All retailers take markdowns but rarely do they take them at the right time. Most would take them too late in the season and as a result are reducing inventory at 75-90% off instead of 30-50% off. The best retailers are quick to markdown when goods are not selling in the first 60 days. Any retailer that tells you otherwise is losing money.
There are two types of Markdowns:
1) Maintenance markdowns
2) Regular Markdowns
Maintenance markdowns are taken during any given month on goods older than 60 days. Certain styles within a class are sitting around too long. They are not getting cuter as the saying goes. Mark those down to 50% off right away to move them out. If you wait to 90 days or longer the season has come and gone and the customer won’t get any satisfaction purchasing them until next season. Think of Ski Equipment in May.
Regular markdowns are an integral part of the business to ensure 91% sell-thru. 91% is the ideal sell thru on any class and we want that sell thru in 90 days not 365 days. Each store has its own seasonality and as we near the end of the season our markdowns get more aggressive. We will not be marking goods down in the first 60 days but stick to a 40% initial markdown then a 70% markdown late in the season.