What do tulip bulbs and toys have in common? They can both be promoted using a sales technique called a Dutch auction – named after a technique used to sell flowers in Holland.  Instead of starting low and bidding the price up, the price starts high and descends until someone accepts it. Here is an exampled given by Investopedia: “The auctioneer starts at $2,000 for an object. The bidders watch the price decline until it reaches a price that one of the bidders accepts.”

Henry Bear’s Park, a toy store in Massachusetts and Rhode Island with 8 fun locations, uses this technique as a creative way to clearance merchandise. They started this summer’s sale at 40% off from July 8 to 21, then went to 60% off July 22-July 28.  Procrastinators – and those willing to risk that their favorite items might be sold out – were rewarded with an 80% off discount from July 29 to August 7. All leftover items, according to their email blast, will be donated to local schools and charities.

This type of promotion is of course not actually an auction – but the Dutch auction name makes the sale more interesting.  Starting with a lower discount amount and increasing it over time makes good sense to maximize income when selling clearance goods in your store. We do this after Christmas, starting at 40% off (instead of 50%) and then progressing to 70% off to get rid of the very 88last items.

I also suggest using this technique if you are closing your shop. Starting at 20% off storewide and then gradually to a higher discount one week at a time is likely to net you more than you paid for the inventory you are liquidating.

Thank you to Henry Bear’s Park for sharing the Dutch auction idea with the readers of this blog – and for a fine customer experience whenever we visit our Boston-based granddaughters.

Happy retailing, 

Carol “Orange” Schroeder