Do Clearance Sales Really Work?

retail trends, Q1 strategies, customer engagement, personalization, inventory management, retail mindset, small business, retail marketing, consumer behavior, retail technology

If January feels heavy for you right now, slower sales, quieter stores, racks full of product that just didn’t move, and the question of whether clearance sales are the right next step, let me start by saying this:

You are not doing anything wrong.

I hear from so many store owners every January who feel discouraged, worried, or even a little ashamed that sales dipped after December. But here’s the truth I want you to hear clearly:

January isn’t the problem.

Your inventory strategy — including how and when you use clearance sales — is simply being exposed.

December artificially inflates traffic and sales. It hides inventory decisions that didn’t quite land. And when January arrives, what’s left behind tells the real story. That’s not failure, that’s feedback.

Why the January Slump Happens

What most people call the “January slump” is really trapped cash sitting on your shelves.

When your money is frozen in inventory that didn’t sell in Q4, you lose buying power. You lose energy. You lose momentum. And suddenly, it feels impossible to bring in fresh spring products even though that’s exactly what your customers are ready for.

The fastest way to counter this isn’t more marketing, longer hours, or hoping things improve.

The fastest way to counter this slump is to free up cash and create buying energy.

Let’s Talk About Clearance (Without the Fear)

So many retailers tell me they’re afraid to run a clearance sale because they don’t want to devalue their brand.

And I want to say this clearly:

  • You don’t devalue your brand by doing a clearance sale.
  • You devalue your brand when you do it without a strategy.

Random discounts. Endless sales. No clear messaging. That’s what erodes trust.

A strategic clearance sales, on the other hand, protects your brand. It tells your customers: We’re making room for what you love. This is intentional. This is rare.

The goal is not to sell everything at a discount. The goal is to extract the trapped cash from inventory that is no longer serving your business.

Listen to the Full Episode here:

Old Inventory Is the Real Problem

I like to say this bluntly because it matters:

  • Old inventory is the devil.
  • A strategic clearance sale is the angel.

Inventory that sits on your floor for months has a 0% return on investment. Zero. Those dollars aren’t working for you, they’re leaking profit quietly every single day.

That’s exactly why strategic clearance sales matter.

When that same cash is reinvested into high-margin, fast-turn products, those dollars multiply.

That’s why clearance sales are actually profitable strategies not because of the markdown, but because of what the recovered cash allows you to buy next.

Profit Isn’t Lost When You Mark Things Down

This might be the biggest mindset shift of all:

  • Profit is not lost when you mark something down.
  • Profit is lost when you let a product sit there for six months doing nothing.

I’ve watched retailers protect inventory instead of protecting cash and it costs them momentum, confidence, and sleep. And yes, we care deeply about profit. Our tagline is more profit and better sleep for a reason.

Profit comes from how quickly you replace the wrong inventory with the right inventory.

Inventory Turns Matter More Than Ratios

People love to obsess over inventory ratios, but the most important number isn’t how much inventory you have, it’s how fast it’s moving.

Fast turns mean newness. Newness means energy. Energy drives sales.

When inventory slows down, January gets harder. So does July. And every slow month feels heavier than it needs to be.

A strategic clearance sale is the fastest way to improve your turns and your outlook.

Watch the Full Episode in YouTube:

Your Millie Moment:

  • Review current inventory and identify products that are no longer serving the business
  • Create a clear and intentional clearance strategy with a defined timeline
  • Focus on extracting trapped cash to fund future profits

Resources and Links:

Join the community with ambitious store owners in our Richer Retailer Facebook Group

💚 Remember: January is not a verdict on your ability as a retailer. It’s simply a moment asking you to choose momentum. When you release what’s no longer working, you make room for what’s next. Strategy creates confidence. Action creates momentum. And you are more than capable of both.