End of Season Markdowns

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Definition: End of Season Markdowns

Life of a product can be determined as of two types. First, the shelf life of a product i.e. the time duration beyond which the product becomes unusable. Second, the trend life i.e. a product has high demand as long as it’s in current trend. Several products such as apparels fall into the second category, where a stock is designed for a season. With the advent of new season or new fashion, the current stock tends towards obsolescence and its demand slacks.

In order to clear the inventory of existing stock before launching the new stock, sellers often start selling the existing products at discounted prices. Such inventory is also known as terminal inventory. This method of stock clearance at the end of a season is called end of season markdown. The degree of markdown and its timing is critical for maximising return on sales.


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