Timeline and discount depth: the grid
Fabrice Decroo
Director of Consulting
August 17, 2026
A markdown policy involves two separate decisions: when to trigger each discount tier, and by how much. Treating them separately, without a common framework, leads to inconsistencies across stores.
30 to 40 percent of the clothing produced worldwide is sold at a discount or never sold at all (McKinsey).
A price reduction is often—and mistakenly—reduced to a single question: by how much should the price be lowered? In reality, two factors come into play: timing and the extent of the discount. When laid out in advance in a grid, they turn the price reduction into a predictable process rather than a panic-driven reaction.
One decision, two dimensions
A markdown policy is often—and mistakenly—reduced to a single question: “By how much should I lower the price?” In reality, two distinct factors come into play:
- The schedule: At what points in the season does the adjustment take effect—and based on what trigger (a fixed date or a deviation from the observed consumption rate)?
- Depth: By how much does the price decrease at each tier—and should this depth be the same for all categories?
Treating these two aspects separately, without a common framework, is the most common source of inconsistency between stores or between categories within the same retail chain.
Why Improvisation Is Expensive
According to the State of Fashion study by McKinsey & Company (BoF-McKinsey), 30 to 40 percent of the clothing produced worldwide is sold at a discount or remains unsold—a strong indication that, for a large part of the industry, the timing and depth of markdowns are still managed too late or in too uniform a manner.
of the clothing produced worldwide is sold at a discount or never sold at all —a sign that the timing and depth of markdowns remain largely underutilized in the industry (McKinsey & Company, State of Fashion).
A markdown schedule established in advance does not guarantee that all markdowns can be avoided—it ensures that every markdown applied is a deliberate decision, not a reaction.
Create a markdown schedule
The schedule answers a simple question: When does the next discount tier take effect? Two approaches coexist, and are often combined:
- The fixed-date calendar: milestones known in advance (weeks 4, 8, and 12 of the season), which are easy to communicate and implement in stores.
- The flow deviation-triggered schedule: The price adjustment is triggered when the actual flow rate deviates from the target trajectory, regardless of the date.
Most established retailers combine the two—see also our article on margin vs. turnover rate arbitrage.
Calibrate the reset depth
The markdown depth—the extent of the price reduction at each tier—should never be a single value applied across the entire catalog. Three factors cause it to vary:
- The elasticity of the benchmark: the more strongly demand responds to a price decrease, the less depth is needed to trigger the desired volume of sales.
- Time remaining until the deadline: The same amount of remaining inventory requires a deeper discount if the remaining sales window is short.
- The residual value if the product remains unsold: the more expensive the final clearance sale is, the more economically justifiable a deeper interim discount becomes.
An example of a tiered grid
Tier 1 — slight discount
The first sign of a slowdown in sales: a moderate price reduction (around -20%) to test the market's reaction without unnecessarily eroding the margin.
Tier 2 — Intermediate Discount
If the flow discrepancy persists: a steeper discount (on the order of -40%), triggered at a predetermined milestone.
Stage 3 — Final Discount
As the deadline approaches: a steep discount (in the range of -60% or more) to move inventory before the end of the sales window.
Final Release
For the remaining inventory that hasn't sold even at the maximum discount: bulk liquidation, donation, or transfer to a secondary channel—decided in advance, not as a last-minute measure.
These order-of-magnitude figures (-20%, -40%, -60%) are indicative, not a universal standard: the appropriate scale is based on the actual historical data for each category.
Frequently Asked Questions
The questions we're asked most often before getting started.
No. The depth should vary depending on the category's elasticity, the time remaining before the deadline, and the cost of the final liquidation.
The two are generally combined: a basic schedule with fixed dates, adjusted by early triggers based on the lead time.
Three stages (shallow, intermediate, deep) are generally sufficient, with a final outlet provided for any residual water that has not drained away.
No. It provides a default framework, but specific adjustments are still necessary depending on unforeseen events.
Sources: McKinsey & Company, “The State of Fashion 2025” (BoF-McKinsey) — mckinsey.com · Booper product data (GENIUS Promotions module, customizable discount grids).
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