Markdown Best Practices

MARKDOWN IN SEASON

If products aren’t selling at full-price and the season is dwindling down, it’s

time to start marking down products. Customers will feel like they are really

getting a deal on something they can use right then, rather than something

they won’t be able to use until next year.

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MARKDOWN AT LEAST 20%

Don’t waste time gradually increasing the markdown percentage. If you

do that, you may end up hanging on to the item too long and miss out on a

chance for a sale.

Instead, start at 20% and move items out more quickly.

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LIMIT SALES

Decrease the frequency of sales, so that your customers don’t lose incentive

to come in and pay full-price for items. Aim to have full store sales only

once or twice a year.

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HAVE A CLEARANCE SECTION

You should have a section of your store that is dedicated strictly to clearance

items. Make sure you have clear signage directing your customer to sale

items and make that area in the back so that shoppers have to walk past

your new merchandise.

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CONSIDER PRICE POINT TABLES

To make your customers’ lives easier, you should create price point tables

so that shoppers will know exactly how much they will be paying for a

product. This should be the last stop for your products if they still haven’t

sold after 2-3 weeks on the clearance rack.

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THE RIGHT TIME FOR MARKDOWNS

Markdown your merchandise if it is lacking matching sizes, is down to one

color, or is the last one or two. Sometimes it’s best to markdown merchandise

even before it’s met its shelf-life.

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KNOW WHEN TO DONATE

If you still have inventory that’s over a year old, it’s definitely time to

donate it and create space for profitable inventory. Businesses who donate

to charitable organizations may be eligible for a tax benefit each year.

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