Creating effective markdowns
A markdown is a devaluation of a product because it cannot be sold at the original selling price. An example of a discount would be if you have an item that after a month of slow sales you decide to discount by 20%. Even if you just lost revenue, it also invites more people to buy it at a lower price. Since the item didn’t originally sell well, offering a good discounted price can often lead to sales that otherwise wouldn’t have happened. However, you will often find that you need to pursue your markdown strategies based on slow sales, moving products from 20% to 30%, 40%, and more as needed. Timing is particularly important because you want to sell the product while it is still relevant to the season, trends, and more.
Markdowns need to be differentiated from discounts. In retail, a discount is a reduction in the price of an item or transaction based on the type of customer who is buying. The employee discount, senior discount, and frequent...
