Putting items on clearance does more than simply move poor performing inventory. Clearance sales can attract bargain hunters that are typically new customers to your store. It’s also a reward for loyal customers. But, most importantly, it opens up more shelf space for your best-selling items. To do this well, you’ll need to incorporate the right retail clearance strategies for these sales.
Clearance Sales Need to Entice Your Customers
There are reasons why items get put on clearance and you’re probably very aware of them. Every day these items sit on the shelf, the more money they take out of your cash flow and affect profits.
Just because the price is low doesn’t mean that it will sell. To give you some help with your clearance sales, here are 5 ways to maximize the potential for liquidating items at or above costs:
1. Pricing Strategy
Still want to make a profit? You’ll need to do some digging in your point of sale software to figure out your breakeven point. Next, calculate how much the extra marketing is going to cost. Add this to your breakeven point. You should also check on your competition to see how much they are selling the same product for. These should give you a good range on a discount price that works to your advantage.
2. Timing
The timing of your sale will attract more customers. Mistakes are often made when clearance items don’t match their season. For example, a winter coat on clearance in the middle of summer is something no one needs or wants, so it will go unsold. You can begin your clearance sale at the tail end of a season to entice bargain hunters. Ever buy Christmas decorations the week after Christmas? It’s a very common practice for retailers and consumers almost expect it. You’ll also want to set a date to end the sale, and be strict about it.
3. Marketing
You don’t have to spend a lot of money to make your sale work. Simply, print or buy a “Clearance Sale” sign with bright colors, then make sure it’s visible from the front of your store. It doesn’t have to be big or flashy. Bargain hunters are only interested in the word “Clearance.” Social media is a great way to spread the word to returning customers. To motivate them, you should give lots of details and pricing. And remember to update your website with details and lots of photos.
4. Biggest Discount First
Clearance items are no longer high value products, because they drag down profits. To be competitive, you need to give the biggest discounts first, then gradually increase them, if necessary.
5. Connect with New Customers
You’ll notice when new customers are drawn to your bargains. To capitalize on their appearance, you should engage with them, have them get on your email list or follow you on social media. Bargain hunters are keen shoppers, so show them that they are welcome to come back any time.
Have an Exit Strategy
It’s common to have items leftover from your sale. Experts say that you should not hold onto stale products with the hope that one day they may sell. So, you need to know when to cut your losses. You can give your unsold inventory to your regular customers or a favorite charity, which may give you a tax break. Whatever you choose, the goal is to free up space for your best sellers and maintain profitability.