The terms “closing down sale” and “clearance sale” may only be used in marketing if it applies in reality, i.e. if one of the following situations is true:
- the retail store is closing down
- the store is giving up a certain product group or product model, or closing down one of its outlets.
Clearance sales may also be based on special circumstances such as the risk of spoilage, renovation of the premises, fire or water damage. Clearance sales may only be used on the basis of these circumstances if the circumstances have a negative impact on the store’s ability to operate. In these cases, the reason for the clearance sale must be clearly indicated in marketing materials.
The same applies if a closing down sale refers to something other than the closure of the store as a whole.
The use of the expressions “closing down” and “clearance sale” in any other meaning or circumstance (e.g. a temporary sales event) is misleading.
Content of closing down and clearance sales
Unless the content of the closing down or clearance sale is limited or specified in marketing materials, then a significant proportion of the product selection must be discounted in a closing down or clearance sale.
• If the closing down or clearance sale is limited to a certain portion of the store’s product selection, then the products or product groups included in the sale must be specified in marketing.
• If a closing down or clearance sale does not apply to all the products in a store, then the discounted products must be clearly marked or separated from those that are not discounted.
- The purpose of a closing down or clearance sale is to sell out existing stock or a specific batch of products. Therefore, the stock included in the sale may not be topped up during the sale (or after the sale has been decided on).
- If a company has several outlets in the same region or in diverse regions, and it is closing down one of them, stocks may not be transferred into the closing down sale from outlets that are not closing down.
Size of discounts
In closing down and clearance sales, discounts are calculated on the price applied previously (immediately prior to the sale) on the same retail premises, on the same product. The same regulations apply to the discount rates as in ordinary discount sales.
Duration of closing down and clearance sales
Closing down and clearance sales may last a maximum of two months. An exception is the complete closure of a company or an outlet, in which case the sale may last up to six months.
Renovation sales and other expressions
Closing down and clearance sales may also be referred to by different names in marketing. Comparable expressions include “renovation sale”, “moving sale”, “fire sale”, etc. The regulations pertaining to closing down sales apply to all of these.
Marketing for clearance sales organised on the basis of seasonal fluctuations in demand (seasonal clearances) is subject to the same regulations as for ordinary discount sales.
If a business buys up stocks from a bankruptcy estate, the stocks become the property of the business in question. The sale of such stocks may not be designated as a closing down or clearance sale.