Markdown Strategies Revealed with Data: Boohoo & H&M

Fast-fashion retailers are changing the ways they deploy markdown strategies as the industry’s excess inventory problem reaches new peaks. In this report, find out the key learnings and best markdown practices from two major players on the high street, Boohoo and H&M.

Written by Atiqah KamarudinMarch 2, 2020

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With e-commerce growing at an unprecedented pace coupled with the shifts in consumer demand, the issue of excess inventory has escalated especially amongst the fast fashion retailers. Lack of proper planning and inventory misjudgements have also exacerbated the issue. Despite markdowns costing retailers a significant USD300 billion in 2018, it is one of the ways to regulate product lifecycle and combat the issue of overstocking.

Moreover, with the increased awareness towards climate change and how the fashion industry is being scrutinised for negatively impacting the environment, retailers need to stay on top of its product lifecycle management by taking a proactive approach to markdowns.

In this report, we analysed two of the biggest fast fashion retailers in the United Kingdom – Boohoo and H&M, to learn about their markdown strategies and best practices in 2019.

More than 125,000 data points were screened from January to December 2019 on these two retailers.


All data used in this report comes from products retailing online as tracked by Omnilytics, unless otherwise mentioned.

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Markdown Overview

Overall Performance

Boohoo is notoriously known for its aggressive markdown executions. This was no exception in 2019, with nearly all products placed on discount at least once during the year (Chart 1 on % of Discounted Products = 99%). Despite sitting on the extreme spectrum of markdown execution, it did not achieve the total sell-out rate higher than H&M.

Meanwhile, H&M managed to achieve above average sell-out rate with less discounted items. The retailer’s strategy in scaling back on markdowns and focusing more on full-price sales had resulted in increased net sales and gross profit in 2019.

First-Time Discount Strategy

Major discount launches for Boohoo and H&M were held in June and October to drive the top spending seasons of the year, namely Summer and Holiday (Chart 2). While Boohoo launched discounts every month in huge volumes, H&M adopted a more tactical approach with new discounted products launched only over key sale events observed for Jun and Oct.

A stark contrast lies in the months of Feb and Nov, where Boohoo ran large volumes on new discounts while H&M was conservative with little first-time discounts.

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Key Markdown Events

Consistent Tactical Promotions

Boohoo typically held more than three types of promotions in a month (although only the key ones are highlighted in Chart 3). These promotions often include discounts off assortments, time-bound offers, payday focused, and tactical key events such as Valentine’s Day and Halloween. These promotions were mostly executed at up to 50% markdown, with promo codes required at checkout.

In contrast, H&M was focused on scaling back discounting as part of its wider transformation effort. The retailer also paid attention to app download offers and member-exclusive events, in line with its goal to enhance the customer experience via offline and online store integration.

H&M Kick-Started with Aggressive Sale

Both retailers launched seasonal sale four times in a year, proving that one of the long-established markdown practices remains relevant to this day.

Boohoo executed its deepest discounts in the year-end sale at up to 80% off, which was unsurprising.

H&M launched the first seasonal sale of the year with deep discounts of up to 70% off, signalling a continued effort to reduce the build-up of inventory. The move paid off as the subsequent sale events saw reduction in the depth of discounts.

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Summer Sale

Launch Timing

As one of the major sale events of the year, both retailers participated in Summer Sale in June that lasted for 8 weeks respectively.

H&M had an early start, nearly 2 weeks ahead of Boohoo and with new discounted products taking up 32% of its total assortment. Not only did the retailer bet on consumer excitement over early seasonal discounting, it also offered almost 2 times more new discounted products than Boohoo in proportion to its total assortment.

Further Markdown

Boohoo launched Summer Sale with ‘up to 50% off sitewide’ messaging in its newsletters and landing pages, followed by aggressive further markdown ‘up to 80% off everything’ in just 2 weeks before the sale ended.

Meanwhile, H&M adopted a more measured approach with ‘up to 60% off’ mechanic that lasted a month, before further markdown up to 70% off on selected items.

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Summer Sale (cont’d)

Boohoo’s Performance by Discount Range

Despite its messaging on sale up to 50% off sitewide and eventually up to 80% off, Boohoo discounted the majority of items at just 10-29% off (Chart 5). Consumers responded in favour, with the highest sell-out rates registered in the same discount range.

Boohoo’s Discounted Categories by Gender

The strong sell-out performance at shallow discounts did not come as a surprise, because the most discounted items belong to Dresses and Tops which commanded 42% of Women’s total discounted items (Chart 6).

Men’s discounted items contributed less than 20% to Boohoo’s total markdown. Tops and Outerwear drove the most discounted items with a combined 56% contribution. Shorts made up a significant mix at 8% which showed higher seasonal-relevance in the Men’s markdown offering.

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Summer Sale (cont’d)

H&M’s Performance by Discount Range

Aimed at selling down existing inventory, H&M was tactful in approach with most of the discounted items concentrated in the range of 40-69% off (Chart 7). Sell-out rates over the sale period corresponded accordingly.

H&M’s Discounted Categories by Gender

Slightly differed from Boohoo, H&M’s most discounted category for Women’s was Tops, then followed by Dresses, which contributed a combined mix of 46% (Chart 8).

The retailer’s Men’s markdown offering was largely contributed by Tops, Outerwear, and followed by equal mixes across Pants & Leggings and Activewear. The significant contribution by Activewear at 11% signalled a build-up of inventory.

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Black Friday & Cyber Monday

Tactical Mechanics

The weekend between Black Friday and Cyber Monday has emerged as a lucrative period for online commerce.

Boohoo was more aggressive during Black Friday, offering deep discounts at up to 75% off sitewide. The retailer also started a week earlier on November 22, calling it a ‘Black Friday Warm Up’ by offering 30% off sitewide.

Meanwhile, H&M remained cautious by starting with 20% off sitewide before further markdown to 50% off on selected styles 3 days later on Cyber Monday. While its members enjoyed the same discounts, they were also entitled to a one-day early access to the sale event – a smart move to sale at a decent margin while creating a sense of exclusivity to its members.

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Black Friday & Cyber Monday (cont’d)

Boohoo’s Black Friday Warm Up

Significant volumes of first-time discounts were recorded throughout Boohoo’s Black Friday campaign, which kick-started 9 days earlier on November 21st.

Sell-out rose steadily following the launch of ‘Black Friday Warm Up’ on November 22nd and reached its peak on the official Black Friday before declining over the weekend. Cyber Monday deal revealed a scaled back discount at 30% off sitewide and failed to entice consumers. Sell-out on Cyber Monday was 2x lower than Black Friday.

H&M’s First-Time Discount Strategy

H&M was focused at driving out existing discounted items in the lead up to Black Friday with minimal new markdown stocks. Nonetheless, it managed to achieve consistent sell-out up to its peak on Black Friday.

Similar to Boohoo, trade performance took a downturn after Friday. However, the retailer quickly re-gained momentum on Cyber Monday, with the influx of 1,284 first-time discounted SKUs at up to 50% off. While the move successfully extended strong sell-out duration, it might pose a risk when consumers eventually learned to hold back spending on Black Friday and wait for new markdown with deeper discounts on Cyber Monday.

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Black Friday & Cyber Monday (cont’d)

Boohoo’s Performance by Discount Range

While Boohoo launched the most items at 30-39% off, it was the 80-89% discounting bracket that achieved the highest sell-out contribution. This was followed by the 20-29% discount range with marginal variance on the sell-out contribution. Hence, confirming that Boohoo consumers were also willing to purchase items at lower discounts.

Boohoo’s Discounted Categories by Gender

Women’s Dresses and Outerwear, amongst the top 3 categories with the most discounted items, were highly seasonal relevant which contributed to an attractive markdown offering.

Men’s Tops and Outerwear drove the most discounted items for Boohoo, with a strong 60% combined contribution.

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Black Friday & Cyber Monday (cont’d)

H&M’s Performance by Discount Range

The retailer had once again, proved that 50-59% range drove the highest sell-out and backed by the most discounted items (Chart 12).

Items from the discount range of 30-49% off failed to drive high sell-out despite significantly backed by a wide assortment. This is not surprising as the competition was stiff with many other fast fashion brands offered very aggressive markdown of up to 80% off.

H&M’s Discounted Categories by Gender

Women’s Swimwear & Beachwear had the third most highest discounted items.  This signalled a build-up of off-season inventory in the category.

Similarly in Men, Shorts which is an important Spring/Summer category, had a significantly wide discounted assortment over Fall/Winter period at 8% contribution. This scenario painted a move to aggressively drive out off-season stocks to make space for newness.

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Main Findings

There is no one single winning formula in deploying markdown. Both Boohoo and H&M employed markdown strategies that were tailored to their respective consumers.

Relevant Markdown Assortment: While Boohoo is notorious with its constant time-bound promotions in creating urgency, its markdown strategy worked because sell-out was captured at shallow discounts which in turn protected profit margin. The key to its success lies in launching new and seasonally relevant markdown items that meet consumers’ demands consistently.

Smart Discounting: Traditional retailer, H&M returned to fundamental practices by scaling back on heavy discounting and focusing on members-only offers – a deliberate strategic move to drive full-price sales and protect margin.

Less frequent markdowns and executed at the right discounts, coupled with improved seasonal assortment offering, have resulted in increased net sales and gross profit in 2019.

One Event, Different Discounts, Similar Sell-Outs: Black Friday exposed distinctly different discount strategies by Boohoo and H&M respectively. While Boohoo ran offers in the week leading up to Black Friday and then dived deep at up to 75% sitewide, its upward sell-out movement mirrored that of H&M, who launched just 20% off sitewide on Black Friday.

Next Steps for Brands

Execute Promotions Tactfully: While Boohoo’s frequent time-bound promotions has proven to be a successful strategy, it can negatively impact the brand image in the long run. Increasing environmental concern has led a growing number of retailers to opt out of running markdowns on Black Friday. In the coming years, ‘sustainability’ will take higher priority and incorporated into most retailers’ business strategies.

A Balanced Strategy: Taking the key learnings from both retailers, markdowns can be effective when executed with the right assortments paired with the right discounts, and launched at the right time.

While the fundamental practice on running promotions/sale on aged inventory is key, retailers can also develop new assortments specifically for markdowns, which will deliver predictable profit margin to counter the losses of aged products sold at deeper discounts.

Plan & Execute with Data: Retailers should ask these 3 critical questions when making decisions on markdown: 1) What items should enter markdown, given their performance during the season? 2) When to execute a promotion/sale to achieve margin and sell-through targets? 3) How deep should discounts be to achieve margin and sell-through goals? Always measure each markdown effectiveness, and layer the results with market insights to make informed decisions and avoid inventory risks.



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Meet the Author

Atiqah Kamarudin

Nur Atiqah Kamarudin is a Senior Business Intelligence Analyst at Omnilytics. With past experience at Nielsen and Euromonitor, she has spent years analysing data and unearthing insights to help brands and retailers make informed decisions. She currently produces reports on the fashion industry and its changing retail scene across the United States, United Kingdom, Australia and Southeast Asia.

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