In retail, a markdown refers to a reduction in the original selling price of a product. This reduction is typically applied to merchandise that has been on the shelves for a certain period or has not sold as expected. Markdowns are used by retailers as a strategic pricing tactic to stimulate sales, clear excess inventory, and maintain a healthy product turnover.
Markdowns can be temporary or permanent, and the percentage or amount by which the original price is reduced varies. Seasonal changes, overstock situations, or the need to make room for new inventory are common reasons for implementing markdowns. Effective markdown management is crucial for optimizing sales and profitability in the retail industry.