The Hidden Message in Retail Markdowns
Supplier Intelligence Toolkit: Five Questions Every Supplier Should Ask About Retail Markdowns
Markdowns and price protection claims can affect profitability long before their cumulative impact becomes obvious.
Use this quick guide to identify where your margins may be exposed.
Do markdown deductions consistent with negotiated agreements? Confirm that the products, dates, rates, and quantities match authorized terms.
Are deductions increasing? Compare monthly markdown activity to identify unusual changes in frequency or dollar value.
Are certain SKUs repeatedly affected? Determine whether specific products, categories, or seasonal items create disproportionate exposure.
Are promotions contributing to unexpected claims? Review promotional calendars, price changes, and retailer execution against approved agreements.
Are markdowns overlapping with other deductions? Check for duplicate charges, allowance claims, or related pricing adjustments involving the same activity.
Your Intelligence Question:
How much of our margin erosion is expected—and how much deserves further investigation?
Practical next step: Calculate total markdown deductions as a percentage of net retailer sales for each month. Track the trend and flag unexpected increases.
Simple formula:
Markdown Exposure % = (Total Markdown Deductions ÷ Net Retailer Sales) × 100
This measure does not establish whether deductions are valid, but it helps identify periods and products that deserve additional scrutiny.
The intelligence is already in the data.
Turn Insight into Action. Coming November 1.
