What is meant by "merchant markdown"?

A "merchant markdown" refers to a price reduction that is applied to merchandise in order to stimulate sales. This strategy is often employed by retailers to clear out inventory, attract customers, or respond to changes in market demand. By lowering prices, merchants aim to increase the likelihood of selling items that may not be moving at their original retail price, thus helping to improve cash flow and reduce excess stock.

This approach is a vital aspect of pricing strategies in retail and merchandising as it directly impacts sales volume and customer buying behavior. Reduced prices can create a sense of urgency among consumers, encouraging them to make purchases they might otherwise delay or forego altogether.

In contrast to other options, raising product prices, incentivizing bulk purchases, or enhancing brand image does not align with the primary objective of a markdown, which is explicitly about reducing prices to drive sales.