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Discounting Can Cost Retailers Millions — By Not Selling | Forbes

Hemlines rise and fall fast, but when it comes to the shelf life of a discounted $500 skirt, the number of days can drag on — to 106, to be precise.

That’s how long it can take an online luxury retailer to sell a piece of women’s wear, even when discounted, according to an analysis of discounts among 114 luxury, premium and mass-market apparel and accessory retailers. Furthermore, when luxury items were marked down at a higher percentage (40-50%) than they took 19 days longer to sell than if marked down 30-40%.

That translated to millions in lost revenue among select women’s luxury goods in 2016, according to the research by Edited, a retail analytics company with offices in New York, London and Melbourne.

Mass-merchandise items, meanwhile, sell faster at discount, especially when marked down by less. Women’s wear products sold 11 days faster when first discounted from 30-40%, rather than 40-50%. The difference cost retailers millions in needless reductions, according to the research.

The same unusual trends occur across retail, from luxury apparel to kids’ clothes, but why? And what does it mean? According to Katie Smith, senior retail analyst at Edited, merchants fail to factor in several basic but highly relevant factors. “The simplest missteps are obvious even when looking at the surface of retail’s discounting woes,” she said.

The same applies to cereal and eggs — issues from shopper behavior to competitive distractions can blur pricing strategies.

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Discounting Can Cost Retailers Millions — By Not Selling.