What are markdowns primarily used for in retail?

Markdowns are primarily used in retail to boost sales by reducing prices on products. When retailers lower the price of items, they often attract more customers who might have been hesitant to make a purchase at the original price. This strategy can help clear out inventory, especially for seasonal items or slow-selling products. By making these items more affordable, retailers can stimulate demand, encourage quick sales, and minimize the risk of excess stock that could lead to increased holding costs.

Retailers also use markdowns strategically to create promotional events or sales that draw shoppers into the store or onto their website, fostering a sense of urgency as customers may believe they are getting a limited-time deal. This increase in foot traffic can lead to additional purchases of full-priced items, effectively enhancing overall sales performance.