Why Data-Driven Merchandising Leads to Fewer Discounts and Higher Profits
Discover how data-driven merchandising helps fashion brands reduce reliance on discounts, optimize inventory, and improve profitability—backed by real-time market insights.
Discounts can be a double-edged sword for fashion retailers. While they might drive short-term sales, constant markdowns hurt brand perception, eat into profit margins, and train customers to wait for sales. For small to mid-sized brands especially, discounting too often can be a sign of deeper merchandising misalignment.
Data-driven merchandising gives retailers a smarter way forward one where inventory is aligned with demand, prices reflect perceived value, and profits stay intact.
In this article, we break down how fashion businesses can reduce discount dependency by using data and AI-powered insights throughout their merchandising process.
The High Cost of Guesswork in Merchandising
Traditionally, merchandising decisions have relied on a mix of past performance, instinct, and trend forecasting. While these inputs matter, they often lack real-time visibility into what's happening in the broader market. That leads to:
- Overstocked items that require heavy discounts to move
- Missed opportunities on high-demand items
- Poor alignment between pricing and perceived customer value
The result? Shrinking margins and an ever-increasing reliance on markdowns to correct course.
How Data-Driven Merchandising Solves This
Data-driven merchandising flips the script by using real-time market signals, competitor analysis, and consumer behavior to guide key decisions. Here's how it reduces discount reliance:
Aligning Assortments with Market Demand
With access to live market data, brands can see which styles, colors, and categories are actually trending across platforms, regions, and competitors. This ensures you're producing and stocking what people already want so items sell at full price.
For instance, If Woven Insights shows rising demand for utility-inspired outerwear in Northern Europe, merchandisers can prioritize those styles and reduce the risk of overstock on less popular categories.
Smarter Pricing from the Start
AI tools analyze market-wide pricing data to help brands position their products competitively without undercutting unnecessarily. This ensures your pricing is optimized for perceived value rather than discounted reactively.
For example; If similar items from competitor brands are selling well at £75, but you're pricing yours at £95, data can help identify whether a lower entry price or improved value perception is the better move.
Forecasting Demand to Minimize Overstock
Data models can forecast demand with greater accuracy by factoring in seasonality, consumer sentiment, and historical sell-through rates. This reduces the need to offload excess stock at a loss.
Example:
A brand using Woven Insights might notice that sales for bright colorways drop sharply after June, prompting a leaner buy for Q3.
Understanding Customer Sentiment
By analyzing consumer reviews and sentiment at scale, brands can avoid repeating design or quality issues that lead to returns and markdowns. You produce more of what customers love—and less of what they don’t.
Monitoring Competitor Sell-Through in Real Time
Keeping tabs on how similar products are performing across other brands can alert you to slow movers or hot sellers before it’s too late. This gives merchandisers more control over markdown timing and inventory flow.
The Bottom Line: Fewer Discounts, More Profit
When merchandising decisions are guided by real-time, actionable insights, brands:
- Buy and produce more confidently
- Price more competitively
- Reduce end-of-season inventory
- Protect brand value by avoiding over-discounting
- Ultimately, increase margins
It’s not about eliminating discounts entirely, it’s about only using them strategically instead of as a crutch.
How Woven Insights Helps
Woven Insights gives small and mid-sized fashion businesses access to the kind of data and forecasting capabilities once reserved for retail giants. With tools for:
- Market demand tracking
- Price benchmarking
- Consumer sentiment analysis
- Competitor performance monitoring
.....merchandisers can stay ahead of the curve and off the discount treadmill.
Conclusion
Discounts shouldn't be your default. With the right data, you can merchandise smarter, sell more at full price, and protect your profits.
About Woven Insights
Woven Insights is a comprehensive market analytics solution that provides fashion brands with real-time access to retail market and consumer insights, sourced from over 70 million real shoppers and 20 million analyzed fashion products. Our platform helps brands track market trends, assess competitor performance, and refine product strategies with precision.
Woven Insights provides you with all the actionable data you need to create fashion products that are truly market-ready and consumer-aligned.
Click on the Book a demo button below to get started today.
