What is a markdown strategy and how should boutique owners time markdowns?

A markdown is a planned reduction in selling price — used to clear slow-moving or end-of-season inventory. Done correctly, it preserves margins; done poorly, it trains customers to wait for discounts.

The 3-tier markdown system:

1. Tier 1 — 15–20% off: Applied at week 6–8 of a product's lifecycle. Nudges fence-sitting customers without signalling distress.
2. Tier 2 — 30–40% off: Applied at week 10–12. Clears majority of remaining stock.
3. Tier 3 — 50–70% off / bundle deal: Final push — items that haven't sold through Tier 2 are bundled ("buy 2, get 1 free") or heavily discounted.

Timing guidance for Indian ethnic wear:

• Post-Navratri (October): markdown chaniya choli and festive stock
• Post-Diwali (November): clear festive embroidery — start stocking wedding season
• January: summer clearance begins for winter stock
• June: pre-monsoon clearance of slow spring stock