Closeout (sale)
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A closeout or clearance sale (closing down sale in the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the European mainland, continental mainland. It comprises England, Scotlan ...
) is a discount sale of inventory either by retail or
wholesale Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. In ...
. It may be that a product is not selling well, or that the retailer is closing because of relocation, a
fire Fire is the rapid oxidation of a material (the fuel) in the exothermic chemical process of combustion, releasing heat, light, and various reaction products. At a certain point in the combustion reaction, called the ignition point, flames a ...
(a
fire sale A fire sale is the sale of goods at extremely discounted prices. The term originated in reference to the sale of goods at a heavy discount due to fire damage. It may or may not be defined as a closeout, the final sale of goods to zero inventor ...
), over-ordering, or especially because of bankruptcy. In the latter case, it is usually known as a going-out-of-business sale or liquidation sale, and is part of the process of liquidation. A hail sale is a closeout at a
car dealership A car dealership, or car dealer, is a business that sells new or used cars, at the retail level, based on a dealership contract with an automaker or its sales subsidiary. Car dealerships also often sell spare parts and automotive mainte ...
after hail damage. A store that is closing will often advertise to customers their last chance to buy. However, often closures are from companies that can't sell their inventory, inventors whose ideas were not marketable, or businesses needing fast incoming cashflow to pay debts such as payroll or rent. A closeout store is a retailer specializing in buying closeout items
wholesale Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. In ...
from others and selling them at low prices.
Big Lots Big Lots Stores, Inc. (stylized as Big Lots!) is an American retail company headquartered in Columbus, Ohio with over 1,400 stores in 47 states. History The Big Lots chain traces its history back to 1967 when Consolidated Stores Corporation ...
is a well-known closeout
retail chain A chain store or retail chain is a retail outlet in which several locations share a brand, central management and standardized business practices. They have come to dominate the retail and dining markets and many service categories, in many pa ...
in the United States, but other stores such as
TJ Maxx TJ Maxx (stylized as T•J•maxx) is an American department store chain, selling at prices generally lower than other major similar stores. It has more than 1,000 stores in the United States, making it one of the largest clothing retailers in ...
,
Ross Dress For Less Ross Stores, Inc., operating under the brand name Ross Dress for Less, is an American chain of discount department stores headquartered in Dublin, California. It is the largest off-price retailer in the U.S.; as of 2018, Ross operates 1,483 sto ...
,
Marshalls Marshalls is an American chain of off-price department stores owned by TJX Companies. Marshalls has over 1,000 American stores, including larger stores named Marshalls Mega Store, covering 42 states and Puerto Rico, and 61 stores in Canada. M ...
, and
Value City Value City was an American discount department store chain with 113 locations. It was founded in 1917 by Ephraim Schottenstein, a travelling salesman in central Ohio. The store was an off-price retailer that sold clothing, jewelry, and home good ...
are also common, specializing more in clothing and housewares.


Limitations

Some clearance merchandise is non-returnable at some stores, as the intent is of course to get rid of the items. This is especially the case with liquidation and store-closing sales. However, in many jurisdictions such as the United Kingdom, consumers retain their usual rights during a sale, such as the right to return faulty goods (under the
Sale of Goods Act 1979 The Sale of Goods Act 1979c 54 is an Act of the Parliament of the United Kingdom which regulated English contract law and UK commercial law in respect of goods that are sold and bought. The Act consolidated the original Sale of Goods Act 1893 ...
) and the right to return goods granted by the
Distance Selling Regulations The Consumer Protection (Distance Selling) Regulations 2000 (totally repealed in June 2014 by The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 which in many respects are however similar regulations), Statut ...
. Rather than storing merchandise until the following year, almost every U.S. store also has clearance sales around national holidays, sometimes starting even before the holiday (especially at
Christmas Christmas is an annual festival commemorating the birth of Jesus Christ, observed primarily on December 25 as a religious and cultural celebration among billions of people around the world. A feast central to the Christian liturgical year ...
and Halloween). Early discounts are often around 25%, but can be as much as 50%, particularly if prices were increased before the holiday. 50% is common just after the holiday, often followed by 75%, and sometimes even 90%. These may be advertised as "everything Santa Claus forgot." Particularly in Canada and the United Kingdom, Boxing Day sales draw large crowds of shoppers seeking after-Christmas deals. Some stores do pack up holiday merchandise after going 50% off for a
week A week is a unit of time equal to seven days. It is the standard time period used for short cycles of days in most parts of the world. The days are often used to indicate common work days and rest days, as well as days of worship. Weeks are of ...
or so, but often fail to remove the items from shelves before going back to regular price, especially if the items are non-perishable. Some wholesalers sell items on "sale or return", whereby retailers can return unsold items to the wholesaler and be credited a proportion of the cost. The wholesaler can then resell the items to a closeout store at a discount. Some customers take note of when specific retailers normally mark down merchandise further, showing up at the store on the very first day for the best selection. Seasonal merchandise (such as winter clothing or summer
patio furniture Garden furniture, also called patio furniture or outdoor furniture, is a type of furniture specifically designed for outdoor use. It is typically made of weather-resistant materials such as aluminium which is rust-proof. History The oldes ...
) is also put on clearance to make space for new seasonal stock. There are also issues where liquidators may force merchandise from another store or even a mail-order retailer onto the store floor, which was never sold by that store originally. Many sales coordinated with outside liquidators can start with store inventory marked up to the full
list price The list price, also known as the manufacturer's suggested retail price (MSRP), or the recommended retail price (RRP), or the suggested retail price (SRP) of a product is the price at which its manufacturer notionally recommends that a retailer ...
rather than the retailer's regular price, thus asserting a false 'bargain' to the customer. Often, certain inventory which would be considered a true bargain in a closeout such as video game consoles, games and first-party accessories are contractually disallowed from any sort of closeout discount by manufacturers, and are often taken back for sale elsewhere at their intended prices. Some thrift stores have "rolling" closeouts. In this case, all merchandise put out in a given week is given a colored tag, or a letter to indicate what color if the item is directly marked with a
grease pencil The grease pencil, a wax writing tool also known as a wax pencil, china marker, or chinagraph pencil (especially in the United Kingdom), is a writing implement made of hardened colored wax and is useful for marking on hard, glossy non-porous surf ...
. During the last week before the color is used again, everything marked in that color is discounted, usually by 50%. At the end of the week, all remaining item with that tag color are removed from the shelves. There are typically four colors, so that all merchandise is rotated every month or so. Some independent stores use similar systems. Clearance sales typically occur on marked racks in brick-and-mortar stores. Stores typically place merchandise on a "clearance rack" and periodically reduce the price until someone buys it, as in a
Dutch auction A Dutch auction is one of several similar types of auctions for buying or selling goods. Most commonly, it means an auction in which the auctioneer begins with a high asking price in the case of selling, and lowers it until some participant acc ...
. This process has been replicated on the internet. The defunct drop.com (not to be confused with the current retailer of the same name and domain) was the first clearance website to mimic a retail store clearance rack by allowing sellers to automatically mark down their items to a pool of consumers.


See also

*
Fire sale A fire sale is the sale of goods at extremely discounted prices. The term originated in reference to the sale of goods at a heavy discount due to fire damage. It may or may not be defined as a closeout, the final sale of goods to zero inventor ...
* High-low pricing


References

{{Reflist Business failures Retail pricing Sales and clearances