Armani Exchange (AX), like many non-luxury fashion retailers, has long depended on seasonal sales to manage the delicate balance between supply and demand. At the start of each season, with no historical demand data available, accurately pricing hundreds of new arrivals is a daunting task. The standard approach—setting high initial prices and then progressively slashing them through multi-stage discounts (e.g., -30%, then -50%, up to -70%)—often backfires. For much of the season, over 50% of in-stock products remain overpriced, stifling sales. As the season winds down, retailers are forced into aggressive "fire sales" to clear inventory, resulting in deep discounts that erode profit margins significantly. This reactive pricing model not only leaves money on the table but also fails to capture the true value of products based on real-time shopper interest.
To tackle this entrenched problem, AX partnered with BATNA, an innovative AI-driven platform that replaces rigid discounting with dynamic, personalized price negotiations. BATNA empowers shoppers to haggle on prices while using a sophisticated valuation engine to ensure retailers maintain control and optimize margins. Unlike traditional sales tactics, BATNA evaluates product worth in real-time, adjusting offers based on factors like season progression, inventory levels, and individual shopper behavior—without ever revealing its internal valuations.
The pilot launched in a compact 100-square-meter AX store, featuring 500 SKUs and approximately 4,000 total units in stock. Every product was made available for negotiation, with a maximum discount cap set at -50%, as recommended by BATNA. This threshold might seem bold, but it's designed with safeguards: BATNA's engine starts conservatively, granting minimal discounts early in the season when product valuations are high. Retailers are relieved of the burden of micromanaging discounts—BATNA handles the precision, ensuring offers align with fair market value.
The rollout was swift and seamless. Within the first two weeks, BATNA analyzed sales data to build confidence in fair valuations for the majority of products. These insights informed tailored negotiation strategies, customized for each shopper and item. For instance, a high-demand item might yield only a modest concession, while slower-moving stock could see more flexibility—always within the -50% cap.
Critically, the store eliminated all seasonal sales and blanket discounts from day one. Instead, BATNA became the core pricing mechanism, integrating into 80% of orders. This high adoption rate underscores BATNA's role not just as a discounting tool, but as the market's only scalable price personalization engine for retail. During negotiations, BATNA intelligently upsells by suggesting complementary items, encouraging shoppers to add more to their carts.
The impact was transformative. AX's average discount rate plummeted from 31% to 22% in the initial season, and has since stabilized at around 14% as BATNA refined its understanding of AX customers' purchasing patterns. Remarkably, this was achieved while maintaining the -50% maximum discount throughout the season—no fire sales required.
Key metrics highlight the broader benefits:
These outcomes demonstrate how BATNA turns potential liabilities—unsold inventory—into opportunities, fostering a more agile, shopper-centric retail model.
BATNA's implementation at Armani Exchange proves that intelligent negotiation can outperform outdated seasonal sales strategies. By personalizing prices at scale and promoting strategic upselling, BATNA not only resolves pricing inefficiencies but also enhances customer engagement and loyalty. For fashion retailers grappling with demand uncertainty, BATNA offers a proven path to sustainable margins and operational resilience, setting a benchmark for the industry.
