Using Markdowns Strategically

3 Ways to Leverage Markdowns to Maximize Margin and Build Brand Loyalty

Markdowns are often perceived in a negative light. They signal an error in a retailer’s best attempt to entice their finicky, increasingly price-aware customers to open their wallets and pay full price for items in whatever channel they prefer to shop.

Mid-market apparel retailers, in particular, face significant pressure, burdened by trends that are fleeting, assortments that are a mixed bag of art and science when it comes to planning, brand loyalty that is increasingly difficult to acquire and maintain, and competitor sets that are large. Unlike other types of retailers selling goods that are not as impacted by shifting trends and consumer demand, fashion retailers often – with some exceptions for “hot” items – take a reverse approach to price management. Instead of creating a pricing strategy to accommodate an assortment, they often plan their assortments based around a good-better-best pricing approach that is directly influenced by their competitors.