What distinguishes a markdown from a discount in retail?

The distinction that a markdown is a permanent price reduction while a discount is temporary is fundamental in retail pricing strategies. A markdown generally reflects a change in the price of a product that is intended to remain in effect for an extended period. This type of pricing adjustment is often used to clear out inventory, during off-season sales, or to respond to shifts in market demand.

In contrast, a discount usually refers to a temporary reduction applied to a price for a specific promotional reason, such as an ongoing sale event or customer incentives. Discounts create urgency and can boost traffic and sales for limited times; once the promotional period concludes, the item returns to its original price.

This understanding of retail pricing helps in planning and executing merchandise strategies effectively. Managers can decide when to implement a markdown for long-term pricing change versus a discount to stimulate immediate sales.