In what way does effective markdown strategy impact a retailer?

An effective markdown strategy plays a crucial role in helping retailers manage their end-of-season inventory. By implementing markdowns strategically, retailers can incentivize customers to purchase items that may not be selling as well, thus preventing excess inventory from lingering beyond its peak selling period. This not only frees up shelf space for new products but also helps in recovering some of the investment made in those products.

When retailers mark down prices appropriately, they can attract customers who might be waiting for discounts before making a purchase. This can lead to increased sales volume during crucial times, such as the change of seasons, holidays, or clearance events. By managing end-of-season inventory effectively through markdowns, retailers enhance their overall inventory turnover and cash flow, allowing them to reinvest in new merchandise and maintain a healthier stock level for future sales periods.