The apparel industry, and particularly apparel retailers, are facing existential challenges today. Decline in mall traffic, e-commerce competition, inventory risk, and other factors are putting significant strain on the top line and on profitability in ways never seen before.

As a fashion supplier or retailer, keeping your product margins healthy is imperative.  To address this multi-dimensional challenge, you must determine optimal product mix and quantities to decrease mark-downs, find opportunities to reduce costs, and drive improved supplier management.  I’m pleased to announce that we’ve put our collective retail and technology experience together to offer a solution!

Analysis Team’s Margin Expansion Tool (MET) for the apparel industry helps align product assortment planning, product design, cost reduction, and pricing to ultimately optimize margins.  Our approach resolves a range of technical and business analytics challenges to deliver actionable information by:

• Integrating and harmonizing data from disparate corporate sources
• Calculating costing trends in near real time, as the line is developed and before purchase orders are issued
• Actively monitoring costing trend performance versus pre-established targeted outcomes
• Computing consistent metrics that enable benchmarking across brands, categories and product groups
• Providing price yield performance information to strengthen pricing architectural strategies and provide high level quality feedback at the vendor (manufacturing) level

This is a solution that doesn’t merely analyze and report results after-the-fact.  It is used by planners, merchandisers, supply chain teams and senior management to empower proactive decisions during the planning, design and sourcing cycles.  You’ll be able to iterate costs and margins before the entire line is developed and purchase orders committed to sourcing partners.

Analysis Team’s customizable solution includes key metrics you need to optimize decision-making, for example:

• Target setting at category, division and brand levels
• Cost, revenue, and margin trend analysis by season with comparisons of current year vs. prior year, actual results vs. any planning scenario, as well as between any planning scenarios
• Yield by product, comparing initial suggested retail price to actual selling price after markdowns and discounts
• Mix-adjusted average unit cost (AUC) and average unit margin (AUM) by product category and style, to allow for apples-to-apples comparisons between time periods
• Component cost analysis (material, trim, labor, freight, etc.) in total and by supplier
• Custom analytics to meet your company’s specific needs

Our Margin Expansion Tool has already been proven and earned high ROI.  For a well-known Fortune 500 fashion designer and retailer, it delivered a significant financial return: Over $300 million in Gross Margin improvement in the first year alone, and significantly more cumulative savings in subsequent years. That’s our client’s calculation, not ours!

You can read more in our white paper, Optimizing Product Margins in the Apparel Industry, available on Analysis Team’s web site. Please contact us at Info@AnalysisTeam.com or (650) 964-3599 to discuss how we can help you drive improved margins.