What are markdowns in a retail context?

Markdowns in a retail context refer to reductions taken on the initial selling price of products. Retailers implement markdowns to stimulate sales, manage inventory levels, or respond to market conditions and consumer demand. When a product is not selling as expected or seasonal items need to be cleared out for new stock, retailers often lower the price to encourage customers to make a purchase, thereby increasing sales volume and reducing excess inventory.

In contrast, the other options do not capture the essence of what markdowns represent. Price increases during peak seasons are not considered markdowns, as they reflect a strategy to capitalize on high demand rather than reduce prices. Setting prices above the market average suggests a premium pricing strategy rather than a markdown. Discounts applied only to bulk purchases represent a different promotional strategy aimed at incentivizing larger transactions, rather than a direct reduction in the price of individual items. Hence, the correct answer accurately describes markdowns as they are understood in retail.