Why is it a good idea to start a clearance promotion now?
As summer ends, you might have leftover inventory that you don’t want sitting around for another year. Running a clearance promotion now helps you move these items while there’s still some demand, freeing up space and capital for new, seasonal products. Here are two key reasons to start a clearance process:
Financial benefits:
Starting a clearance sale at the end of summer is a smart financial move. Holding onto seasonal inventory ties up capital that could be better used for other business needs, like purchasing fall and winter merchandise or investing in marketing initiatives. By clearing out summer stock, you free up cash flow, reduce storage costs, and minimize the risk of carrying obsolete or out-of-season products into the next year.
Additionally, offering discounts and promotions on these items can increase sales volume, helping to boost your revenue before the seasonal demand completely dries up.
Branding benefits:
A well-executed clearance promotion can strengthen your brand by positioning your business as customer-focused and value-oriented.
Customers appreciate the opportunity to snag high-quality items at reduced prices, which can enhance their perception of your brand and build loyalty. A clearance event can also generate buzz and attract new customers who may not have shopped with you before but are drawn in by the attractive deals.
This influx of shoppers provides an excellent opportunity to showcase your brand’s full range of offerings, potentially converting clearance shoppers into regular, long-term customers.
Which brands typically run end-of-summer clearance sales?
- Old Navy
- Target
- Gap
- REI
- Nordstrom (as an anniversary sale)
- H&M
How to execute a clearance process effectively
- Identify Products: Focus on items with low sales velocity, minimal contribution to gross profit, and excess inventory. In Shopify, you can do this by downloading and merging the following reports:
• ABC analysis by product
- Days of product inventory remaining
Introduce Initial Discount: Apply a moderate discount to your products and monitor the impact on sales velocity. The goal is to increase the sales rate to reduce the weeks on hand (WOH) which should align with your desired sale duration.
Evaluate Weeks on Hand (WOH): After a set period, assess whether the discount has successfully reduced your WOH to your target level. If WOH is still above the desired range, it indicates that the discount is insufficient to accelerate sales as needed.
Adjust Discount: If WOH is not on track, incrementally increase the discount. Monitor the effect of each discount level on sales velocity, and continue adjusting until your WOH aligns with your promotion goals. Remember you can also extend the sale or offer a final clearance discount for any remaining dead stock.
Iterate: Continue this process iteratively—apply a discount, measure its impact, evaluate WOH, and adjust if necessary. The key is to achieve the desired inventory reduction by the end of your sale without excessively slashing prices from the outset.
Pro tip: Streamline your clearance with Aument
Efficiency is crucial when managing clearance promotions. With Aument, you can simplify the process by consolidating all your critical data into one intuitive platform. Aument automatically identifies products most in need of clearance and categorizes them into two actionable groups:
- Clearance Needed: Items that can be sold within 30 days with aggressive discounts.
- Extended Clearance: Items that will require more than a month to clear due to lower sales velocity and excess stock.
Aument allows you to select products, set discount parameters, and establish minimum profit margins to ensure you’re protecting your profitability while clearing out inventory. With just a few clicks, you can automate your clearance promotions and access daily reporting to monitor progress.
By efficiently managing your clearance, you can free up resources for the upcoming seasons and strengthen your brand.
Curious how it works? Check out our interactive demo to see how Aument can optimize your clearance strategy.
