Dear Mr. Pruitt,

Q: I’ve seen you talk a lot about the importance of taking markdowns. Should I be taking markdowns on stock basics?

A: That’s a very good question, and one that more merchants need to focus on. When you’re looking at your aging inventory it’s extremely useful to have all your inventory seasonally coded.

So, for example, say you receive T-shirts for spring. You would want to label them in your POS system as “Spring Basic ‘24”, or whichever year you are accounting for. (This may look like a 4- or 5-digit code indicating the month, year, and season.) That way you can look at the value of your inventory by season and by year.

When it comes to stock basics, you don’t want to have anything over two years old. Even stock basics change over a few seasons. And of course, just handling merchandise over a period of time can cause shop-wear. If you have inventory for over two years you need to look closely — a first markdown may be necessary.

Seasonally coding your inventory will help you plan your markdown cadence. When items start to age beyond their season, you know to take first-level markdowns, then second-level, and so on.

Right now, we are seeing a lot of retailers’ inventory levels starting to tick up. This would be a good time to put this system in place if you haven’t already done so.

Top photo by Scott Graham