Today we're talking about one of the most important tools in your retail toolkit,

a well run stock clearance sale. Not a panic sale, not a

blanket discount, but a strategic cash releasing moment that helps you start

the year lighter and more profitable. I'll walk you through exactly what to

clear, how deep to discount and how to make your clearance event work for you

rather than against your margins. Let's jump into it.

Welcome to the Resilient Retail Podcast. I'm Catherine Erdly and in the

next few minutes you're about to get powerful real world retail strategies

and from insights shared both from my guests and myself,

backed up by my 25 years in the retail industry. Keep

listening to learn how to grow a thriving, profitable product business.

Let's jump in with this latest episode.

Now if you want more information about stock management in your

business. I've been talking about stock a lot in recent episodes. So for

example, you might want to take a look at episode 278

which is about how much money is trapped in your stockroom. What they

found was once they listed it all out, they had over

£7,000 worth of stock

in those plastic totes that had never even seen the

light of day, so it hadn't even been out on the shop floor.

Or 277 where we talk a little bit more about slow sellers and

overstocks. Try a small discount before Christmas to capture that

Christmas purchasing and then avoid those really super deep discounts

afterwards. So if you've got slow sellers, think about what you could do if

you're not into discounting. If you don't do offers at this time of

year, then perhaps could you focus

the attention on them more, try and push them more, try and make them more

of a feature. But in today's episode I wanted to focus in on

your stereotypical, as it were, January

clearance sale. So if you're listening to this episode on the day of release it

is Thursday 18th December, which means that we are

one one week out from Christmas. And you might be starting to think

turning your attention to what you want to do post

Christmas. Now typically a lot of people would have a Boxing Day

sale or for a lot of small business owners, they want

to give themselves a little bit of a breathing space and start it

in January. But either way you may well be thinking about your

clearance sale. And what I want to do in today's episode is run through how

to make it as effective as possible. Because a lot of people do get

nervous about clearance sales, they're worried about them Being brand damaging.

But the good news is I'm here to tell you that this is the time

of year to do clearance activity because the customer is used to seeing

it from retailers. Every single retailer in the land

is going to be having some kind of clearance event in January.

If you walk into a shopping center in January, you are going to see a

lot of red sale signs. So this is the time of year that you can

really be a little bit ruthless if you like and have a really

good clear out. Clearance is not failure. It's a

strategic tale for managing slow stock in your business and

improving profitability. I also like to think of it as a

pressure release valve. I am very much hoping none of you ever

buy stock for your business that you don't think is going to sell. But we

all know that there are things that you thought were going to sell that just

don't. Therefore, having a stock clearance sale is your

opportunity to go through those things that didn't sell and to

discount them. To release that cash back into your business so that you've

got more money to spend on new, fresh, interesting stock which is

going to entice and delight your customer in

2026.

So what we're going to do is we're going to talk about when to run

a clearance sale, what goes into it, how deep to discount, and what to do

if the stock still doesn't shift. Why stock

clearance matters. Well, as I've touched on, it is all about

shifting that slow moving stock that ties up cash and it makes the business

harder to run. In retail, we call the unproductive

inventory, that is the 80% of your stock which is generating just

20% of your sales. Or the inverse of the 80-20 rule where

80% of your sales is coming from 20% of your stock. We

call that the tail. And in my book Tame youe Tiger, I

talk about the bigger the tail, the bigger the tiger. In

other words, the more stock that you have tied up in that

unproductive tail, the more likely your business is going to be

to be cash hungry and difficult to manage. So you need to make

sure that you address that tail by running a stock clearance event. Clearance is

the equivalent of cleaning out your garage. You won't get what you paid for it,

but you'll get your space and cash back. As I mentioned in previous

episodes, what people really fail to realize with

Overstock is that it takes up physical space, it takes up

mental space. It is something that just. It's a lot of

time you have to shuffle it around or work around it. And it also

leaves a hole in your bank account where fresh cash could be

sitting there waiting for you to make your purchases in

2026. And one of the reasons that people

don't pay themselves in their business, people don't pay themselves enough in their product business.

One of the big reasons is that they have too much stock. And

so getting on top of that and clearing it through is a really crucial

part of running a profitable business. Remember, your aim

during this time is not to maximize your margin per item. It's to

liquidate stock efficiently and effectively reset your business.

So as I mentioned previously, we are coming up to the perfect time to run

a clearance sale. A big retailer will typically run four

sales a year. Two large end of season sales in January

and in the summer, and then a mid season sale roughly around March

and then September or October. However, I think for most

small businesses, they don't necessarily need those mid

season sales. I think two stock clearance sales a year would be plenty.

And for some people, they actually will just really focus on one. And if you're

going to focus on one, make it the January sale. Because as I said, that

is so intrinsically built into the customer's mind

that this is the time for sale, that it is not going to feel

brand damaging at all for your customers. It is going to be

something that they just see. Oh, yep, I get it. It's this time of year.

It's January, let's go for it. This is not

the same as being on a discount treadmill. A lot of people are fearful

of having discounts because they feel that the customer is going to

then want to just buy from them at discount. But again, that's why this

January time frame is so powerful. Everybody knows that there's a stock clear

out in January. They don't then expect to be able to buy things on discount

the year round. You can have other events as you

go throughout the year. Even if you only have one stock clearance event,

you can have other targeted clear as you go discounts. So that would be

really super specific on one particular product area.

Maybe you're really heavy on your home fragrance, for example, or maybe you're really heavy

on your summer items if you're a fashion brand. But you would be

able to take some action to clear those down throughout the year. But in

terms of the real stock clearance, what we call red sale,

that is something that you would keep for, as I said, once or twice

a year. So what do you actually put into your sale?

Well, I like to think of there being different buckets of stock.

So you've got your prime stock. This is the products that make up

your 80% of sales. Those ones you do not want to touch.

What you're looking for are either things that have really slowed off.

For example, they are last

sizes in a size run, or maybe they belong to a product range that

you no longer carry much of. They make great fodder for sale because

they're actually effectively prime stock. It's just they're not really selling that much because

you maybe have de emphasized that product range or that product area

within your business. So it should sell, sell. Once you've taken a bit of money

off it and you've put it in front of your customer in a sale. The

other thing that you may want to include

is things like shop soiled or damaged items or seconds.

Sometimes people will run a separate samples and seconds sale

that can sometimes work well as a second big discount sale of the

year. So for example, you might do your stock clearance in January and samples and

seconds in the summer. That could be another option. But if you are going to

include damaged or second products in your sale, make sure that

it's really, really clearly marked as to what exactly it is and

what the faults or the flaws are so that people aren't disappointed if they think

it's just slow moving stock that's been discounted, that they understand there's another

reason behind it. And then the third and probably the biggest

category is the slow moving stock. These are things that you just

aren't selling as well as you thought. They are also things

that maybe you just bought more of than you needed. So it wasn't

necessarily that they're bad, it's just that you've got too much left of them.

Effectively, what you want to think about with this stock clearance

sale, I want you to really think about the things that you've effectively

come to the end of the line with. In other words, if you think you're

going to be restocking something later on, don't put it into the stock

clearance sale. The stock clearance sale is the exit shoot for the business.

So you're putting things into it that you are done with that. If you don't

sell it at that price, you're going to keep reducing it until you do sell

it. There's no concept that you're then going to put it back up to

full price, for example. So I would say that once something goes into

the sale, it's on its way out and you will do whatever it Takes to

clear it down. So don't, as I said, put things in that you think, well,

actually, I might sell a bit more of that later on if it's just slow

because it's not the right season for it. For example, if

you've got Halloween product, don't try and mark that down in your Christmas sale.

That's going to be really tricky for you to sell. You're better off almost keeping

that and then bringing it back out again or relisting it. At

Halloween, you want to be looking at the things that have had a good run.

They've had, you know, a couple of months to sell, but they're just not

selling and now they're clogging up your stock room. And these are the things that

you want to really hit and put into your markdown.

If something's just a bit slow, you might get away with just not reordering

it, rather than discounting it. You're looking for the things that are. Either

you're completely done with or you just. They're really, really

slow and you don't think there's any way you're going to sell them, except if

you take discount action against them. This is the point at which

you absolutely 100% do not want to get caught up

in a personal vendetta against yourself thinking, oh, why did I buy it? Why

did I make that mistake? Mistake. Do not worry about it. It is not anything

to do with you. It's the fact that customers are

fickle, fashions are fickle, zeitgeist is fickle,

people change. You could have bought something that even did really well last year

and it's not working so well this year. Don't think about that. Don't get

hung up on the mindset around it. Just look at

discounting it.

How deep do you discount? I believe that

you want to start your clearance sale reasonably deep.

If you've got loads of something, you probably want to start at 50% off.

If you've just got a few left of something and you think it's actually pretty

good stock, but it's broken end of line, end of a range that you don't

stock anymore, you could maybe start at 30%. So

you're not trying to rescue the margin here, you are trying to release the

cash. We used to have a saying in big

retailers that I worked in when we were looking at sale, everything has its price.

In other words, if it wasn't selling, we would take it to the next

discount level, but we would always start off with what we thought

was reasonable. We didn't go in at the maximum discount. If you want, you could

start everything at 30% off. The key with the sale is then to keep

reviewing it and seeing do you need to take further markdowns. The key

thing really is don't try tickling things at

10% off, 15% off. That's not really sale price, that's more like

a limited time discount. I would say 30 to 50%

is a good place to start. And then one of

the steps that people really miss out on sales planning is that they kind of

are a bit apologetic about it. They're like, oh yeah,

I've got this sale. And they don't shout about it. Whereas you need to plan

your sale like it's a product launch. You need to be making sure

that you're going through and you're building up the messaging, you're reminding people

your homepage reflects the sale, your social media campaign

reflects the sale, and you've got really clear signposting in

store or online, depending on your business model to say that we are

currently on sale. Think about the windows being

blocked out. In big stores. They literally get these floor to ceiling

sale banners and they cover the whole window with them because they are trying to

get your attention. They're trying to say, hey, we're on sale, come

in, take a look at the bargains. That's the kind of thing that you want

to think about. And again, if you can switch your mindset and see that this

is a natural release of cash flow into the

business, this is not something that you do because you failed or because things didn't

go well. This is something that you do to make your life easier. Hopefully

that will help you really shout about it. And inside the retail podcast sales

game plan course that we've been running, we had a whole session all about promotions

and sales and we had a sale planner to help you really nail your

messaging. Because I really believe that this is one of the reasons that people

don't have as successful sales as they would like is because they put

a few things on sale. They usually don't discount it deep enough. They might

put a few things on 20% off and then they don't tell anyone about it.

Whereas what you really want to be doing is starting off with a decent discount

and then really shouting about it. So have

a think about in your business, what's the equivalent of a giant sale

poster? If you've got a window, maybe you can do that. If you're

an online business, what's the equivalent can you black out or

block out your social media as it were, so that all of the posts are

talking about the sales so people could really get the message that you're on sale.

Because remember, this isn't forever, this is a short space of

time. You just got to shout about it as loud as you can because you

really want people coming in and checking out those bargains.

Fun fact. Actually a lot of people find when they turn on a clearance sale,

they actually see that their full price sales go up as well, which they often

are not expecting. And that's because people are coming, they're having a look at

what's in the sale and then they're going, oh, this is a really nice product.

I haven't bought from them for a while or I'd forgotten how nice everything is

here and then picking out some other pieces as well. So we always used to

see this in big retailers. We would see that when we do

clearance sales, it would actually also push full price sales. So there's definitely something

for you to think about. So what if it still doesn't

shift? This is a question I get asked a lot about sailing and I

think a lot of the reason, as I said, people don't see a good shift

in their sale is because they don't shout about it enough, they don't

make enough of a deal about it and they don't discount deep enough.

If you're in the position where you've launched the sale and it's still not

shifting, then I would suggest that you go back and you look at your

discounts. If everything's at 30, could you take some of that stuff to 50?

If everything's at 50, do you start moving some things to 60

or 70? How can you keep shouting about

it? Again, big retailers, they run sales over quite

a long period of time. So it might be eight or nine weeks of sale.

And then what we would do is every Monday we would go through and we

review the sale lines and we would look and decide if we were going to

take further action on things. Right, do we want to take a further markdown? What

do we want to do? What should that price be, what's the cost

of the business, and so on and so forth. So it was never something

that was one and done. We would never just launch it and then, you know,

let it just sit there. We would actively manage that sale week on week

and we would be reacting to the sales that we were getting. So

the same thing for you too. If you launch it and nothing happens,

ask yourself, did I shout about it enough. If you shouted about it a whole

bunch of times and you really feel like nothing's happening or you're getting lots of

visitors but your conversion rate's not good, think about do you take your discounts

deeper? That's a whole new round of messaging.

You can have new lines added, further discounts, or

now up to 60% off, or now everything

from 10 pounds, whatever it might be, think about

moving that sale on. Think about looking at what's selling

and letting that sell through at that price. But then if it's not moving, do

you take it further? Discount it further? As I said, we used to always say

everything has its price, so what price do your products need to be

at? You can also do extra messaging like VIP.

Customers get an extra 10% off the last 48 hours only. There's lots

of different ways that you can lean into the sale and

keep it interesting and different as you move through. Maybe you have a three

week sale and you have different messaging each week. Maybe you offer

three for two on your sale items for the last 48 hours only.

Who knows? But just keep layering on that messaging, keep

moving the discounts forward and don't be afraid to be

aggressive with your discounting because again, we're talking about, this is the

exit shoot. Once it's in the sale, that's it, it's on its way out. So

what do you need to do to give it that push? And then at the

end of it, you should have a decent amount of cash and more

space and more headspace in your business as well. If you get

to the point where you really have done everything you can and you're still sitting

on a lot of stock, it may be worth thinking about

donating to charity. Talk to your accountant, find out if there's actually going to

be a tax benefit to writing some stock off and donating

it. That can be another way of getting some older stock out of your

way and helping the business financially in some ways.

A lot of big retailers, they also run clearance channels,

so they will run ebay shops or depop shops. You might

not even know looking at it that it belongs to that particular

retailer. They're busy selling off all of the stuff that they couldn't quite

clear out at rock bottom prices. But because it's a completely

separate, different sale channel, it's not impacting their

main channel. So that is something else that you could consider if you've got a

lot of stock. Sometimes the answer is can you go to an event?

Can you basically have like a clearance

event in person. Sometimes you can shift more that way. Sometimes there are

even specific sale and outlet events that you can look for

tables at to just sell things off at a discounted price. But

what you kind of want to do is you want to really push the sale

as hard as you can for a short period of time and then you want

to de emphasize it. You don't want to be talking about sale for weeks and

weeks and weeks and weeks. You want to push it hard and then hopefully sell

through as much as you can and then be able to put the remainder

into say, an outlet section on your website or something like that.

The key thing here is to reframe in your mind that

clearance is not wasteful. It's responsible stewardship of your

stock. It's an important way to release cash that is trapped and

to get it back into your business. You're not encouraging

over consumption. I know that's one of those things that people are concerned about. And

I have to say, if you say to me, I don't ever discount, I don't

believe in discounting, that is completely fine, I will completely

100% back you on that. But in that case, you have to be very, very

cautious about how you buy to avoid having these pockets

of trapped cash. And there are very few businesses, even extremely

ethically run businesses, that are able to get away without any kind of

clearance event. Otherwise they just end up with stuff being stuck.

If you feel like you're not really in a position to do a big January

clear out, then you can think about doing clear

outs throughout the year. But it's not as

beneficial to have a big clear out, say in

March as it is in January. Because again, in the

customer's mindset that's slightly different in January. They totally

will get it. They understand it's part of the January sales. At another

point in the year it may feel a little bit more

distressed. So I would think carefully about the timing of it.

And that's also again, people have different peak seasons. It might work for you to

have your sale at a different point in the year in terms of next

steps then that you can take this week. As I said, we are running

quickly towards the Christmas time period and

therefore the post Christmas sales. So some practical steps you can take

this week are have a look at your 80 twenties,

so your top 80% of sales coming from

20% of your stock and then vice versa. This is very easily done

in Shopify. If you're a Shopify user, you can look at your ABC report. You

do have to add in the product title as an additional

variable. Otherwise you can't actually see what's in your abc. But that is something that

you can easily do. If you look at that, then you can quickly identify what

you're sitting on a lot of stock of. Make sure you're pulling together

your sale list. So I would identify the slowest moving stock

with the highest cash value against it as the items that you definitely want

to look at clearing. Make sure you're choosing a discount

strategy. You're going to go straight in at 50% off everything. You're going to start

at 30% and then review it. Make sure you put in your dates in the

diary, make sure you're getting all your marketing messaging work

ready to go. And make sure that you put time in to review

your sale as you're going through it so that if it's not shifting, you've got

time to actually take action and take it deeper. So good luck

with planning your sale. I can't wait to hear how it

goes for you. You can always drop me a message on Instagram at Resilient Retail

Club and let me know if you've got any questions about

it. If you really pushed yourself this year and the difference that it made. And

I will look forward to next week where we will be releasing an episode on

Christmas Day where we're going to be talking all about how to

recap the season. Have a great week and see you then.