The Markdown Is Never the Problem
40% off isn’t where the problem started. It’s where you finally noticed it.
Merchandising Solves This | Week 10
Somewhere in a warehouse, on a retail floor, or buried in the back of an end cap right now is a product sitting in a clearance bin that everyone believed in six months ago.
Design fought for it.
Sales sold it.
Planning bought it.
Marketing supported it.
And now it is 40% off.
So what went wrong?
Probably not the markdown.
The markdown is just where the problem finally became visible.
What a Markdown Is Actually Telling You
Markdowns are receipts for decisions made months, or even years, earlier.
Too much inventory. Too much optimism. Too little differentiation. The wrong channel. The wrong color. The wrong bet.
By the time the price gets cut, the damage has already been done.
This matters because most brands and retailers manage markdowns the way you manage a symptom. They adjust the discount. They move the inventory. They vow to do better next season. And then the same decisions get made upstream, and the same receipts arrive at the end of the season.
The goal is not to eliminate markdowns. Markdowns are a legitimate retail tool. Sometimes inventory needs to exit. A calculated risk does not work out. Demand shifts in a direction nobody predicted. Those markdowns are part of the plan.
The problem lies in the markdowns no one can explain. The ones that keep showing up. The ones where the end-of-season debrief produces a lot of theories but no clear answer about what actually created them.
Those are the markdowns this article is about.
Four Places Markdowns Are Born
The buy: We bet too big.
Buying too deep into a product before it has earned that confidence is one of the most common sources of markdown pressure. The buy should not be driven only by what has sold in the past. It also needs to reflect where the business is intentionally going. Which products are you elevating this season? Where are you placing your real bets?
When hero products are defined before the buy is placed, those questions have answers. The decision about where to go deep and where to stay conservative becomes dramatically clearer. Without that hierarchy, every product gets treated roughly the same, and the dollars get spread too thin to make any of them successful.
The forecast: We believed the target.
A forecast built from a growth target working backward to a unit number is a markdown waiting to happen. The strongest forecasts start from sell-through history and layer in deliberate ambition on top of what the data supports. There is a real difference between saying this hero model can grow thirty percent based on how it performed last season and what we are planning to do to support it, and saying we need to hit this number so let us figure out how many units that requires. One is a merchandising decision. The other is math dressed up as planning.
The product: We did not create enough reason to buy.
Sometimes the uncomfortable answer is that the customer simply did not want it badly enough at full price.
That can happen for several reasons. The product was not clearly differentiated from what was already in that line or already in the market. The price and value relationship was not compelling enough to create conviction. The seasonal story was not in place. The colors were chosen reactively rather than built around what the hero products needed and what would create urgency on the floor. When the seasonal color story is not doing its job, the line loses momentum. Customers wait. And when they wait long enough, the discount arrives. Customers learn quickly. Once they know a brand discounts, they stop buying at full price. They wait because waiting works.
The channel: We put it in the wrong place.
The right product in the wrong channel will underperform regardless of how good it is. A product priced and positioned for a premium specialty environment does not behave the same way in a mass channel. A product built for a DTC relationship where the brand story can be told fully does not translate to wholesale accounts where the brand has thirty seconds of shelf space to make its case. Channel placement is a merchandising decision, and when it is made without intention, the product pays the price in sell-through.
Where Merchandising Comes In
Merchandising is the function positioned to catch each of these upstream before they become receipts downstream.
Challenging the buy feels negative. Questioning the forecast feels pessimistic. Challenging the product feels personal. Raising concerns about the seasonal color story feels like picking a fight with creative.
But those conversations are merchandising.
The uncomfortable conversation before the season is a lot cheaper than the markdown after it.
Where to Start: The Season Review
Pull your full season sell-through and margin data by product. Every product, not just the ones that hurt the most.
For every meaningful gap between what was planned and what sold, ask one question: what decision did we make upstream that created this outcome?
Was it the buy? Did the initial order quantity outpace what the sell-through history and the product hierarchy supported?
Was it the forecast? Was the plan built on ambition without the data and product clarity to back it up?
Was it the product? Did it have a clear enough reason to exist, a differentiated position, a compelling price, a seasonal story that created urgency?
Was it the channel? Was it placed where the right customer could actually find it and understand it?
One of those four will have a clearer answer than the others. That is your root cause. That is the conversation worth having before the next season starts.
Markdowns will always exist.
The goal is not zero markdowns.
The goal is zero mystery.
Know why it happened. Fix what happened upstream. Make a better bet next season.
Because the markdown was never the problem.
It was the symptom.
The Outdoor Merchant is a product merchandising consultancy specializing in outdoor, cycling, and snowsport industries. Each week in this series, we explore a real business problem that smart merchandising was built to solve.
Follow along for Week 11, and reach out to sarah@theoutdoormerchant.com if any of this is hitting close to home.