With the holiday season approaching, retailers are planning the roll-out of multiple discounts to increase the foot traffic. Leading the list, we find those who experienced flatter sales the past season. There is no perfect strategy to guarantee sales However, is essential to understand how holiday markdowns and returns work.

Where to start?

As a rule, keeping up with the customers’ shopping behavior is the perfect place to start. Instead of chasing endless deals, it is time to focus on creating a holiday markdown strategy in-sync with the current demand. 

No discount approach is one-size and what works for one store is not assured to work for another or the same store, at a different time. To create the best action plan, retailers need to observe closely what resonates with new and recurrent customers. Knowing what matters to a customer is key when determining a pricing strategy because today, the decision-making process goes beyond the price. The pricing strategy of products impacts directly how customers perceive the brand, even for bargain-conscious shoppers.

Yes, there is an inevitable end to any holiday but that can’t be the excuse to play the markdown game fearing the loss of customers. Believe it or not, there is a logic to deciding which products should go down in price. Don’t hang on to products for longer than needed! Retailers with more control of their inventories can plan discounts preserving their margins. No doubt operating in such a competitive landscape, retailers may feel forced to engage in massive deals to “gain sales”. However, low-profit margins should not be the cost of being competitive and staying relevant.

What happens to the holiday markdowns after the holidays?

Make sure there is an answer to this question as the holiday markdowns are discussed. Customers look forward to leveraging post-holiday sales and promotions. Whether customers are returning items or looking to spend that gift card they got, there are plenty of opportunities to stay top of mind and engaging with them even as the holiday season ends. In a nutshell, those who plan today can prevent shrink tomorrow

Read more about Ways to Reduce Shrinkage in Retail