Top 5 markdown actions to take to dominate at mid season sale

Cherie Beslich
March 25, 2022
7 min

To set you up for success and ensure you dominate the first quarter of retail trade, we give our tips for your markdown strategy what to look for when analyzing sale performance, taking further discounts and adding new lines to sale.

Here we are already half way through the first season of the year and in the midst of Mid Season Sale (MSS) mayhem.  Now is the time to check how your markdown performance is tracking against your retail markdown strategy keeping inventory management top of mind, so you have budget to fuel your next season.  

Mid Season Sale (MSS) is an opportunity for retailers to clear through any stock that is old, underperforming against expectation or seasonal.

The reason why this analysis is so important, is because as the new season approaches retailers do not want Open To Buy (OTB) funds tied up in last season's slow movers particularly if we are transitioning from summer to winter or vice versa.

Basically if we don’t clear through this season's obsolete stock we risk having our replenishment funds frozen in aged inventory that will prevent us from trading when the new season freshness launches!

Open to Buy (OTB) is a retail budget that outlines the money that is available to spend on future orders (replenishment and newness).

An OTB takes into consideration the amount of inventory you have on hand and the ideal amount of stock the business is required to purchase to meet budgeted sales and demand of the customer.

So your markdown skus are live, but how are they tracking? Selling like hot cakes or still turning on 20 weeks of cover (eek!).  It’s always important to identify the slow movers quickly, even more so during sale periods.

I know it can be disappointing when you thought a particular style was going to set your world on fire but the customer didn’t agree… devastating.

We’ve all been there, the first round markdown goes live and the styles still aren’t moving, what!   But never fear, now is the opportunity to review performance, and make some tweaks to kiss the slow movers goodbye. How you ask?  By adding a further discount of course! This is just one markdown strategy that can be implemented to cement MMS success.

Further discount meme of Meryl Streep shouting
Photo by @thismerchlife

Review Performance

I know, I know more retail data analysis really? Yes, to succeed we must dominate with data and understand what is going on inside our retail business.  Have a fear of analysis paralysis? Don't worry I have you covered, and will outline the key areas to look at while completing your MSS reporting below.

I like to think of retail analysis as a better way to understand your customer. Sale analysis will provide you with insights regarding your pricing architecture and what products resonate with your customer.  Maybe you selected a great product but it was priced too high, you will see this in the data when it flies off the shelf with a light discount. Something to keep in mind for your next round of assortment planning.  Below are a couple of points to review, to ascertain what action to take.

Full price vs markdown mix  

So first things first, review performance of current markdown clearance stock - what is driving your overall business sales since the sale period began?  During sale periods, we expect to see a shift in the percentage of sales that are coming from markdown, after all the aim of the game is to clear underperforming stock. However, if your data is telling you otherwise it may indicate underperformance.

Markdown cover

Consider how quickly your sale stock is turning. You want to ensure you have enough stock to continue strong sales for the remainder of the sale period. On the flip side, if you have too much cover you risk being overstocked. It’s all about balance and the actions you take to restore that balance.


Sell through rate of markdown stock

Sell through rate will tell you what percentage of markdown stock you have sold through. This varies from brand to brand, ideally you would have an ideal ST% by week/month set at the beginning of the season to measure against.

Hang on, wait a minute, which styles did I markdown again and how will I know which sales came from markdown? We’ve all been there, hunting down the right version of the markdown file we’d saved those precious sale SKUs in. (Was it version 6.0, or SALE_FINAL.xls?!)

Thankfully, Style Arcade’s Rollups makes it easy to view the above mentioned metrics and have your sale SKUs saved in the one place (for the whole team to access), so you understand what's driving your business and then decide the appropriate actions to take.

Style Arcade Rollups tab
View all your live data straight from your system (rather than 5 old data downloads!)

Pairing the above metrics together will identify the levers to pull to drive certain outcomes.

For example, if you have a sku with high weeks of cover and low ST% the levers to pull would be applying a further discounted paired with marketing support.

Take Action

Now you have an understanding of what’s happening, it's time to implement actions and pull identified levers to impact your business results.

1. Apply a deeper discount

When taking a further discount, usual business practice aims to protect profit and margin and ensure you never offer discounts deeper than the cost of the price of the stock you paid.  Ideally, the aim is always to break even so keep this in mind when deciding how much deeper to discount on those slow skus.

Next decide how you will execute the further offer you have decided to apply.   Will you offer an additional discount on top of the original markdown using a discount code?  Example, Use code XZY at check out for an additional 10% off sale skus.

Or will you adjust the red pen to display to reflect the new reduced amount?

Consider consumer pricing psychology, will you round your discounts to the nearest dollar or .99 cents?

We suggest looking back on previous promos & sale messaging to identify the type of offers that resonate best with your customer. For example, did the promotion “3 for $25” do better than “Take a Further 25% off?  Don’t be afraid to test the water with different promotions, test and test again until you find your magic formula.

2. Identify new lines to add

If your mid season sale is over performing and you have sold out of a high number of skus, you might decide to add additional lines to your sale. Lines you may want to include are previous SKUs that didn’t make the initial cut or items that you’ve identified as potential risks since sale began. Adding new items keeps your offering exciting, and can entice the customer to return to see what else is on offer.

When reviewing new lines to add it’s particularly important to note the number of options you have visible on your sale page.  Given markdown sale messaging generally drives more traffic to your website, or bricks & mortar store, you want to ensure there is a wide enough assortment  of products to increase the chance of conversion once landed.

Disappointed Customer
I turned up for this?!

Using the same methodology to identify original markdown skus ,  you can create a power pivot in Style Arcade’s Rollups or simply select the Aged Styles tab in Style Arcade to quickly identify old stock that needs clearing and which styles you will add into your MSS.

Style Arcade aged tab
In just one click, you can visually see all the products older than 12 months.

One click and you can visually see the next items to add to sale. Even better, share the list across the team so everyone can get to work on merchandising and marketing.

3. Remove all sold out styles

Don’t forget to remove items that have sold through.  There’s nothing worse than the excitement you feel as a consumer when your favourite brand goes on sale only to be bitterly disappointed when clicking through to the sale page to discover everything is sold out.

disappointed child, are you serious
Why am I on this site when nothing is in stock.

It’s not a great experience for your customer, the results of having out of stock items within your eComm store can have a greater impact on your business than you might think. Conversion rate, customer acquisition cost, repurchase rate just to name a few, can all take a hit if out of stock items are left live on your site.

Let’s take a look at Customer Acquisition Cost (CAC) for example, you may have invested in marketing support to drive your sale messaging through means of Google or social media ads. The customer clicks through on the ad, only to land on styles that are out of stock, so they don’t convert (conversion rate drops), and the customer experience has been negatively impacted which may reduce the likelihood of them returning to shop with you again.

CAC - Customer Acquisition Cost is the amount of money spent to acquire new & potential customers.

CAC includes all costs associated in obtaining new customers including marketing, advertising, sales.

The same applies to B&M stores and the requirement to re-merchandise instore. The last thing you want is for marketing investment to fall flat because you run out of sale stock to support the messaging.

4. Consolidate across channels

If you are an omnichannel retailer, compare how the sale is performing for each channel and consider switching stock between the two if you notice one overperforming the other.

By consolidating between stores, you bolster the sale display so it's not a mixed bag of random products and the offering is therefore stronger to the customer.

5. Engage Marketing

Finally, don't forget to let your customer know the changes you have made. Scream it from the rooftop, NEW STYLES ADDED, FURTHER DISCOUNT APPLIED, SALE EXTENDED! After all, there’s no show without punch or in retail terms marketing support.

Sale messaging should be consistent across your marketing channels. Consider the amount of stock you have to clear and whether it warrants some paid advertising to really drive the sales home.

Further reductions sticker
Don't forget to market your sales message

Get on the front foot of your season, by analyzing the points above and taking action now to achieve MMS success.

Our customers have reported that doing the above in Style Arcade can be done in under an hour (instead of the usual days), saving you valuable time during peak sale periods. This helps the whole team, as then eCommerce has time to execute your plans & retail has time to re-merchandise stores without all the unrealistic deadlines.

Take control of your sale season, with Style Arcade sale is no longer a period to dread.  With all your markdown plans accessible at the click of a button, you can make smart,  informed decisions faster, easy and with images (so your sale bays don’t look like dog’s breakfast!)  

Chat with one of our super chill team to show you what we can achieve for your brand - helping you with sale periods is just the tip of the iceberg.

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