The Clearance Trap: Why Your 'Exit Strategy' is Bleeding Your Q1 Margin
Walk into almost any major retailer this week and you will see the same thing: a sea of red signs and desperate percentage discounts.
The post-Christmas clearance is a necessary evil to free up working capital and floor space for new season stock. However, the way many retailers approach this period is commercially damaging.
Far too often, the January clearance is a reactive panic. It is a desperate attempt to clear mistakes made in Q4, characterized by slashing prices aggressively to move volume, regardless of the impact on brand equity or Q1 gross margin. This is not a strategy; it is a fire sale.
A true commercial "exit strategy" is not decided in a panic on December 27th. It should be planned at the time of purchase.
Best-in-class retailers understand the price elasticity of their products throughout their lifecycle. They know exactly when the first markdown should occur, to what depth, and on which specific SKUs, to maximize cash recovery without destroying the brand's value proposition.
If your teams are relying on blanket "30% off everything" tactics just to clear the decks, they are leaving significant margin on the table. Effective clearance requires skill in lifecycle pricing and data analysis, not just a willingness to cut prices.
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Posted by Martin Dugan
14th January 2026
