For retailers, deciding when to take a markdown isn’t always easy. You want to get items out the door, but also want to recover as much of your investment as possible.
We understand that. In today’s blog, we will be looking at five tips to keep in mind when deciding when to take a markdown.
Consider taking a markdown…
On a particular color of an item that isn’t selling.
You’ve likely been in this situation before: you purchase a shirt in three colors—but when it comes time to sell, two of those colors are moving fast while one just isn’t selling. This is when you should markdown the color that is not selling, so that you can better fund purchases of the ones that are.
On an item that isn’t moving as fast as others in the store.
Do you have an item on your hands that just doesn’t seem to be selling as fast as others in the store? It happens to all of us! The best thing you can do here is to markdown the slow items and buy more of what is selling to maximize your profits.
When the season is a month away from ending.
Many small retailers will wait until the season ends to take markdowns on items in the store, but this isn’t the best idea. You don’t want to wait until all your customers are gone and moving into the next season to take your markdowns. Instead, take markdowns a month ahead of time to get items out the door.
Remember, your store items aren’t like fine wine—they won’t get better with age! Take your markdowns now to get your money out.
On non-staple items that are more than a season old.
Take a look at your inventory. If there are any items that are not staples (which get reordered every season) and are over a season old, a markdown can help you get these items out the door—you don’t want to hold on to them any longer!
As soon as possible.
In any case, the best time to take a markdown on an item is as soon as possible—that is, as soon as you realize that there is a flaw or other issue keeping the item from selling. The sooner you do this, the sooner you will be able to recoup costs—and the greater the chance you will be able to make more back on something else.
While you may be hesitant to take markdowns, know that they can often be a helpful tool for your shop. In addition to letting you move less popular items (while making room for more lucrative ones), markdowns—when used correctly—can help you keep your sales high during the holidays and throughout the year.
We hope that these tips can help you improve your markdown strategies to make for a more successful business in the coming year!