Stock clearance, also known as clearance sale, closeout sale, or clearance event, is a business strategy where a company reduces the prices of specific items or a range of products to sell off excess, outdated, or slow-moving inventory.
Behind this notion also lies a fast-growing societal trend to give products a second life.
There are a number of reasons why retailers may set up a clearance operation:
- Make room on shelves to offer a new collection, new products, ranges in line with consumer expectations.
- Clear stock used as a display model or exposed to the elements.
- Attract budget-conscious consumers who are looking to save money. This can help retailers reach a broader customer base.
- Minimize losses, as if products are no longer in demand or are approaching their expiry date, selling them at a discount is often better than disposing of them and incurring a complete loss.
- Boost brand reputation and customer loyalty by demonstrating value and goodwill in offering goods at a significant discount off of the regular price.
- Cope with a liquidation before closing the outlet for good. In this case, the store must clear out all its stock and not resort to restocking.
Almost all retail players may be required to organize clearance actions for their products. These may be brands themselves, distributors, or supermarkets.
In addition, the majority of the products available on the market can be cleared: clothing, kitchen accessories, decorative items, etc.
Other retailers specialize in the sale of clearance products: these are known as closeout stores. These stores are retail establishments that specialize in purchasing wholesale closeout merchandise from various sources and then offering these products to consumers at discounted rates. Closeout stores are supplied by any of the following:
- brand unsold stock,
- customer returns,
- customs seizures, or
- auctions resulting from judicial liquidations.
Stock clearance is generally subject to strong seasonality.
In fact, it’s not uncommon to see clearance operations after sales or after major events such as Black Friday and end-of-year festivities. This is an ideal way to sell off merchandise that no longer meets consumer expectations.
