Progressive Price Changes

Progressive price changes are an effective tool for assuring a complete sell through at the end of each season for any line or category of merchandise. Margins can be maximized by gradually marking down product in progressive steps that assures a complete sell through at the best prices possible.  They can be critical in maintaining high turn rates while protecting margins, even when selling below cost.

By tracking groups of merchandise (what we call Style Lists), inventory can be initially marked down to a moderate level, such as 20% off retail.  As time passes, the same merchandise group can be marked down at progressively lower levels until it is sold out; maybe 30% then 50% and ultimately at clearance levels. By marking goods down in Style Lists they can be easily tracked to report the effectiveness of each markdown level as well as being useful to take the next necessary markdown in the progression.

Some retailers utilize a colored sale price tag rotation to avoid remarking merchandise that is reduced every few weeks until it is sold.  They simply change the color legend to match the current percentage off the original retail at the time the merchandise was moved into the clearance section of the store and the system manages each pricing progression.

While this is an especially efficient way to move slow sellers, many retailers will routinely markdown merchandise after it has been in the store for a set number of weeks.  Schedules can be established to continue to deepen markdowns until the product is completely sold out. Thus, turn rates and dollar investments are managed even when margins must suffer.

A well managed markdown program can be essential for every retailer to redirect dollars invested in poor performing inventory so it can be better utilized on faster turning and more profitable merchandise.  The biggest mistakes are made when inevitable markdowns are delayed as merchandise continues to lose value as a season passes.  Earlier, in-season markdowns are always less costly while late season markdowns are always the most costly.

Give us a call to discuss ways to help better manage your markdown budget.