11.5 Seasonal and clearance sales
The remaining stocks after a promotion has ended, will enter the next phase of markdown, either in a sale or clearance event. Extreme slow-movers can also be added directly into a sale or clearance event, without having to go through the first phase of promotions.
A Seasonal Sale
Usually executed twice a year, the steps required for planning a seasonal sale is not that different from planning a tactical markdown, although more consideration needs to be taken into account, such as existing discounted and aged stocks.
Astute retailers utilise seasonal sale as an overhaul exercise, with goals to clear out aged stocks and return current inventory to a healthy state, as well as to make way for upcoming season’s newness.
The sell-through rate and balance stocks to markdown will determine the depth of discounts for each individual product for a seasonal sale. The result of this is what leads to what is commonly observed at a sale event, where discount typically begins at 30% off, followed by the next tier at 50% off and 70% off.
A Clearance Sale
Items identified for clearance are generally dead stock and balance of aged stocks. These products will no longer be carried in any store nor displayed online once it has been markdown for clearance. Therefore, the depth of discount is usually drastic to ensure a swift clear out, at times at below cost.
Typically, a clearance sale can take place at the year-end where consumers are in more actively hunting for bargains and slashing products up to 80% off would not hurt your brand as the market would also be flooded with deep discounts then. Alternatively, a clearance sale (also known as warehouse sale) can be carried out at an offsite location, especially where the brand is not represented to upkeep the image of the brand.
Balance stocks after a clearance sale should then be written-off and disposed ethically or donated, to make space for new inventory.