How to prevent end-of-season markdowns before they start

By Elie Dufeu, CTO & Co-Founder, Metreecs. Published September 30, 2026.

To prevent end-of-season markdowns, commit less of the season’s budget before it starts, read sell-through by product and location in the first few weeks, and move or reorder stock while there is still time to sell it at full price. Most end-of-season clearance is decided months earlier, on the day the buy depth gets locked in.

Tomás runs buying for a 35-store home décor chain. Last year he committed the full Christmas decoration budget in May and split it across stores by floor area. By the second week of December, his city-center stores had sold out of the best-selling glass ornaments, while his retail-park stores still held around 60% of their opening stock. The January clearance took 40% off everything left, and the category closed well below its planned margin even though total units sold came in close to plan.

If that sounds familiar, you already know the January discount was only the last step of a decision made in May. This guide walks through the earlier steps: how to set buy depth, how to use the first weeks of sell-through, when a markdown is the right call, and which KPIs flag trouble while you can still act. It applies to any seasonal range, from apparel and footwear to beauty gift sets, garden furniture, and holiday décor.

Key Takeaways

• Zara was estimated to sell only 15 to 20% of its volume at marked-down prices, against 30 to 40% for most European peers (Ghemawat and Nueno, Harvard Business School), largely because it commits less stock before the season and reacts to early sales.
• McKinsey finds that markdown optimization can improve margin rates by 400 to 800 basis points, yet the cheapest markdown is the one a better buy never required.
• In Fisher and Raman’s study of a skiwear maker, using early-season demand to set the rest of production cut costs enough to raise profits by 60% compared with the company’s previous planning process.
• Holding back part of the open-to-buy budget until the first sell-through read lets a buyer chase winners instead of clearing losers.
• A markdown taken early, shallow, and only where stock is stuck costs less margin than a deep, chain-wide clearance in the last weeks of the season.

What are end-of-season markdowns, and why do they happen?

End-of-season markdowns are permanent price reductions taken to clear seasonal stock before the next range arrives. They happen when the quantity bought and sent to a location is larger than what that location can sell at full price within its selling window, usually because buy depth was set on a forecast that was too coarse, too early, or both.

If you want to see where your own range was exposed last season, we can walk through a product x location view of your sell-through with you.

That definition points to three structural causes. All three come from how seasonal planning is usually organized, and they show up in well-run buying teams too.

Buy depth is set long before demand is visible. With lead times that often run several months on seasonal ranges, the main order goes in before a single customer has seen the product. Whatever the forecast says at that point becomes the stock position for the season.

Forecasts are built at category or chain level. A category forecast can be right in total and still wrong in every store. The chain sells the planned 12,000 units of outdoor cushions, but the coastal stores wanted twice their share and the inland stores half of theirs. The surplus in one place ends up marked down while the other place runs out.

Reaction comes too late. When sell-through is reviewed monthly, or weekly but only by category, a slow product is often flagged after half of its selling window has gone. At that point the only remaining lever is price.

One mistake we repeatedly see is treating the whole season as a single buying decision: the full budget goes into one order, so the first real demand signal arrives after the money is already spent.

Statistic callout: Days inventory outstanding across the fashion industry reached all-time highs in 2024, based on the McKinsey Global Fashion Index cited in The State of Fashion 2026 by McKinsey and BoF.

How to prevent end-of-season markdowns before the season starts

The pre-season plan decides how much room you will have later. These five steps give you that room without starving the range of stock.

1. Segment the range by product role. Core carryover products, seasonal basics, and high-risk trend pieces need different depth rules. Buying carryover items deep is safe because unsold units roll into next season at full price, whereas a trend piece deserves a shallow first buy plus a written plan for what happens if it takes off.
2. Split the buy and keep an open-to-buy reserve. Commit a base order that covers the demand you are confident about, and hold the rest of the budget back until you have real sales. A buyer might commit 70% of planned units up front and release the remaining 30% once the first three weeks of sell-through are in. The exact split depends on how much supplier flexibility you can secure.
3. Negotiate flexibility, not only price. Ask suppliers about fabric or component reservations, second drops, shorter lead times on repeat items, and cancellation windows. A slightly higher unit cost on a reorderable quantity is often cheaper than a 40% markdown on stock you did not need.
4. Forecast at product x location, then add up. Build the forecast where demand actually happens: by store or store cluster, by channel, and by variant such as size, color, or scent. Product x location demand forecasting gives each store its own curve instead of a share of the chain total, which is where most allocation surplus comes from.
5. Plan the exit on day one. Decide the season end date, the markdown budget you are willing to spend, and where leftover stock goes (outlet, marketplace, or next year for undated products). A planned exit is cheaper than a panicked one.

Pro Tip: For every trend product, write down before launch the week-3 sell-through that would trigger a reorder and the one that would trigger a transfer or early markdown. Deciding the thresholds in advance removes the temptation to “give it another week” when the numbers come in soft.

Seasonal peaks raise the stakes on each of these steps, which is why planning seasonal peaks without overstocking starts with the same split between committed and flexible stock.

Read early sell-through to catch end-of-season markdowns by week three

The first few weeks of sales carry more information than most planning calendars give them credit for. In their Operations Research study on accurate response to early sales, Marshall Fisher and Ananth Raman worked with a fashion skiwear company that used early orders from its largest retail customers to set the rest of its production. Replacing the company’s informal process with that approach cut the cost of demand uncertainty enough to raise profits by 60%.

The planners we work with often underestimate how much the first two or three weeks already say about the rest of the season, especially when the signal is read by store and variant rather than as a chain total. A chain-level sell-through of 18% can hide one store cluster at 35% and another at 6%, and those two numbers call for opposite actions.

Use a simple signal-to-action table so that every early read leads to a decision:

When the mismatch is between locations, rebalancing stock between stores usually recovers more margin than any discount, because the product still sells at full price where the demand is.

Priya plans for a direct-to-consumer beauty brand that sells 12 holiday gift sets online and through 40 wholesale doors. In the third week of November, two sets were at 45% sell-through and three were at 12%. Instead of waiting for December, she used the reserved packaging and components to assemble more of the two fast sets, cancelled the second production run of the weakest one, and moved the other two slow sets into a bundle offer for existing customers. The brand closed the season with about 8% of holiday units left, against 25% the year before.

When a markdown is the right call: early, shallow, and local

Preventing end-of-season markdowns does not mean refusing to discount. A range that never needs a markdown was probably bought too thin and lost full-price sales along the way. The goal is smaller markdowns, taken sooner and only where they are needed.

McKinsey’s analysis of retail markdown strategy lists the missteps that drain margin most often: marking down items that are still hitting their sales targets, cutting deeper than needed to reach sell-through goals, and making reductions too small to move the products that are truly stuck. Its recommended approach answers four questions for every candidate: which items, in which locations or channels, at what time, and how deep.

Statistic callout: Markdown optimization can improve margin rates by 400 to 800 basis points, according to McKinsey’s Retail Practice.

Timing matters because each week that passes shrinks the remaining selling window. A 15% markdown in week six has many weeks to work; the same product in week fourteen may need 40% or more to clear in the time left. Phasing helps: start with a modest reduction on the slowest products, measure the response for two weeks, then go deeper only where the rate is still too low.

Location matters too. Marking down a style across every store because it is slow in half of them gives away margin in the stores where it still sells. Store-level or cluster-level markdowns, or an online-only markdown while stores hold full price, protect more of the season. The same logic sits behind allocating stock to protect full-price sell-through: the better the stock matches local demand, the fewer places need a discount at all.

Some misses will still happen. A warm autumn, a trend that fades faster than expected, or a competitor’s early sale can push any plan off course. Better planning makes those misses smaller and earlier, and it gives you more options than price when they arrive.

KPIs that warn you about end-of-season markdowns early

The right KPIs show markdown risk while there is still time to act. Track them weekly, by product and location, and compare against your own previous seasons for the same category rather than a generic industry benchmark. Sell-through norms vary too much between a carryover basic and a one-season trend piece for a single target to be useful.

Across Metreecs’ work with seasonal retailers in fashion, home, and beauty, the weeks-of-cover comparison is the metric teams adopt fastest, because it turns a vague sense that a product is slow into a date on which it will run out of time.

Jonas is the merchandise planner at a 20-store outdoor and cycling retailer. Last summer he started comparing weeks of cover with weeks left in the season every Monday. In mid-June he flagged 14 cycling apparel styles whose cover ran past the end of August. He moved about 1,800 units from inland stores to the stores near tourist routes where those styles were selling, and ran a 15% online-only markdown on five styles in early July. End-of-season clearance covered roughly 9% of the season’s units, down from 22% the summer before, and the average clearance discount fell from 50% to 30%.

FAQ

How early should you start marking down seasonal stock? As soon as the data shows a product will not sell through in the time left, which is often weeks three to six rather than the final month. Compare weeks of cover with the weeks remaining in the season. When cover is larger, a small markdown now usually costs less than a deep one later.

Is it better to mark down early or late? In most cases earlier, since a modest discount has more weeks to work. Check first whether the product is slow everywhere or only in some stores. If it is only some stores, transfer the stock and discount whatever is still stuck after two weeks.

What is a good sell-through rate before the end of the season? There is no single number that fits every range. A carryover basic can sit at a lower rate because it keeps selling next season, while a one-season trend piece needs to clear almost completely. Set a target per product role and compare against the same category in previous seasons.

How do you reduce end-of-season markdowns without losing sales? Buy the confident part of the range up front, keep an open-to-buy reserve for proven sellers, and move stock between locations before discounting. That combination keeps winners in stock while reducing the surplus that ends up in clearance.

Can AI forecasting prevent end-of-season markdowns? It reduces them, mainly by forecasting at product x location level and updating as sales come in, which surfaces transfer and reorder opportunities earlier. It cannot remove the risk of a trend or weather miss, and buyers still own the range and depth decisions.

Conclusion

Preventing end-of-season markdowns comes down to keeping options open: buy the confident part of the season up front, hold the rest in reserve, read sell-through by product and location from week two, and use transfers and reorders before price. Start by adding weeks of cover versus weeks left to your Monday review, and set trigger thresholds for your riskiest products before the next season launches.

To see how AI-driven inventory optimization flags transfer, reorder, and markdown candidates across your stores, book a working session with the Metreecs team.

Sources

• Pankaj Ghemawat and José Luis Nueno, “ZARA: Fast Fashion,” Harvard Business School case 703-497 (2003, revised 2006): Zara estimated at 15 to 20% of sales at marked-down prices versus 30 to 40% for most European peers.
• McKinsey & Company, “Hitting the mark: Why markdowns matter more than ever,” December 2, 2022: markdown optimization improving margin rates by 400 to 800 basis points; common markdown missteps; the what, where, when, and how-deep framework; phased markdowns.
• Marshall Fisher and Ananth Raman, “Reducing the Cost of Demand Uncertainty Through Accurate Response to Early Sales,” Operations Research 44(1), 1996: early-sales response at a fashion skiwear firm raising profits by 60% versus the previous informal process.
• Marshall Fisher, Janice Hammond, Walter Obermeyer, and Ananth Raman, “Making Supply Meet Demand in an Uncertain World,” Harvard Business Review, May-June 1994: using early orders as a demand signal for seasonal production.
• McKinsey & Company and The Business of Fashion, The State of Fashion 2026: days inventory outstanding at all-time highs in 2024 per the McKinsey Global Fashion Index.