Clearance Sale

Posted in Marketing and Strategy Terms, Total Reads: 547

Definition: Clearance Sale

A clearance sale is a retail sale where products are offered at heavy discounts to reduce the inventory or make it zero. It is also called a close-out sale as it is the final sale of a product.

Reasons for clearance sales:

• To reduce or zero the inventory

• Because a certain model is not selling well

• To increase the sales or traffic in stores

• Because the store is relocating and they have to clear out their stocks before they leave

• To clear the stocks of seasonal goods or holiday items

• When a company changes the packaging of a product or makes any other modification it has to get the old stock cleared before putting the new stock on the shelves

• Because of bankruptcy. This is an extreme form of clearance sale and is called “going-out-of-business sale” or “liquidation sale”. A liquidation sale is however also used by retailers these days to quickly turn over their inventory

Another reason for clearance sales is the uncertainty in demand. When the company can assess the demand and employ flexible manufacturing according to it, the need to use clearance sales reduces.

Clearance sales are normally offered only in brick-and-mortar stores on clearance racks where the prices of the products are marked down. The effectiveness of a clearance sale can be enhanced by putting up signs and banners inside and outside the store and advertising it properly. This process is found on certain online websites also today.

A good example of clearance sale is GOSF or the great Online Shopping Festival which has become popular in recent years. A lot of online stores which participate in this festival give away their old merchandise or clearance stocks at very low prices. Christmas sale, summer sale, autumn sale and end of the year sale are all examples of clearance sales.



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