Retailers are losing over $200bn a year due to markdowns, according to retail and economic trends reported by the US Census Bureau and the National Retail Federation.

Markdowns, with a direct impact on sales, gross margins, and net profits, hit department stores, discount stores and specialty apparel hardest. However, optimisation technology has proved to cut markdowns by up to 15 per cent.

"I've witnessed the growing interest in markdown optimization by many of the retailers I deal with," reports Terry Donofrio, president of Retail Systems & Services, a worldwide consulting and training firm specialising in merchandise planning services for major retailers.

"When you see the size of the problem, the interest is clearly justified."

"Markdown optimisation has been proven to deliver tangible, rapid and significant results, straight to the bottom line," said Jim Kelly, CEO of Spotlight Solutions, a retail solutions company that has developed the Spotlight Markdown Optimizer.

The package applies mathematical algorithms to sales, inventory and other operating data to recommend the timing, depth and location of markdowns. Spotlight's approach optimises, manages and automates merchandising decision-making enabling merchants to dramatically increase bottom line profitability, the company claimed.