Holiday Markdown Pressure

Q: The big box stores around me have already started to markdown significantly –- up to 50% off. I know we’re in a shortened season due to the late Thanksgiving, but how much pressure am I under to keep up with these markdowns?

A: You can’t beat them at this game — they’re pros. (Assuming, of course that you’re not a discounter, in which case you can play the same game.) When the market starts making noise about discounts, you need to chime in. This doesn’t mean giving away the farm.

Ask yourself the question: “What are they trying to accomplish?” They’re not doing this to sell discounted merchandise; they want to build traffic. You want the same thing, so pound the drum hard but don’t dump your margin because the big guys aren’t. Think of markdowns as marketing dollars — only spend them when it drives traffic and revenue. This means taking measured, timely markdowns that give customers an excuse to come into your store. Start pounding because this is going to be a fast season!