Free Up Space and Money by Reducing Markdowns
by: David Wing

Recently, I led a discussion-group meeting with retailers on the topic of markdowns. We reviewed the six most common and effective selling points to reduce existing markdowns:

1. Do not let your clearance items look like junk! As much as possible, keep this merchandise looking new and fresh, making sure that it is at least sized, but always try to colorize and price point.
2. Keep your markdown and clearance area well lit. Customers do not like shopping in dark corners; the more light on the merchandise, the more attractive it will look.
3. If you have an overabundance of clearance merchandise, try using tables. Make sure that you have sized and price-pointed all tabled items. Tables will put the merchandise in the traffic pattern of the customer, forcing an impulse buy.
4. Budget-conscious customers will be more inclined to buy clearance merchandise; use this to your advantage.
5. Try setting up small displays in your clearance area. The same principles used in selling your full-price merchandise apply to markdowns, too.
6. Always remember to use price points in lieu of percentages. Customers relate dollar signs faster and easier than percentage points.

Once your markdowns reach 50 percent or more, just size and price-point them. Above all else, you must make sure that all of your markdowns are easy to shop. The old adage of putting markdowns in the back and against the wall does not always work. Move this merchandise front and forward, like a sale, and blow it out! You must free up your store’s valuable space for full-price items while freeing up your buying dollars.

Although every retailer’s goal is to always sell at full retail, we all make bad buys. But there are ways of reducing the amount of items we mark down. Creating a customer wish list and asking the customers who didn’t buy “Why didn’t you…?” can reduce poor buying habits and markdowns substantially. These two simple tools will give you a good idea of what you need to be buying, or any store problems you were not aware of.

If yours is a chain-store operation, make sure you share customer feedback with your buyers. The more information they have about your market, the better your chances of getting the merchandise that will sell in your area. Just keep in mind that it will not work overnight -- this is a long process that will pay off as time goes by.

Strive in the areas of displays and product knowledge. A large amount of markdowns can be attributed to lackluster displays, poor merchandise knowledge, and improper placement.

Make sure that your sales staff understands how to sell each piece of merchandise you carry, its benefits to the customer, and its quality. Ask your vendors to come in and give a class about their merchandise to your employees.

Keep your merchandise moving. Displays that sit for more than 2 weeks become old in the eyes of the customer. Map out your customer traffic pattern, and swap your merchandise in and out of this pattern. This will keep your store fresh and changing, even in the middle of a season.

Each one of these suggestions will not eliminate the need to mark down some merchandise. The goal is to reduce your markdowns to a manageable amount while freeing up valuable floor space and your buying dollars.