Clearance sale is a markdown event that retailers use to clear the remaining merchandise at very low prices. Sometimes the price levels at this stage of markdown can be even below the cost price of the product.
What is The Difference Between Sale & Clearance?
Clearance is a type of sale event with a further reduction in price on the previous discounted price.
Usually the retailer starts discounting with a first markdown event (sale) at, say, 25% off, and then goes deeper on the remaining items with a, say, 50% off; and then to finally clear the items that are still not sold, a clearance sale is initiated with discount levels usually in the range of 70% to 80% off.
Are Clearance Items Good?
Clearance items are normal goods that have been sitting unsold for a long time and started to age.
Sometimes, when retailers have damaged goods, that are still in sellable condition, they wait until sale time and offer them with sale items. The damage, however, should be marked on the item (e.g. with a sticker) and shown to the customer before buying.
Why Have A Clearance Sale?
The main goal of a clearance sale is to generate cash and make room for new products to be launched. Even-though the items at this stage could be sold at below cost price, it is still a wise decision to clear them and invest in new inventory.
Merchandise that has reached the clearance stage has already been subjected to different levels of discounts. So failing to clear them at slashed prices will not give them more chance to be sold, but will rather move them into obsolescence, where they will be written off completely.
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Retailer & Founder of Retail Dogma, Inc.
Rasha has 14 years of retail & ecommerce experience. She has started an ecommerce business in 2008, and later worked at H&M, Bath & Body Works, Victoria’s Secret and Landmark Group. She’s lived in 4 different countries, speaks 3 different languages and holds a BSc in Pharmaceutical Sciences and an MBA in Strategic Management & Marketing.