When we look at today's fast-moving fashion market, retailers often feel pressured to slash prices early and aggressively, especially when sell-through slows or seasonal timing feels off. But this rush to discount can leave significant margin on the table.
In this article, we explore the common triggers behind overly aggressive markdowns, why current tools and workflows aren't helping, and how modern markdown optimization software is helping leading retailers strike a better balance between speed, strategy, and profitability.
Fashion retail has been navigating turbulent waters. The rapid rise of online marketplaces and the relentless pace of fast fashion have blurred the traditional boundaries of seasons. At the same time, unpredictable weather patterns have further complicated matters. March, April and May 2025, for example, brought record-breaking warmth, widespread drought, and sharp regional contrasts in rainfall across Europe.
As a result, the traditional concept of a clearly defined fashion “season” is gradually fading. Retailers now have less time to introduce new items, price them at full margin, and expect them to sell through. Instead, they must act fast, monitoring item performance closely and adapting quickly to shifting conditions that can drastically shorten the full-price window.
This shift places even greater weight on end-of-lifecycle markdowns. When it’s time to clear inventory and make room for new collections, merchandise planners are under pressure to extract every bit of remaining value. But they must do it faster than ever, with higher expectations for results.
Photo by Arisa Chattasa on Unsplash
During the end-of-season sales in January and February 2025, the team at Markmi scraped public pricing data from three fashion retailers in the Nordics to better understand their markdown strategies. This wasn’t our first rodeo. We have done so before to understand trends, improve our product, and share knowledge with the brands involved.
What we saw was eye-opening. Several retailers applied deep discounts early in the season. 50% to 70% markdowns were not uncommon. When we compared this to reference cases from Markmi clients with similar characteristics, the picture looked very different. While some items were marked down significantly, the average discounts were lower overall. The markdowns were more targeted, more strategic. Margins were preserved, where possible, and revenue accumulated over time.
Which brings us to the core question: Why do fashion retailers still feel the need to apply steep markdowns so quickly, leaving money on the table?
In many cases, poor early-season results do demand a quick response. As seasons become more erratic, time is of the essence. Yet based on our experience working with fashion retail merchandising teams, the process of setting markdowns remains largely manual and time-consuming. It’s a tedious, error-prone exercise in spreadsheet juggling. A process that leaves little time for deep analysis by merchandisers or analysts.
So when performance disappoints, panic often kicks in. The reaction? Aggressive discounting. While this may offer a short-term sales boost, it often harms long-term profitability and limits flexibility for future pricing moves. Retailers fall back on a generic, one-size-fits-all markdown approach, without detailed segmenting or thorough analysis of product performance.
Another key issue is the overemphasis on hitting sell-through targets. This frequently leads to the belief that high discounts across the board are the only way to meet those goals. But this strategy treats lots of products the same, ignoring differences in demand, lifecycle, and performance. Without segmentation, strong performers are over-discounted, and opportunities to protect margins are missed.
The current tooling and way of working are no help either. Merchandisers are often left:
Digging through endless lines of products in massive Excel files
Struggling to identify which items to prioritize
Lacking a clear understanding of performance trends or the right discount levels for specific goals
Faced with this complexity, teams tend to play it safe and keep things simple. They think: “If we choose a certain markdown now, what should the next one be? Should we go aggressive or stay cautious? Should we just focus on a few categories?”
This uncertainty and lack of structure often lead to defaulting to blunt tactics that sacrifice margin for the illusion of control.
Markdown optimization software addresses both the reactive ‘panic’ and the oversimplification that fashion merchandising teams often fall into. Instead of reacting emotionally to early results, teams can simulate pricing strategies and forecast their likely impact, well before committing to discounts.
These tools bring clarity and structure through scenarios, forecasts, and smart guardrails. Teams can test different strategies, adjust for performance shifts, and make confident decisions with full control. Rather than chasing sell-through with blanket markdowns, they can segment product groups by performance, demand, and lifecycle stage, and apply the right discount at the right time, maximizing margin and avoiding over-discounting.
Markmi helps fashion retailers approach markdowns in an even smarter, more structured way, thanks to three key features:
Plan the entire sales season using a structured, three-phase markdown approach that reflects how merchandising teams already like to work
Compare strategies based on clear goals and flexible, customizable business rules, supported by AI-driven forecasting and optimization
Adjust, approve, and seamlessly transfer recommendations to your ERP system for smooth execution
These features work together to give teams more control, faster insights, and better results, making the entire markdown process more proactive and less reactive.
Markmi allows teams to set markdowns for the full season upfront, starting with an initial discount and gradually increasing it over time. This phased approach mirrors how many merchandisers already operate but adds structure, predictability, and intelligence. Instead of scrambling to respond at the last minute, teams define their markdown timeline, set key price-change moments, and let Markmi’s AI adapt to how performance evolves.
They can create multiple strategies for different product groups, some focused on sell-through, others on margin. Flexible business rules allow you to exclude items, set discount limits, or apply tailored approaches to specific categories. Once the optimal strategy is selected, it can be pushed directly to the ERP. Meanwhile, real-time dashboards provide full visibility into performance, allowing teams to spot issues early and act with confidence.
So, if your team is still marking down too fast, too aggressively, or relying on outdated metrics, there’s room for improvement. Tools like Markmi replace the guesswork with structure, giving merchandising teams the clarity they need to plan, adapt, and succeed. In a world where data-driven fashion retailers set the pace, you can’t afford to stay stuck in the old way of working.
Take a look, listen, and discover how markdown management software can make all the difference.
