving their brand image and equity.
By moving from schedule-driven to data-driven pricing decisions, the business was able to protect margins, free up valuable warehouse space faster and maintain its premium brand image in a highly competitive market.
What’s powerful about AI is that it doesn’t just help you clear stock — it helps you clear it in a smarter way. In luxury retail, where brand integrity and profitability are so tightly linked, this is vital.
Tom Summerfield
Retail Director, Peak
This powerful use case highlights how AI-driven approaches are not just for operational efficiency — they’re becoming essential tools for strategic decision making in modern retail. By embedding intelligence into its markdown strategy, the retailer is now able to meet customer demand more precisely, maintain brand value and integrity and, crucially, deliver stronger financial results.
In a fast-evolving industry, where margins are tighter and consumer expectations are higher than ever, intelligent pricing isn’t a nice-to-have — it’s a competitive necessity.
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