Markdowns
A markdown is the amount by which a retail price is reduced. "The
control of markdowns is a measure of management." This statement can
be restated more forcefully - "Control of Markdowns is the prime
responsibility of you the owner of your business."
Profitable merchandising requires a certain amount of markdowns.
Excessive markdowns cause decreasing profitability. Markdown control can
be accomplished through the proper use of systems and procedures you
develop for your business and through the application of good
merchandising judgment and skill.
When to take markdowns and how much of a markdown to take are questions
of judgment. The first decision you must make is whether or not a markdown
is the only alternative to clear slow moving merchandise. Rate of sale,
ownership, and the ability of sales people to sell, all should be
considered before a markdown decision is made.
The amount of the markdown to take is the second decision that you must
make. Generally, the more urgent the need to clear, the larger the
markdown. In any case, the markdown taken should be sufficient to move the
merchandise.
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