What is the primary reason retailers mark down the prices of new items after an initial sale?

The primary reason retailers mark down the prices of new items after an initial sale often focuses on achieving desired gross margin goals. Retailers set certain profit expectations based on their pricing strategy, and when new items do not sell as anticipated, markdowns can help stimulate demand. By reducing prices, retailers can increase the turnover of inventory, which is essential for maintaining cash flow and meeting gross margin targets.

When new items don't attract buyers at their original price, lowering the price can create a sense of urgency and encourage customers who were undecided or price-sensitive to make a purchase. This can help the retailer come closer to achieving their margin goals by moving stock before it becomes outdated or seasonally irrelevant. Maintaining a successful gross margin is crucial for long-term financial viability, making this a key driver behind markdown strategies.