Clearance
Clearance is the final markdown that exits a product's remaining stock, at whatever price frees the stock and the space it occupies.
- Is
- The final markdown that exits a line's remaining stock.
- Judge by
- Cash recovered from here on, and what the freed space and capital earn next.
- Watch for
- Anchoring on what the stock cost. That money is already spent.
Updated
Meaning / 01
What it means for retail and category teams
Clearance starts once the decision to exit a line has been made: it is being delisted, the season is ending, or it is being replaced. The aim at this point is to recover what the remaining units are worth now, and to release shelf space and working capital for something that will sell. Clearance may run in store, online, through an outlet channel or via a stock buyer.
Stakes / 02
Why it matters
The money spent on the stock is already gone, so clearance decisions should rest on what the units and the space are worth from here. What the stock cost is sunk. Holding out for a better price has its own cost: the space earns nothing, the stock keeps ageing, and the line blocks the range that replaces it.
Example / 03
Illustrative example
The business and figures are illustrative. None of it is customer data.
| Item | Cash recovered | Result |
|---|---|---|
| 30% off for a month (100 sold at $56) | $5,600 | 100 left, bay full |
| 50% off for two weeks (190 sold at $40) | $7,600 | 10 left, bay free |
The deeper cut earns less per unit, more in total, and frees the bay two weeks sooner.
Read the example as text
A games retailer has 200 units of a previous-generation controller, ticketed at $80, after the new model launches. At 30% off ($56), the team expects to sell 100 in a month: $5,600, with 100 left. At 50% off ($40), it expects to sell 190 in two weeks: $7,600, with 10 left and the bay free for the new model's accessories. The deeper cut earns less per unit, more in total, and frees the space sooner.
Related / 04
Related concepts
Next step
Look at the price gaps that matter
Bring a few products and competitors. We can walk through matching, observation dates and which gaps deserve a closer look.
