The furniture industry is at a crossroads. As home sales decline, furniture sales are facing a proportionate downward trend, with unsold stock clogging warehouses at record rates. Now, retailers must confront a problem that was once easy to ignore: their clearance inventory.

Offloading clearance is essential to maintaining a healthy business — but many retailers don’t have the resources to do this at scale. With most of their energy reasonably directed at moving their full-price inventory, many either ignore clearance entirely or resort to stopgap sales measures, compounding the problem.

But it doesn’t have to be this way. Let’s look at the outsized impact the clearance problem has on the furniture industry. Then, we’ll break down the four best strategies retailers can use to manage their existing inventory more efficiently and even prevent future pile-ups.

Why clearance can’t sit on the back burner 

For many furniture retailers, clearance begins as an “out of sight, out of mind” problem. Since it’s hard to justify investing much in moving low-margin stock, it’s not uncommon for retailers to let overstock furniture accumulate for as much as five years. While this tactic may work for a little while, the clearance problem ultimately becomes too big to ignore.

The moment of truth for most retailers? They run out of space to carry all of their inventory. And by exceeding their inventory targets, they usher in all kinds of downstream effects. Not only does it force retailers to come up with ad-hoc solutions — like trailer storage — to house the spillage, but it increases holding costs. Dead stock is, after all, just as expensive to keep on hand as its higher-margin counterpart.

High holding costs, in turn, undermine open-to-buy budgets. If retailers are tying up their working capital in carrying excess inventory, they won’t be able to purchase the newest seasonal offerings from their vendors.

As clearance inventory continues to cause problems downstream, most retailers will hit a breaking point — and many already have. In 2024, industry leaders like Williams-Sonoma, Wayfair, and Lowe’s all reported revenue drops, with May marking a 6.8% year-over-year decline in furniture sales.

So, in hopes of reinvigorating their top line and preserving profit margins, furniture retailers are now turning to their clearance sales with renewed attention.

How conventional clearance sales perpetuate the cycle of too much dead stock 

In theory, clearance sales drive short-term revenue, free up cash, and improve your inventory management. So when retailers do get around to investing in offloading their clearance furniture, they assume their efforts will pay off. 

In pursuit of this payoff, most retailers approach the process in one of two ways: They showcase and sell their furniture from a regular showroom, or they invest in a dedicated clearance outlet. 

However, both measures can be time-intensive — and expensive — to implement. With all their inefficiencies, these makeshift solutions only jeopardize full-price sales, eat further into net profits, and ultimately extend the cycle of having too much dead stock. In other words, by only focusing on the solution, retailers bypass the factors that create and perpetuate the clearance problem to begin with.

Fortunately, you can still fast-track your way to clearance success by overcoming the trifecta of hurdles below. Here are some of the biggest short- and long-term problems traditional clearance sales cause:

Higher operating expenses

While holding excess inventory is always expensive, offloading it can drive operational costs even higher. For instance, if you display your inventory in a regular storefront but it doesn’t sell, you could end up paying more to shuttle it across multiple locations before settling on what to do next. And should an item need repairs — costs go up again.

Outlets, meanwhile, are a great way to centralize clearance operations — but can be an even bigger investment. You are not just taking on an additional rent payment, but the costs needed to outfit, maintain, and staff the new store.

Non-strategic pricing

To make matters more complicated, determining clearance prices that offset these overhead costs can be tricky. Retailers must walk a tightrope to balance their target margins with consumers’ perceptions of clearance as low-value stock. However, without reliable insights into exactly how much customers are willing to pay, it’s easy to over- or under-discount. 

Meanwhile, the high costs of holding and showcasing all this excess inventory further stifle your cash flow and, in turn, your ability to acquire new stock that you can sell at higher margins. 

Inefficient allocation of people and resources

Traditional clearance sales aren’t just expensive; they also lock up your best people and resources in the low-ROI work of moving your least valuable inventory. Marketing, transporting, and showcasing clearance is a task that touches multiple teams — including your merchandisers, your salespeople, and, naturally, your supply chain. When they already have plenty of high-margin stock to offload, this simply isn’t the best use of their time.

Clearance furniture is likewise a misallocation of your showroom space. If you go the route of displaying it in your regular storefront, you steal prime real estate from full-price inventory and reduce your revenue per square foot. And, let’s face it: You probably don’t want that cumbersome clearance couch crowding out your highest-demand stock.

Threats to brand equity

On top of leaking revenue, selling inventory at reduced prices risks jeopardizing your long-term brand perception. In the event consumers grow accustomed to discounts, they may ascribe less value to your brand and start only purchasing products on clearance.

But this risk has implications beyond your brand image and even your margins — it also feeds the problem that produced too much dead stock in the first place. If customers aren’t purchasing your full-price furniture, that inventory will eventually become clearance, and the issue will continue to spiral.

4 best practices to solve the clearance problem for good

The good news is that retailers no longer have to settle for a band-aid clearance solution. With these four key strategies, yesterday’s clearance problem can become tomorrow’s clearance opportunity. 

1. Double down on demand planning to keep up with market trends

Fine-tuning your demand planning strategy will gradually reduce the need to rely on clearance sales. By accurately predicting consumers’ appetites for certain products, you’ll move more inventory faster, reduce return rates, and nurture more loyal customers.

Yet, getting demand planning down to a science is easier said than done. That’s why the savviest furniture retailers use designated tools to optimize the process.

To tackle the unique demand planning challenges of the furniture industry, turn to an inventory planning software (such as Shopify’s native feature). Or, if you’re looking for a full-service clearance solution, you can even outsource your demand planning to SaySo. Its clearance optimization platform collects and analyzes your customer data to give you real-time insights into which products are in the highest demand. 

2. Showcase your inventory at lower OpEx costs with a digital Dutch auction model 

The Dutch auction format can be a surprisingly potent way to coax customers to clearance. It uses an unconventional descending price model in which each product is listed at a high price that incrementally decreases until the highest bid wins. Unlike the one-way nature of traditional brick-and-mortar shopping, this gamified experience engages customers with the promise of negotiation. But that doesn’t mean Dutch auctions force you to sacrifice your target margins — their competitive nature builds a sense of urgency, prompting customers to pounce at higher price points.

Even better, transferring operations online eliminates the costs of physically showcasing your furniture and creates new entry points for younger, digitally native shoppers. With everything conveniently displayed online, you can store your inventory in distribution centers until it sells.

Building out your own virtual Dutch auction can seem daunting, but platforms like SaySo ease the lift. SaySo partners with furniture retailers to build a co-branded and gamified storefront for their clearance inventory. Plus, there’s no need to worry about individually uploading every unique clearance SKU to your new storefront: SaySo integrates with your product catalog in a matter of clicks.

3. Optimize your pricing strategy with willingness-to-pay analytics

Setting clearance prices that entice customers while preserving your profit margins can feel like a never-ending game of give and take — but analytics can help. The right price optimization solution will provide granular, real-time visibility into customers' shopping habits and pricing sensitivities. That way, you avoid needlessly steep discounts that leak revenue and overly high prices that keep inventory idling.

The utility of willingness-to-pay data also extends beyond clearance, with many retailers using it to supercharge entire pricing strategies and attract more customers to full-price inventory. This will also increase overall sell-through rates and mitigate the need to rely so much on clearance sales.

And with comprehensive pricing optimization software like SaySo, you can access all of these benefits in a single platform. SaySo’s markdown pricing and optimization engine gathers real-time willingness-to-pay data from every live auction for full visibility on pricing dynamics by product category, condition, and region of sale. 

4. Put your clearance operations on autopilot with an end-to-end solution

When you’ve got higher-margin inventory to move, you don’t want to lose any time allocating your in-house resources to a 360-degree clearance sales strategy. But, by partnering with a reliable third-party solution, you can quickly and profitably offload your excess inventory with minimal pull on your team.

SaySo makes that happen — combining a sleek, co-branded storefront with a user-friendly pricing optimization engine — to free up your people for your most profitable initiatives. 

Take it from leading retailer Ashley Canada. With SaySo’s co-branded storefront (dubbed Ashley x Descend), they slashed transportation expenses by 20% and saw a 6x ROAS boost. Plus, Ashley Canada even has evidence that their brand equity remains robust. How do they know? Ashley x Descend shoppers are proven to navigate to the main site and purchase at full price.

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SaySo turns your dead stock into a new revenue stream

See what SaySo can do for your clearance inventory by booking a demo today.

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