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Retail Markdown Planning: The Cost of Discounting Too Late
The season has six selling weeks left, but the jacket holds twelve weeks of stock. Waiting protects today’s price only if demand catches up. Otherwise the retailer has less time, more pressure and a narrower choice of price responses.
INSIDE MERCHMIX / CORE
The stock waits.
The season doesn’t.
Follow a jacket with 120 units, twelve weeks of cover and six selling weeks left. Compare the scoped price proposal with the stock it needs to move.
Core markdown illustration. Price changes remain proposed and await authorisation.
Markdown & repricing command centre
Apparel / Everyday Jacket / selected stock scope
Everyday Jacket holds 120 units and sells ten a week. That is twelve weeks of cover, with six selling weeks left.
THE KEY IDEA
Twelve weeks of jacket stock cannot fit a six-week selling window at the current rate. In Core, assess the price response early enough to observe it, and make the cost of a deeper later markdown explicit.
The stock has more weeks left than the season
Everyday Jacket holds 120 units and sells ten a week. That is twelve weeks of cover, but only six selling weeks remain. At the unchanged rate, sixty units sell and sixty remain after the useful window. The warning is already visible before the stock becomes an end-of-season clearance problem.
Merchmix is a connected platform for retail planning and operations. Core is its planning product. Its markdown and repricing workspace brings the selected styles, stock, selling rate, price and proposed margin into the same decision. The purpose is to assess that gap while a response still has time to work.
Waiting uses up the time needed to respond
If the retailer waits four weeks and the jacket continues selling ten a week, eighty units remain with two weeks left. Selling those eighty in the remaining period would require forty a week, four times the assumed current rate. That is a requirement to test, not evidence that a discount can deliver it.
The earlier six-week position gives more time to observe a response and adapt it. Waiting may still be justified by evidence such as a known event or confirmed demand change, but the expected quantity and timing should be explicit. Hope that sales recover is not a substitute for a stock plan.
AN APPAREL PLANNING SCENARIO
Twelve weeks of stock, six weeks to sell
Everyday Jacket holds 120 units and sells ten a week. Waiting four weeks at that rate leaves eighty with two weeks to sell. A 20% total markdown from $100 gives an $80 price; a later 40% option gives $60. At a $40 unit cost, the gross-profit difference is $20 per unit. Neither price guarantees the required demand response.
Illustrative situation, not a customer case study.Use cover and the remaining window as the warning
Weeks of cover is stock divided by weekly unit sales. For the jacket, 120 divided by ten is twelve weeks. Compare that with the six-week selling window, then check whether stock is concentrated in sizes, locations or variants that customers are not buying.
Other warning patterns include cover increasing while recent sales slow, or much of the season passing while most stock remains. Core’s Stock and Modelling column views help keep those inputs visible. SOH U means stock-on-hand units; ROS is rate of sale. Keep the rate’s time basis consistent before interpreting the cover figure.
Make the price and margin trade-off concrete
The jacket’s reference price is $100, its current price is $90 after a 10% markdown, and unit cost is $40. A proposed 20% total markdown from the reference gives an $80 selling price. That leaves $40 gross profit per unit and a 50% gross margin, before other expenses.
If a later decision needs a 40% total markdown, the price becomes $60. Gross profit is then $20 per unit and gross margin 33.3%. The deeper price gives up another $20 of gross profit on each unit sold. Compare both prices against the same reference; do not confuse a total markdown with an additional percentage reduction from the current price.
Show what the delay could cost without inventing demand
For an equal-volume comparison of 120 units sold, the $80 option gives $9,600 revenue and $4,800 gross profit. The $60 option gives $7,200 revenue and $2,400 gross profit. The difference is $2,400 of gross profit on the same quantity.
This isolates the price effect. It does not forecast that all 120 units sell at either price, and it does not imply that 120 units would still remain after weeks of trading. The actual outcome depends on response, timing, size availability and the stock still held. Use a stated sales assumption when comparing the commercial options.
FROM THE SIGNAL TO THE MERCHMIX DECISION
What to check before the next action
| What you see | Where to look in Merchmix | The decision to review |
|---|---|---|
| 120 units / 10 weekly sales / 6 weeks left | Core / Markdowns / Stock columns | Investigate the six-week cover gap before the selling window narrows. |
| $80 proposed price / 50% gross margin | Core / Modelling and selected style detail | Check the total markdown basis, unit cost and expected sales response. |
| $60 later option / $20 unit gross profit | Markdown summary / commercial comparison | Recognise the $20 unit gross-profit difference without assuming equal demand. |
Connect the remaining stock to MFP/WSSI
MFP/WSSI is Core’s merchandise planning workspace, connecting weekly sales, stock, intake and financial assumptions. A markdown changes the value earned on the units sold; the remaining window determines when that response needs to happen. Bring both into the plan rather than treat price as a detached spreadsheet exercise.
Check confirmed intake before expecting a markdown to solve the exposure. More jackets arriving late can extend the problem. Also investigate availability, placement or a supported stock move if the issue is where useful sizes are held. Discounting every variant alike is not the only possible response.
Use the command centre to prepare a scoped decision
In Core, open Product Review, then Markdowns. The command centre provides the selected style scope, stock and modelling columns, a summary panel and an approval step. The pricing workbench also exposes a selected style’s price and SKU detail. Use those views to connect the proposal with the merchandise it actually affects.
The article animation keeps the jacket’s $80 proposal awaiting authorised approval. Its companion summary compares the $80 and $60 options on a stated equal-volume basis. Neither publishes a price or claims a completed approval. Confirm the required workflow, cost basis and affected variants before progressing the decision.
Set the next decision while there is time to observe it
For this jacket, the decision point is the six-week window, not the final clearance week. Establish which response to test, which sizes and locations it covers, who authorises it and when the team will assess the result. Use the gap between twelve weeks of cover and six weeks left as the reason to act on the question now.
After the authorised response, compare actual unit sales, gross margin and remaining cover with the assumptions. If the selling rate stays at ten, the stock problem remains even if the proposed price looked attractive. Recalculate the remaining requirement while the team can still change course.
BEFORE THE REMAINING WINDOW NARROWS
- Which styles and variants are carrying the slow-stock exposure?
- What evidence supports waiting for full-price demand?
- How much selling opportunity remains for a response?
- What is the margin and stock trade-off of the proposed change?
- Who authorises the decision and checks the actual selling response?
A CLEARER NEXT STEP
Common questions
Why can waiting make a markdown more expensive?
It leaves less time to sell the remaining stock. If a deeper price is then required, gross profit per unit falls. In this example, the $80 price earns $40 gross profit per unit, while $60 earns $20 at the same $40 cost.
Does the $2,400 comparison predict the sales result?
No. It assumes the same 120 units sell at each price to isolate the price effect. It is not a demand forecast or a claim that the same stock remains after a delay. Test the quantity and timing assumptions separately.
When should the team raise the markdown question?
When stock cover no longer fits the useful selling window, especially if sales are slowing or intake is still due. Here twelve weeks of cover against six weeks left is already a reason to choose and assess a response, rather than wait for the final clearance period.
THE COST OF DELAY / CORE
A deeper cut.
Less profit per unit.
An $80 price leaves $40 gross profit per jacket. At $60, it leaves $20. The summary holds the sold quantity constant to make that price difference clear.
- 01State the comparison basis
Reference price $100, unit cost $40 and 120 assumed sold units.
- 02Compare the gross profit
$4,800 at the earlier price versus $2,400 at the later option.
- 03Test the demand response
Equal quantities isolate price; actual sales need their own assumption.
Markdown summary / price comparison
Apparel / Everyday Jacket / selected stock scope
- Unit gross profit
- $40
- Gross margin
- 50%
- Revenue / 120 sold
- $9,600
- Gross profit / 120 sold
- $4,800
- Unit gross profit
- $20
- Gross margin
- 33.3%
- Revenue / 120 sold
- $7,200
- Gross profit / 120 sold
- $2,400
Reference price $100 · unit cost $40. The same sold quantity isolates the price effect; neither option guarantees that 120 units sell.
Everyday Jacket holds 120 units and sells ten a week. That is twelve weeks of cover, with six selling weeks left.
FROM EXCESS COVER TO A TIMELY PRICE DECISION
A decision in time.
A trade-off understood.
Twelve weeks of jacket stock cannot fit a six-week selling window at the current rate. In Core, assess the price response early enough to observe it, and make the cost of a deeper later markdown explicit.