As Denmark’s leading online grocer, nemlig.com has experienced explosive growth in recent years. With that growth, though, came the need for an adaptable markdown optimization system that would allow them to scale effectively into the future. Improved markdown planning is an area of critical importance for the grocer’s commitment to food waste reduction.
The process that had served them well as a smaller company needed to be replaced with a more sophisticated markdown optimization solution that could:
- Introduce high levels of automation
- Deliver proactive visibility into fresh products approaching expiry dates
- Significantly increase planner efficiency while maintaining existing KPIs
- Provide greater flexibility and adaptability than their previous process
- Support long-term scaling needs well into the future
Their success criteria were:
- Improved markdown margins
- Early identification of products for markdown
- Reduced food waste
- Greater planning team efficiency
A Fast, Smooth Implementation
Nemlig.com had already implemented RELEX’s demand forecasting and automatic replenishment solution in 2019. The retailer appreciated RELEX’s ability to support their needs as an online-only retailer, as well as their strong results in grocery retail. They believed RELEX could enable nemlig.com to scale quickly while future-proofing their markdown process as well.
Because nemlig.com’s supply chain data was already being managed through their existing RELEX forecasting and replenishment solution, the implementation of markdown optimization proceeded very quickly and smoothly:
- May 2020: Markdown optimization project kickoff
- June 2020: Markdown optimization goes live with selected suppliers
- August 2020: Markdown optimization is fully rolled out for all suppliers
Markdown Success: Improved Margin and Efficiency, Less Food Waste
Results at a Glance:
- 24% higher margins on markdown products
- 45% reduction in food waste
- 77% increase in planning team’s daily efficiency
Note: These results apply only to the products in nemlig.com’s assortment which had markdown potential both pre- and post-RELEX markdown implementation.
With the new markdown solution in place, nemlig.com was able to redesign their process to be more proactive and automated.
RELEX’s inventory projections now proactively identify perishable products with excess stock. The system then automatically recommends optimal markdowns based on the amount of excess stock and price elasticity analysis. Nemlig.com is able to sell the products at the highest possible margin before their last sales dates.
The system applies the new, lower price through the initial markdown period or until batches with limited remaining shelf-life have sold out. Should nemlig.com still have excess stock after the initial markdown period, RELEX now automatically suggests a new, further reduced price.
Nemlig.com’s planners report high levels of satisfaction with the new system and process. They have been able to reduce daily markdown planning time from 3 hours and 55 minutes to 55 minutes—a 77% increase in planning efficiency. “The automation RELEX has introduced into our processes has given our planners hours of time back each day to focus on more value-adding work,” says Jack Enevoldsen, Chief Procurement Officer at nemlig.com.
Enevoldsen continues that “RELEX’s markdown solution has actually made it faster and easier to identify a larger number of products for markdown than we were able to before, driving higher margins and less food waste.” Because the system now automatically identifies items approaching expiry dates and recommends the optimal pricing, planners only need to either accept or modify the system’s recommendations. As a result, nemlig.com has seen 24% higher margins for their marked down products, while improved visibility into approaching expiry dates has driven a 45% reduction in food waste for products typically placed on markdown.
As the company continues along its rapid growth trajectory, the high levels of automation RELEX has introduced will allow nemlig.com to scale effectively without having to hire and train a larger planning team. “In RELEX, we’ve found the solution that’s flexible and adaptable enough to meet our long-term needs, no matter how quickly we continue to scale,” says Enevoldsen. “We chose to work with RELEX because we saw a strong track record of delivering results and a reputation for working as a true partner to their customers. We can now vouch for that too, and we look forward to developing the relationship as we continue to improve our processes and outcomes with RELEX.”
- Ability sell the products at the highest possible margin before their last sales dates. RELEX’s inventory projections proactively identify perishable products with excess stock and recommends optimal markdowns based on the amount of excess stock and price elasticity analysis.
- High levels of satisfaction with the new system and process. Planners have been able to reduce daily markdown planning time from 3 hours and 55 minutes to 55 minutes—a 77% increase in planning efficiency.