ing. As an example, marked down goods accounted for just eight per cent of retail sales three decades ago, but have now increased to around 20 per cent (National Retail Federation). What is good for high fashion is not good for fine jewellery. There are a few pointers (not rules) that I have been taught over the years. 1. If you eat like an elephant, you defecate like an elephant. Expect high markdowns if you have high purchases and high sales. 2. Your first markdown is your best markdown. If it’s a dog, hit it hard and early. 3. Don’t allow the cost price to influence you. Many retailers get jittery when they mark down goods below cost. Understandably, they want to at least recoup what they paid for the item, but the logic is flawed. If it’s a dog the cost price is of no consequence. 4. Seven out of 10 Count yourself lucky if seven out of 10 buys sell at full price. 5. Early signals In fashion, look for an average clearance of about 25 to 30 per cent in the first three weeks. Depending on how the rate of sales are going, a rule of thumb says that a mark down of a third would double the unit sales and half price would triple the unit sale rate. Finally, if you are operating at cost and not at selling and you are selling seasonal merchandise, consider changing to planning at selling. Otherwise your budgeting of markdowns becomes tricky. Yes, you do have to budget for markdowns or you will run overstocked or understocked. Stuart Bennie is a retail consultant at Impact Retailing and can be contacted at stuart@impactretailing.com.au or 0414 631 702