Sales vs Clearances: 7 Distinct Differences

Mar 10, 2022 | 0 Votes by Mel - rate Your vote
When you see a number followed by a percentage sign when you’re shopping at a physical or online store, the thing that likely automatically lights up in your head is “SALE!” Because a discount is a discount, right? Not necessarily. While people tend to interchange the words “sale” and “clearance” often, they are actually markedly different retail concepts. How? Find out below. Time to Buy - Sales vs Clearances: 7 Distinct Differences

Ask your average shopper what the difference is between a “sale” and a “clearance” and chances are, you’ll either be met with a nonchalant shrug or an insistence that both are synonyms of products being sold at reduced prices.

And while some people probably won’t care either way if a discounted product is considered a “regular sale” or a “clearance sale” just as long as they save money in the end; knowing the differences between the two can make a big impact on how much you save, when you can save the most, and the quality and type of products you’ll be getting.

So, what exactly makes a clearance and a sale different from each other? After all, both events tend to get Pavlov’s bells ringing in the ears of eager FOMO shoppers. Below, we’ll discuss how and when they are used liberally—and effectively—by the retail industry to ensure every discounted product reaches the right type of shopper when they want it most.

SalesVsClearance_Shopping



Definition



A “sale” is a promotional tactic created by companies or retailers used to attract more customers to enter their space and attain a high turnover rate of products. The most popular tactic used in a sale is to offer reduced or discounted prices on products. Other common consumer sales promotion types utilized include “Buy One, Get One” (or BOGO), freebies, point-of-purchase (POP) displays, rebates, premiums, and more.

A “clearance,” meanwhile, is a special type of inventory sale that attempts to attract more customers than traditional sales by offering significant price reductions on products the store is trying to get rid of for one reason or another, such as items are going out of season, the need to create room in the store for new items, or the store might be going out of business.

“Clearance or closeout is permanently removing merchandise, often one-offs and items that did not sell,” according to The Retail Doctor.

Time Period & Duration



Store-wide sales are orchestrated for many occasions throughout the year, including major holidays, special days, back-to-school, and before the summer. These sales usually only last for a limited time--around three or four days--before the retail price tag on these selected items return to regular rates. Once the sale ends, prices go back up. And if you missed the sale, you’re stuck waiting for the next big event.

Clearance sales are in effect indefinitely until the clearance item is sold or pulled from the shelves. Clearance sales also usually come in cycles, happening mostly at the end of a season like summer, in January to dispense with post-Christmas merchandise, or on special days like the Black Friday. Clearances often happen concurrently with traditional sales.

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Rationale



Despite its definition as a period during which a retailer sells goods at reduced prices,
sales are, ironically, one of a seller’s most effective strategies to actually make customers spend more. By enticing them to visit their stores at certain times of year, companies expect customers to buy even more products (at regular prices) apart from those that they’ve advertised as discounted. This tactic also serves to create urgency, encouraging consumers to stock up on items in the belief they will be saving more money before the price of items go back up.

Clearances, however, are used to help sell unwanted, outdated, unpopular, excess, or seasonal inventory to make room for new products. Customer purchasing trends can change quickly and result in excess inventory that clutters a store. Maximizing shelf space for more in-demand items helps maintain sales levels and profits. Clearance sales help minimize the financial impact of unpopular and non-moving products without diluting the price levels of other merchandise.

Furthermore, clearance sales help stores recoup some of their money when items don’t sell within a profitable time frame.

Product Type



Because sales are meant to attract customers to the store, items that are typically designated on sale are widely popular and fast-moving. Expect heavy promotions of a specific brand or even store-wide discounts. That said, practically any type of merchandise can be on sale in a given promotional period.

Clearances, on the other hand, will likely not be spread across various departments. Instead, clearance products will be gathered together, oftentimes haphazardly, in a special section. Some stores actually have a space in their shopping area specifically for clearance items. Expect most clearance products to be seasonal and/or outdated. Clothing, decorations, accessories, food, and other products often reflect seasonal demand and must be cleared out completely to free up space for the next season's merchandise.

SalesVsClearance_Product



For example, if you visit a clothing store in April or May, you may happen to find winter boots and coats on clearance, as there is no reason for consumers to buy winter clothes during the summer. Items on clearance will usually be priced even lower than the retail tags on traditional sales as they tend to be for items that no shopper is willing to buy, unless it is for a huge, almost giveaway, bargain.

Do note that clearance sections in most stores can be highly inconsistent when it comes to quality finds and can often feel picked and passed over—because they often are. You may find an amazing pair of shoes that’s only in Size 5, or a fabulous maxi dress with makeup stains on it. But if you can deal with the unpredictable nature of clearance sales, you can sometimes snag up favorite finds for just mere cents!

Pricing



In general, a sale offers items marked down for a temporary period. Big-ticket items tend to remain at their retail price unless a holiday pops up on the calendar. Discount percentages are typically set in increments of 5% and usually range from 5% to 50% for most items.

A clearance, meanwhile, offers items with permanently slashed prices. Unlike a sale, the price of an item on clearance will not go back up. Clearance prices may typically start at 30% off marked prices for the first week, with markdowns coming down significantly more on the following week. The longer an item is up for clearance, the lower the price tends to go before the store decides to pull it from the inventory. Items on clearance will typically be priced lower than traditional sales since they tend to be for items that shoppers aren’t willing to buy unless it’s for a real bargain. The impressive differences between the “regular price” and the dramatically marked-down rates draw them in, leaving the impression that these deals are just too good to pass up.

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Advertising



During sales promotion periods, retailers will advertise heavily on both traditional, digital, and social media to maximize awareness. This is also the main driving force for why most retailers will offer circulars, mailers, and digital newsletters to subscribers, enticing them with colorful product photos and low/sale prices that scream out at you.

On the flip-side, stores rarely advertise clearance sales in print or in media like they would a sale since the items being offered are non-big ticket and don’t really add anything to the store’s profits or bottom line. The only occasions where clearance sales are advertised widely are in cases when a store is moving out or going out of business.

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Post-purchase



While traditional sale items are normally subject to a store’s standard returns, exchanges, and refunds terms and conditions; it is important to note that most clearance items are final sale only, meaning they fall under a strict “no returns, no exchanges” policy where all items are deemed “bought as is” and are mostly non-refundable. Therefore, when shopping at a clearance rack, be sure that you understand the product’s details and disclaimers (if available) and do every possible diligence to ensure it is defect-free. Otherwise, if there is some issue with it that you neglect to notice, once the sale is final, you will have to accept your purchase gamble.

Now that you know the various differences between a traditional sale and a clearance sale, you can shop confidently knowing how each deal can get you precisely the items you want at the best possible prices and discounts.

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