Algeria AgencyIndustries
End of season: when to mark down, by how much, and in what order
An unsold garment does not lose its value all at once at the end of the season. It loses it every day, quietly.
The article beside this one says your stock has two expiry dates: fashion’s and the season’s. The fact is right and it stops where the decision begins.
That decision is the markdown, and it is almost always taken late and all at once. A retailer looks at the rails in February, sees what is left, and decides in one morning what should have been decided in three stages.
This article describes the other method: a ladder of three steps, fixed in advance, with dates written before the season starts. It is not a selling technique, it is a cash decision taken in the cold.
We give no percentage. The reason is in section 10 and is worth saying at once: the published schedules describe what somebody decided, not what works.
Two expiry dates, and only one is visible
An unsold garment loses value in two ways and at two speeds. It goes out of fashion, slowly and irregularly; and it goes out of season, on a date everybody knows.
The second is the only visible one, which is why it dominates decisions. A coat in April is visibly out of season; a style nobody has wanted since November is not — it is simply there.
The consequence is that the most important loss of value happens before anybody notices. Between December and February, an item that is not selling costs the space it occupies and the money it ties up every day, and nothing in the shop signals it.
That is what makes end-of-season markdowns so painful: they are presented as the moment you lose money, when they are the moment you observe a loss already taken.
So the useful reversal is this: a markdown is not a loss, it is a recovery. What was lost was lost long ago; what is decided in January is how much of it you get back and how fast.
The markdown is the second half of the buy
A seasonal buy is not finished when the goods arrive. It is finished when they have gone, at whatever price, and the markdown is part of that operation just as much as the negotiation with the supplier.
Seen that way it stops being a confession. A retailer marking down has not failed at buying: they are completing an operation whose risk they knew when they started it, at a price they themselves anticipated.
That view has an immediate practical consequence: the markdown price is thought about at the moment of buying, not six months later. "What could I clear this at if it does not sell" is a question asked in front of the supplier.
It has a second, less obvious and more useful consequence: it tells you how much you can buy. If you cannot bear the markdown on an item, you cannot buy it — whatever its theoretical margin.
It is the only discipline in this article that acts upstream, and it is the one that produces the most effect. All the others are ways of managing a situation that already exists.
When to start: the calendar is read backwards
The date of the first markdown is not chosen by looking at the stock. It is calculated from the end: the day you want the season gone, minus the time it takes to clear.
That time is known from experience and it is longer than people think. A markdown takes several weeks to produce its full effect, because the people who buy in sales do not all come on the first day.
The consequence is that the first step falls much earlier than instinct suggests — usually while there is still season left to trade, which is exactly the moment you do not feel like marking down.
The rule that helps is to think in shares rather than dates: when a season has sold about half of what it will sell, the first step is due. That point arrives early and it is spotted by watching the rate of sale rather than the calendar.
The exception worth knowing is a burst of demand falling late in the season — a feast, a school start, a local event. It justifies moving a step once; it does not justify deleting one.
The ladder: three steps, not a slide
A markdown should be a series of clear dated steps and not a continuous slide negotiated item by item. The difference is visible to the customer and it decides their behaviour.
Three steps are enough and are decided together, before the season: a moderate first, a markedly stronger second, and a third aimed at clearing rather than at margin. Each has a written date.
Writing all three in advance is what makes the method sustainable, because the second and third are unpleasant and would never be decided in the moment. A decision taken cold in October holds in February; the same decision taken in February does not get taken.
The progression has to be clear between steps. A second markdown barely stronger than the first is not read as a new opportunity: it is read as a shop that is hesitating, and it teaches the customer to wait longer.
The third step deserves an explicit decision about its purpose: it is not there to make money, it is there to recover space and cash for the next season. Treated like the first two, it is always too timid.
The order: what gets marked down first
The instinct is to mark down what sells least. That is almost always the opposite of what to do, and the reason is a question of sizes.
An item that has not sold at all is often an item nobody wants; an item that sold well and is left in extreme sizes is a desirable item that only needs an occasion to clear. The second moves on markdown, the first does not.
So the first step falls primarily on the tail ends of good lines: what remains of a style that worked, in the sizes that are always left. It is the most profitable markdown of the season.
What never worked goes straight to the second step without passing through the first. A moderate markdown on something nobody wanted at full price produces nothing at all and consumes a step.
The third group is damaged, mismatched or unlabelled stock, and it does not belong on the ladder: it is handled separately, immediately, at a price reflecting its condition. Mixing it with the sale casts doubt on everything else.
What is never marked down
Part of your stock has to stay at full price throughout the markdown season, and deciding that in advance protects the value of the whole.
Permanent basics are the first case: something you sell all year, in every season, has no reason to lose its price because February arrived. Marking it down teaches your regular customers to wait for the sales for a purchase they make twelve times a year.
Late-arriving new stock is the second case, and it poses a real presentation problem: it physically coexists with the sale. The answer is spatial rather than about price, and the next section returns to it.
The third case is more strategic: the items that define your positioning. A shop whose most visible piece is systematically in the sale does not have a stock problem, it has an image problem that takes a year to correct.
What is never marked down has to be written before the first step, like everything else. Otherwise the decision gets taken day by day, under the pressure of a quiet afternoon, and the full-price perimeter shrinks to nothing in three weeks.
The struck-through price, and what it says about you all year
How a markdown is displayed is regulated and this article does not make law: the conditions for announcing a price reduction are a matter of commercial regulation and are checked with somebody whose profession that is.
What we can say is commercial rather than legal, and the principle is simple: a reference price has to be a price you actually sold at. A price inflated to make the reduction impressive is visible in a market where people compare and talk.
It is especially visible online. An item whose price doubled the day before a fifty per cent reduction can be seen by anybody who looked at the page two weeks earlier, and that discovery gets retold.
The second thing a struck-through price says concerns the rest of the year. A shop permanently on sale no longer has a price: it has a range, and its customers learn to buy only at the bottom of it.
That is why end dates matter as much as start dates. A markdown that ends on an announced date and at which prices genuinely go back up preserves the credibility of your prices; one that fades out with nobody knowing when destroys it.
Space: marking down without breaking the shop
A badly placed markdown damages the sale of everything that is not marked down, and it is a cost rarely counted.
The mechanism is simple: a customer entering a shop whose doorway is occupied by dense sale rails has understood in three seconds what this shop is today. They will not look at the new collection, even if it is behind.
The layout that protects consists of giving the sale a clearly bounded space and not the best one. That is not a refinement: the best space must stay with what carries a margin, including during a markdown period.
Density does the rest of the work. A dense rail signals an end of line and gets rummaged; an airy rail signals a selection and gets looked at. Both have their use, and the second must stay dominant in the area visible from the door.
As the steps go down, the sale area shrinks rather than grows. That is counter-intuitive and it is the right direction: fewer items, more densely, in a defined corner, while space frees up for the season arriving.
The remainder: four exits, and keeping it is not one
After the third step something always remains. That remainder has four possible exits and the choice has to be made in advance, because none of them can be improvised in a week.
The first is clearing to a wholesaler or a colleague in another region. The price is low and it is immediate, and the advantage is not only cash: the goods leave your area, which protects your prices.
The second is selling online, which opens a geographically different clientele. It takes work per item and only suits a remainder homogeneous enough not to cost one photograph per piece.
The third is donation, which has real value and should be done without recounting it. A donation announced publicly in the same breath as a commercial operation reads exactly as what it is.
The fourth is keeping it for next year, and it is the only one that is rarely defensible. An item kept for twelve months occupies space all year, comes back into a different context, and generally does not sell any better. It is justified for a timeless basic and almost never for anything else.
What the markdown teaches about the next buy
The end of a season is the only moment in the year when your stock tells you the truth, and it is intelligence that is lost if nobody writes it down before marking down.
The useful list fits on one sheet: by reference, what was bought, what remains, and in which sizes. It is done before the first step, because after it the picture is mixed with the effect of price.
What it says falls into three cases. An item left in every size was badly chosen. An item left only in extreme sizes was well chosen and badly distributed. An item that ran out mid-season was well chosen and under-bought.
The three call for different corrections and only one is about taste. The second and third are errors of quantity and distribution, corrected with figures rather than flair — and they are the more frequent.
That sheet is what you take to the supplier for the next order. It is also the only thing in this entire article that improves next season rather than salvaging this one.
What is counted, and why no published schedule applies to you
Three things are counted, and they are counted on the sheet from the previous section. The share of the season’s stock sold at full price, the share sold at each step, and what is left after the third.
The first is the only indicator of the quality of a buy, and it is the one almost nobody keeps. A season where half the stock goes on markdown does not have a markdown problem: it has a buying problem, and the first figure says so six months before the accounts do.
The figure we will not give is a schedule: how much to take off at each step. Published ones exist, they are precise, and they measure nothing.
A published schedule is a record of what somebody decided. It does not describe an observation of the world but a policy — one chain’s, with its margins, its cash position, its seasonality and its buying mistakes that year. Copying it amounts to importing another business’s financial situation.
What can be calculated at your end, by contrast, is simple and personal: your cost price, what you are willing to recover, and how fast you need the space. Those three values are yours, they give you your three steps, and they are the only honest basis for a ladder.
What we do, and what we refuse to do
What we do is one page and a calendar: we write the three-step ladder with you before the season, with the dates and the list of what is never marked down, and we set up the end-of-season sheet that serves the next buy.
We do not set your percentages. They depend on your cost price and your cash position, which we do not know, and a figure from us would become your schedule while describing nothing but our assumption.
We copy no published schedule and advise you not to, for the reason written in the previous section: those documents describe decisions rather than results, and another chain’s carry its cash position and its mistakes.
We do not draft your reduced-price displays and we will not tell you what the regulation permits. The conditions for announcing a reduction are a matter of commercial law and are checked with somebody whose profession that is; what we say here is a question of trade.
Finally, the most profitable part is free and can be done now: write the three dates before the season, and make the sheet by reference before the first step. Both fit in an hour and they decide the substance.
Frequently asked questions
When should the first markdown happen?
Much earlier than instinct suggests. The date is calculated backwards: the day you want the season gone, minus the clearing time — several weeks, because sale buyers do not all come on the first day. In practice the first step is due once the season has sold about half of what it will sell, which happens early.
How many steps, and why not a gradual decline?
Three clear dated steps, decided together before the season. A continuous slide reads as a shop that is hesitating and teaches customers to wait longer. Deciding them in advance is what makes the method sustainable: the second and third are unpleasant and would never be taken in the moment.
Should we mark down the slowest sellers first?
Almost the opposite. What has not sold at all is often what nobody wants, and a moderate markdown on it produces nothing while consuming a step. The first step falls primarily on the tail ends of good lines — what remains of a style that worked — and it is the most profitable markdown of the season.
What do we do with the remainder after the third step?
Four exits, chosen in advance: clearing outside your area (low price, immediate, and it protects your prices), online selling if the remainder is homogeneous, a donation made without recounting it, or keeping it — defensible for a timeless basic and almost never otherwise. An item kept twelve months occupies space all year and generally does not sell better.
How do we avoid damaging full-price sales?
Through space rather than price. The sale gets a bounded perimeter and not the best position, which stays with what carries a margin. And as the steps go down the sale area shrinks rather than grows: fewer items, more densely, in a defined corner, while space frees up for the season arriving.
How much should we take off at each step?
We give no schedule and advise against copying one. A published schedule is a record of what somebody decided, with their margins, their cash position and their buying mistakes that year; it is not an observation of the world. Your three steps are calculated from your cost price, what you are willing to recover, and how fast you need the space.
Where we come in
Three dates settled before the season, plus what you decide never to discount, beat a decision taken in February under pressure.
- We build the three-step ladder from your own margins.
- We prepare the season-exit sheet, reference by reference.
- We leave the percentages to you, because they depend on your cash position.
No published scale will be copied across, and we advise against it: another shop’s rests on cost prices you do not know.
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