Why do items in stores go on sale?

Why do items in stores go on sale?

Is the store trying to get rid of excess stock? Or is it a marketing ploy to get customers in the door? The answer, it turns out, is a bit of both. We explore the different reasons why items go on sale, and how to explain this to your kids.

What are the benefits of items going on sale in stores?

Sales benefit storeowners and customers alike. For storeowners, sales are a way to move surplus stock, tempt customers to buy and boost their profits.  

 

Sales give customers a chance to stock up on items they need. ( ‘2 for 1’ or ‘3 for 2’ offers are great for this.) A sale can also provide them with an opportunity to purchase something they’ve been saving for sooner. Large items like furniture appliances or expensive tech products are often discounted on Black Friday, for example. 

Common reasons why items in stores go on sale

Stores put items on sale for various reasons. Here are a few of the most common ones:

To get you to try new products

Ever noticed how stores tend to put new products on sale when they first come out? That's because they want to tempt customers to try them. 

 

Shoppers tend to be creatures of habit and stick with products they know. Shelling out for a product they’ve never heard of is risky. What if they don’t like it? It could be a waste of money or mean they’ve got to go to the trouble of returning it.

 

By offering a discount, stores hope customers will be more likely to give new products a chance. 

To get rid of excess stock

Sales are a way for stores to get rid of surplus stock and free up valuable storage space. They can end up with too much stock for all kinds of reasons:

  • They over-ordered
  • A seasonal item didn’t sell as well as expected
  • A product was discontinued. 

Whatever the reason, if stores need to get rid of unsold goods, they’ll try and shift them quickly by putting them on sale. 

They are out of season

This happens a lot with clothing, but it also applies to seasonal items like holiday decorations or patio furniture. When something is going out of season, stores will put it on sale to make room for new products. That’s why you see winter coats marked down at the beginning of summer and swimsuits on sale at the end. 

A newer version of the product has been released

This is most common with electronics but can affect other products too. When a store has the old version of something out on the shelves, they'll put it on sale to try and shift it before the new version arrives. 

When the newer version comes out, the old one will be harder to sell. It’ll seem outdated, making it less attractive to customers.

The item has an expiry which is approaching

You see this a lot with food and other perishables like beauty or skincare products. When an item is close to its expiry date, stores will mark it down to sell it before it goes bad. Because who’s going to want to buy moldy bread or clumpy cosmetics?

The item isn’t selling

A sale can help shift products that might otherwise sit on shelves for a long time. If an item isn’t selling well stores will often discount it. Lowering the price to clear the shelves makes sense. It creates space for new and different products that may sell faster.

So the business can raise money quickly

If a store is struggling financially you’ll often see items on sale. It’s a way to raise money fast, help pay bills and keep the business going. Or clear out old stock before a store closes its doors for good. 

 

But sales aren’t necessarily a sign things are going wrong. They can also raise money for a new venture or help pay for expansion. 

What do stores do if items on sale don’t sell?

Of course, most stores would love it if every single item on sale sold quickly. Unfortunately, that's not always the case. So, what do stores do with all the leftover merchandise? 

Every store will have its own way of dealing with unsold sale items, but here are a few options:

  • Offer even bigger discounts to try and move the product faster.
  • Donate the items to charity.
  • Return the unsold stock to the manufacturer or supplier.
  • Sell the goods to a liquidator who will then resell them to other businesses or individuals at a discounted price.

How to explain items going on sale in stores to a child

When you’re explaining to kids why stores have sales, use scenarios they’re more likely to come across. You could say things like:

  • “Those decorations and gift wrap are on sale because the holiday season’s over. We’ve already taken down our lights and tree decorations haven’t we? The storeowner’s hoping people will buy these for next year if they’re marked down. Otherwise, they’ll have to store them till the holidays come around again.”
  • “Nobody buys winter coats when the weather’s warm. So as it’s nearly summer, stores put them on sale to get rid of them. They want to make space to sell T-shirts and swimsuits instead.”
  • “It’s like when you have a lemonade stand and it’s getting toward the end of the day. If people weren’t so thirsty and you have lots of lemonade left, you might want to sell it cheaper. It’s better to get rid of it so it doesn’t go to waste, right?”

Using simple language and real-world examples children can relate to will help them understand why items go on sale in stores.

 

For help answering questions about financial topics and ways to develop your child’s financial knowledge try our in-app Money Missions. These fun games, quizzes, and interactive, bite-sized lessons are targeted to your child’s age and knowledge level. They’ll help teach your kids the value of money, budgeting, saving, and more. 

 

 

 

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Written by Charlotte Peacock Published Dec 12, 2022 ● 5 min. read