What Are the Pros & Cons of One-Day Only Markdown Sales?

A one-day only markdown can draw customers to a store at a time when sales are ordinarily slow. Used strategically, and as part of a larger pricing approach that factors the likelihood of future markdowns into the retail price, their impacts can be positive. However, constant reliance on these events can have a negative effect both on brand perception and profits.

Traffic Patterns

  1. A well-publicized one-day only markdown sale can drive customers to your store who wouldn’t otherwise have patronized your business, or who might have shopped around before making a purchase. Depending on how often you have these promotions, and how severe the discounts are, they can become events that shoppers look forward to. However, these markdowns can also cannibalize your business on the days preceding the event, which can negate the positive effects. For a Saturday markdown sale, you may see business on the preceding Thursday and Friday limited to window-shoppers trying to gauge what they’ll come back to buy later.

Inventory Management

  1. One-day markdowns can be an effective way of managing stock to move slower-selling items off the shelves and make way for newer merchandise. A clothing retailer, for example, might use markdown events to clear out the old season’s wares so he can set up the next wave of styles. Or, a store that sells Halloween costumes as part of its line might have an annual one-day markdown on the day after Halloween. This allows penny-pinching shoppers to grab next year’s costumes or kids' dress-up clothes early at a special price, while keeping unwanted items from lingering on the shelves.

Sales and Profits

  1. A one-day markdown can increase your sales figures as bargain shoppers looking for a deal pile items into their shopping cart. That’s no guarantee that it will have a positive impact on your profit margins, however. If you’re moving products that could sell at full price for less because of a store-wide markdown, that’s less profit than you might have received had you simply held sales on targeted items and left everything else at full price.

Customer Expectations

  1. Markdown sales please customers when they think they’re getting something for less than it is worth. The danger for your business arises from the flip side of that equation. If the one-day markdown trains your customers to think that your standard prices are too high, and that they should wait for a markdown to buy, that could have a negative effect on sales. When you hold one-day only markdowns too frequently, customers will know that if they simply bide their time, they'll likely get the items they want for less. This may cause them to resist paying full price in the meantime.