5 Tips for Avoiding Markdowns at Your Retail Business

One of the biggest fears for any retail business is the dreaded markdown. It’s a sign that you didn’t sell enough products at the original price, and now you have to slash the cost to get rid of them. This can be a significant blow to your profits, and it’s something that you want to avoid if at all possible. 

A markdown can also hurt your reputation, as customers may think you’re desperate or your products are of poor quality. All businesses are susceptible to markdowns, but there are some things that you can do to minimize the risk. 

Here are five tips to reduce the chance of marking down your products.

1. Use Flexible Pricing

Flexibility is vital when it comes to pricing. You can charge a higher price if you’re selling products in high demand. On the other hand, if demand is low or there’s a lot of competition, you may need to lower your costs to attract customers. 

This strategy also applies to seasonal items. You may want to increase the price of beach towels in the summer and decrease the price in the winter. 

By being flexible with your pricing, you can better match your prices to demand, which will minimize the need for markdowns. To calculate the optimal price for your products, determine your cost of goods sold, and add a markup that will cover your other expenses and allow you to make a profit. Markdowns should only be used as a last resort to eliminate excess inventory.

2. Use Data From Customer Feedback

By listening to what your customers say, you can get an idea of which products are selling well and which aren’t. Listen to feedback from all channels, including social media, in-store surveys, and customer service calls. This data can help you decide on pricing, inventory levels, and product assortment. 

Voice of the consumer testing can also help you identify trends. If you see a certain type of product becoming popular, you can stock up on it as the demand increases. This will help you avoid markdowns because you can sell the product at a higher price. 

To get the most out of customer feedback, track it over time. This will help you spot trends and make adjustments to your business accordingly.

3. Take Better Inventory

Automated inventory management systems can help you avoid markdowns by taking better inventory. These systems can track your sales and automatically order products when running low. This ensures that you always have the right amount of product in stock, which minimizes the risk of overstocking. 

Your inventory management system should also be able to track customer demand. This information can help you make decisions about pricing and products. 

When taking inventory, counting everything, including products on display and in the back room, is crucial. This will help you get a more accurate picture of your inventory levels and avoid markdowns. Markdowns are often caused by outdated inventory.

4. Place Product in Key Focal Points

When customers walk into your store, you want them to see products that are in stock and selling well. These products should be placed in critical focal points near the entrance or high-traffic areas. Placing these products in strategic locations will increase the chance of selling them at full price. 

You can also use visual merchandising techniques, such as product placement and color schemes to influence customer behavior. You can use the color red to draw attention to clearance items. Using these techniques, you’ll be able to sell more products at full price and avoid markdowns. 

Get creative with your product placement and use it to your advantage. Your marketing team should start with a product placement strategy based on customer behavior and adjust as needed.

5. Have a Strong Supply Chain

When your suppliers are reliable, you’ll have the product you need when you need it. This minimizes the risk of overstocking and allows you to sell products at full price. 

To build a robust supply chain, develop relationships with your suppliers. Get to know them and their business. This will help you identify potential problems disrupting your supply chain. You should also create a supplier scorecard. This scorecard should include criteria such as delivery times, quality of product, and customer service. 

By tracking this data, you’ll be able to identify which suppliers are performing well and which ones need improvement. The goal is to have a strong supply chain that can provide you with the product you need when you need it.


Your retail markdown strategy should be based on your specific business goals. Research and understand why markdowns happen so you can avoid them in the future. 

Customer behavior is vital. Your clients should be able to shop easily in your store, find what they’re looking for, and purchase the products they want. 

All in all, by following these tips, you’ll be able to avoid markdowns and increase your profits.