What Are Markdowns at Target?

Overview

Target uses Markdowns when a product's selling price needs to be reduced below its normal retail price. Markdowns help manage inventory, address product issues, support promotions, and adjust pricing based on business needs.

The Four Types of Markdowns

A Markdowns

A Markdowns are associated with products that are being cleared out or removed from inventory. They are often related to end-of-life products or items no longer intended for regular sale.

• Clearance items.
• Salvage products.
• Marketing Initiated Returns (MIRs).
• Quality Assurance (QA) Recalls.

B Markdowns

B Markdowns apply to products affected by quality or condition issues that prevent them from being sold at their normal price.

• Damaged products.
• Defective merchandise.
• Outdated products.
• Re-wrapped items.

C Markdowns

C Markdowns are competitive price reductions based on competitor activity and Target's competitive shopping analysis. These markdowns are generally not used in supplier contracts.

D Markdowns

D Markdowns represent temporary promotional price reductions used to drive sales and customer engagement.

• Circle offers.
• Coupons.
• Weekly advertisements.
• Temporary promotional price cuts.

Markdowns in Target Contracts

Some Target contracts use Markdowns as a calculation input when determining contractual deductions. A, B, and D Markdowns may be included in contract calculations, while C Markdowns are rarely used.

A Markdowns in Contracts

A Markdowns are used in contracts related to transitions, revisions, and occasional Not on Planogram (NOP) inventory. They may also apply to smaller markdowns caused by misplaced discontinued products and clearance inventory outside transition periods.

B Markdowns in Contracts

B Markdowns may occasionally be included in contracts related to defective allowances, where suppliers help cover costs associated with defective merchandise.

D Markdowns in Contracts

D Markdowns are commonly used in contracts involving promotional discounts, temporary price cuts, and coupon-based activities.

• Temporary Price Cuts (TPCs).
• Circular advertisements.
• General Incentive programs.
• Buy Something/Get Something offers.
• Registry, RedCard, and other Target-wide loyalty promotions.

Conclusion

Target Markdowns are used to reduce product prices for inventory management, quality issues, competitive pricing, and promotions. Understanding the differences between A, B, C, and D Markdowns helps suppliers better understand contract calculations and related deductions.