When a winter coat loses twenty percent, the decision was made weeks earlier, upstairs. Most apparel chains give markdown authority to a planning function that meets on a fixed cycle and releases price changes in batches. According to the United States Bureau of Labor Statistics, apparel prices have run flat for years, yet beneath that line churns constant temporary reductions.
Who actually holds markdown authority?
Authority is layered. The buyer or merchandiser typically proposes a markdown when a style's sell-through misses plan, but formal approval usually sits with a planning or pricing team that guards margin across the whole assortment. In large chains, store managers have little or no discretion: prices are set centrally and pushed to point-of-sale systems, which is why two branches of the same chain cut the same dress on the same morning. Exceptions exist at the edges — damaged stock, local clearance, franchise operations — but the centre decides the bulk of the discount volume.
The structure exists because markdowns are a portfolio decision, not a product decision. A price cut on one style cannibalises a neighbouring one, trains customers to wait, and consumes the margin that funds next season's buys. Treated casually, discounts stop being a merchandising tool and become the whole price architecture. Planning teams therefore compare candidates against each other, against the calendar, and against inventory position before releasing money off, which is also why the process runs on a schedule rather than on reflex.
What is the markdown cadence?
The cadence is the rhythm of markdown releases across a season. Traditional department-store practice, inherited from a century of seasonal clearance, runs a step-down ladder:
- First markdown, roughly four to eight weeks into the season: typically 20 to 30 percent off, aimed at styles tracking behind plan while demand remains strong enough to clear size runs.
- Second markdown, six to ten weeks later: 40 to 50 percent, clearing the bulk of residual units before the next season's floor set.
- Final clearance: 60 to 75 percent or fixed low prices, timed against the physical reset when the next season arrives, with leftovers routed to outlets or jobbers.
Fast-fashion and value formats run a compressed version, marking down within weeks and accepting thinner recovery in exchange for rapid floor turnover. Off-price chains skip the ladder almost entirely, buying the industry's unsold goods and presenting them at a standing discount, which converts someone else's markdown into their everyday price, at whatever volume the market discards.
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How does sell-through data drive the timing?
The trigger is arithmetic. Planners track sell-through — units sold as a share of units received — against a weekly curve agreed before the season starts. A style at 60 percent sell-through in week eight is on plan; the same style at 35 percent is a markdown candidate, because the remaining weeks of demand will not clear the remaining stock at full price. The planner's judgement covers the response: mark down hard and early to protect the calendar, or wait one more week hoping a cold snap or a celebrity helps.
| Sell-through vs plan | Typical response | Rationale |
|---|---|---|
| On or ahead of plan | No action; possibly reorder | Full-price margin intact |
| 10–20 points behind | First markdown at scheduled cycle | Correct while demand remains |
| More than 20 points behind | Early or deeper first markdown | Recover cash before season end |
| Ahead on units, behind on sizes | Size-level promotion only | Clear broken runs without repricing the style |
Size-level detail has become the sharper instrument. Promoting only the broken sizes preserves full-price integrity on the size run that still exists, and modern systems support it through SKU-level price events that legacy point-of-sale infrastructure long made impractical. The distinction matters commercially: a style-level cut of 30 percent sacrifices margin on every unit, while a size-level cut of the same depth touches only the tail of the size curve, and the recovered cash difference across a 200-store estate is measured in millions per season.
Where do algorithms now sit in the decision?
Through the 2010s and 2020s, price-optimisation systems moved from a novelty into standard equipment at large chains. These models ingest sell-through, weather, cannibalisation estimates, and price elasticity by category, then recommend which styles to mark down, by how much, and in which locations. Bloomberg coverage of retail technology adoption through 2024-2025 has described the pattern as a shift from calendar-driven to data-driven clearance, though the calendar survives inside the machine: most optimisers still respect fixed reset dates, because floor-change labour and logistics are the least flexible costs in the system and a missed reset costs more than a week of imperfect prices.
The algorithm's practical contribution is granularity and nerve. It can hold one size at full price while cutting another by 40 percent, and it does not hesitate the way a buyer hesitates before discounting a style she personally championed. Retailers running optimisation generally report modest gross-margin improvement, commonly framed in the low single digits as a share of revenue, with the larger effect being fewer end-of-season leftovers flowing into the discount channel, where recovery is worst and where the brand meets its own merchandise again under someone else's label.
Why does the calendar still matter so much?
Because markdowns are synchronised with fixed events: the floor set for the new season, the school-year start, the post-Christmas reset, the spring changeover. Missing a reset is expensive in ways that outweigh a week of better price discovery — fixtures must be cleared, backstock staged, marketing switched. The cadence therefore behaves less like pricing and more like a freight schedule with price attached. Independent retailers have more freedom in theory, but they face the same seasonal handoffs, and those who mark down too late learn what the chains' planning decks encode: the last week of a season is the worst time to discover the price was wrong. The cadence, in other words, is not bureaucracy layered on top of merchandising; it is the merchandising, expressed as a timetable — and, for now, the least bad scheduler of the season's hardest arithmetic.