Retailers commonly offer new items at significantly higher prices with the intention to later mark them down. Is this statement true or false?

The statement is true because many retailers implement a pricing strategy known as "initial keystone pricing" where they launch new products at a higher price point. This approach creates a perceived value of the product and generates excitement around its introduction. Subsequently, retailers can then mark down the price, which makes it appear as though customers are receiving a deal or discount. This tactic not only stimulates consumer interest but can also drive traffic to the store.

In a competitive retail environment, marking down prices after an initial high price can enhance sales and clear out inventory, allowing retailers to maintain fresh stock with newer products. Additionally, this strategy can leverage the psychological aspect of consumer behavior, where shoppers may feel a sense of accomplishment when they purchase an item at a discounted price, despite it being just a marketing tactic.