Closeout
Encyclopedia
Discounts and allowances
Discounts and allowances are reductions to a basic price of goods or services.They can occur anywhere in the distribution channel, modifying either the manufacturer's list price , the retail price , or the list price Discounts and allowances are reductions to a basic price of goods or services.They...
of an item or items to zero inventory
Inventory
Inventory means a list compiled for some formal purpose, such as the details of an estate going to probate, or the contents of a house let furnished. This remains the prime meaning in British English...
. It may be a given model of item that is not selling well, or in the case of the final closure of a retailer because of a relocation, a fire
Fire
Fire is the rapid oxidation of a material in the chemical process of combustion, releasing heat, light, and various reaction products. Slower oxidative processes like rusting or digestion are not included by this definition....
(fire sale
Fire sale
A fire sale is the sale of goods at extremely discounted prices, typically when the seller faces bankruptcy or other impending distress. The term may originally have been based on the sale of goods at a heavy discount due to fire damage...
), or especially because of a bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
. In the latter case, it is usually known as a going-out-of-business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
sale, and is part of a liquidation
Liquidation
In law, liquidation is the process by which a company is brought to an end, and the assets and property of the company redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation...
. A "hail sale" is a closeout at a car dealership
Car dealership
A car dealership or vehicle local distribution 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. It employs automobile salespeople to do the selling...
after hail
Hail
Hail is a form of solid precipitation. It consists of balls or irregular lumps of ice, each of which is referred to as a hail stone. Hail stones on Earth consist mostly of water ice and measure between and in diameter, with the larger stones coming from severe thunderstorms...
damage. Often, when the store is shutting down, they let people know that this is their last chance to buy the merchandise.
A closeout store is a retailer specializing in buying closeout items wholesale
Wholesale
Wholesaling, jobbing, or distributing is defined as the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services...
from other retailers and selling them at a discount
Discounts and allowances
Discounts and allowances are reductions to a basic price of goods or services.They can occur anywhere in the distribution channel, modifying either the manufacturer's list price , the retail price , or the list price Discounts and allowances are reductions to a basic price of goods or services.They...
. Big Lots
Big Lots
Big Lots, Inc. is a Fortune 500 retail corporation with annual revenues well over $4 billion.Its department stores focus mainly on selling closeout and overstock merchandise. The company is based in Columbus, Ohio, USA and currently operates over 1,400 stores in 47 states...
is probably the most well-known closeout store chain in the U.S., but other stores such as TJ Maxx, Ross Dress For Less
Ross Dress For Less
Ross Stores, Inc. , is a chain of American off-price department stores headquartered in Pleasanton, California, operating under the name Ross Dress for Less. It is the third largest off-price retailer in the United States, behind T.J. Maxx and Marshalls, both of which are owned by TJX Companies.As...
, Marshall's, and Value City
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 goods below the manufacturer suggested retail price...
are also common, specializing more in clothing
Clothing
Clothing refers to any covering for the human body that is worn. The wearing of clothing is exclusively a human characteristic and is a feature of nearly all human societies...
and housewares.
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.
Rather than storing merchandise until the following year, almost every U.S. store also has post-holiday
Holiday
A Holiday is a day designated as having special significance for which individuals, a government, or a religious group have deemed that observance is warranted. It is generally an official or unofficial observance of religious, national, or cultural significance, often accompanied by celebrations...
clearance sales now, sometimes starting even before the holiday (especially Christmas
Christmas
Christmas or Christmas Day is an annual holiday generally celebrated on December 25 by billions of people around the world. It is a Christian feast that commemorates the birth of Jesus Christ, liturgically closing the Advent season and initiating the season of Christmastide, which lasts twelve days...
and Halloween
Halloween
Hallowe'en , also known as Halloween or All Hallows' Eve, is a yearly holiday observed around the world on October 31, the night before All Saints' Day...
). Early discounts are often around 25%, but range from zero to as much as 50%, particularly if the "regular" prices were deliberately inflated as some stores do. 50% is common just after the holiday, often followed by 75%, and sometimes even 90%, at which point there is very little if anything left to choose from. Often during after-Christmas clearance sales, they let people know that this is their chance to buy everything they didn't get for Christmas, or as the phrase goes, "everything Santa Claus
Santa Claus
Santa Claus is a folklore figure in various cultures who distributes gifts to children, normally on Christmas Eve. Each name is a variation of Saint Nicholas, but refers to Santa Claus...
forgot."
Some stores do pack-up holiday merchandise after going 50% off for a week
Week
A week is a time unit equal to seven days.The English word week continues an Old English wice, ultimately from a Common Germanic , from a root "turn, move, change"...
or so, but often fail to remove the items from shelves before going back to regular price. A few merchants actually get credit
Debits and credits
Debit and credit are the two aspects of every financial transaction. Their use and implication is the fundamental concept in the double-entry bookkeeping system, in which every debit transaction must have a corresponding credit transaction and vice versa.Debits and credits are a system of notation...
back from vendors for throwing out certain merchandise.
Some customer
Customer
A customer is usually used to refer to a current or potential buyer or user of the products of an individual or organization, called the supplier, seller, or vendor. This is typically through purchasing or renting goods or services...
s 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. More general seasonal merchandise (such as winter clothing or summer patio
Patio
A patio is an outdoor space generally used for dining or recreation that adjoins a residence and is typically paved. It may refer to a roofless inner courtyard of the sort found in Spanish-style dwellings or a paved area between a residence and a garden....
furniture
Furniture
Furniture is the mass noun for the movable objects intended to support various human activities such as seating and sleeping in beds, to hold objects at a convenient height for work using horizontal surfaces above the ground, or to store things...
) is also put on clearance, but at more irregular times, making way for new fashion
Fashion
Fashion, a general term for a currently popular style or practice, especially in clothing, foot wear, or accessories. Fashion references to anything that is the current trend in look and dress up of a person...
s and fad
FAD
In biochemistry, flavin adenine dinucleotide is a redox cofactor involved in several important reactions in metabolism. FAD can exist in two different redox states, which it converts between by accepting or donating electrons. The molecule consists of a riboflavin moiety bound to the phosphate...
s.
Even 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
Grease pencil
The grease pencil, a wax writing tool also known as a wax pencil, china marker, , is made of hardened colored wax and is useful for marking on hard, glossy non-porous surfaces such as porcelain, glass, polished stone, plastic, ceramics and other glazed, lacquered or polished surfaces, as well as...
. 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
Month
A month is a unit of time, used with calendars, which was first used and invented in Mesopotamia, as a natural period related to the motion of the Moon; month and Moon are cognates. The traditional concept arose with the cycle of moon phases; such months are synodic months and last approximately...
or so. Some independent stores may use other similar systems, such as using more colors, and possibly marking down a color by 25% the week before it goes 50% off.
Clearance sales typically occur on clearance racks in brick-and-mortar stores. Stores typically place merchandise on a clearance rack and mark the price down until someone purchases the item. This clearance sale can be further enhanced by using banners and signs, both on the interior and exterior of the store. This process has been replicated on the internet. The defunct drop.com 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.