Markdown management is the process of reducing the price of products that are selling slowly, are out of season or are close to their expiry date. The aim is to clear stock while giving up as little margin as possible.
Retailers monitor sell-through, weeks of cover and age of stock to decide what to mark down, by how much and when. Markdowns are often staged, such as 20 per cent first and deeper later, rather than one large cut. Systems can apply the new price at the POS, online and on shelf labels at the same time.
Fashion, homewares and seasonal retailers use markdowns to clear ranges before the next season. Grocers and bakeries reduce fresh products late in the day to cut waste. Electronic shelf labels make price changes quick and consistent across a store and avoid reprinting tickets.
Pitfalls include discounting too early and giving away margin, discounting too late when little demand is left, and prices that differ between shelf, POS and website. Teaching customers to wait for sales can also hurt full-price sales.
Managing markdowns with data, rather than by habit, helps recover cash from slow stock and frees space for new ranges. Recording the outcome of each markdown shows which discount levels actually work.