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Retail Store Management: Markdowns

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Drawing In Sales

Markdowns serve many purposes within a business, and using point of sale software is an extremely effective way to manage your markdown activity sensibly, ensuring your business objectives are met while maintaining a level of profitability from your marked down merchandise.

Increasing Footfall

One reason why businesses may mark down stock is to bring in significantly higher levels of footfall to their business. Choosing which items to mark down need no longer be a difficult task, as the business owner can use point of sale software to analyse margins and make an informed decision on which items they can mark down yet still achieve a profit through their sale. Such techniques are often used by businesses when they first open. Early trading can be extremely difficult for businesses as they initially have no customer base or reputation with which they can assure themselves of continuing trade. Early markdowns with a tag line such as “introductory offers” can often be a great way to achieve footfall into a business and attract customers so you can begin to establish relationships and build a firm customer base.

Using point of sale software to identify the items with the largest margin is one common way to identify which items to mark down. Another strategy is to look at low margin items and accept a small loss on these items, to drive sales of these and provide your customer with an incentive to return to the business at a later date.

Poor Sales

Probably the most common reason for markdowns in a retail business is to clear through slow selling stock. There are many reasons for stock being slow selling, which may not always necessarily related to the price point at which they have usually been sold. Whether an item has simply proven to be a slow seller or is soon to be out of season, these can all be identified using point of sale software in order to accelerate the rate at which these items are sold and clear room and provide finances for newer items to come in.

Price Establishment

The final big reason for markdowns is for businesses to give the impression that they are offering excellent value. Although not entirely ethical, many business initially offer goods at a vastly inflated price for a period of time required by trading standards laws. Once this is done, the business can markdown goods and attach “Save X/Hald Price” promotions to the items while still making excellent levels of profit.

Posterita is an International company with offices in Mauritius and America specialising in point of sale software solutions to retail companies.

Robert Reeve works for Bough SEO, a London SEO agency that specializes in all forms of digital marketing.
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