A markdown is a permanent price reduction applied to clear inventory, improve sell‑through, or respond to market conditions.
Why Markdowns Matter
- Help clear slow‑moving or seasonal stock
- Protect cash flow and storage capacity
- Influence margin and profitability
- Signal demand issues or forecasting gaps
- Affect customer perception of value
How Markdown Is Calculated
Common Use Cases
- End‑of‑season clearance
- Over‑forecasted inventory
- Competitive price matching
- Product lifecycle management
- Promotional strategy
Related Terms
- Promotion
- Margin
- Sell‑through
- Inventory turnover
- Price elasticity
What this metric really tells us
A markdown is often seen as a failure of planning, but in reality it’s a moment of truth, a signal that the system and the customer fell out of sync. When interpreted thoughtfully, markdowns reveal where assumptions didn’t match behaviour, where demand shifted, or where value wasn’t communicated clearly enough. They’re also an opportunity to reset, learn, and design better for the future. When teams approach markdowns with curiosity rather than blame, they unlock a more sustainable, human‑centred approach to merchandising: one that balances commercial needs with customer experience, and short‑term actions with long‑term brand health.
