A clearance sticker looks like a reaction to slow sales. In most large retailers it is the output of a markdown plan written before the product reached the shop floor.
Why the plan exists at all
Retail buying commits money months ahead. Stock is paid for long before it sells, so every week it sits unsold is capital tied up in a warehouse or on a rail.
Space costs as much as capital. A rail holding last season's goods cannot hold the incoming range, and the incoming range is what carries full margin.
A markdown plan resolves both pressures on a fixed timetable, so decisions do not wait for a manager to notice that something is not moving.
How the steps are set
The first reduction is usually modest and lands at a predictable point in the selling season. It is designed to lift sales without giving away more margin than necessary.
If the sell-through rate does not recover, a second and deeper cut follows. Each step is larger than the last because the remaining stock is harder to shift.
The final step is set at or below cost. At that point the retailer is recovering cash rather than margin, and clearing the space matters more than the price.
What the percentage on the sign conceals
Reductions are calculated from the original ticket, not from the previous reduction. An item cut twice does not show the two figures added together.
Successive cuts compound instead. A large-sounding second reduction applied to an already reduced price produces a smaller absolute saving than the number suggests.
The useful comparison is the cash price against what the item is worth to you, since the reference figure is fixed and increasingly historical.
Why sizes disappear in a particular order
The middle of the size curve sells first at every price point, so by the time deep cuts arrive the rail is weighted towards the extremes.
This is why late clearance looks picked over even when the discount is largest. The stock left is the stock that was hardest to sell at every earlier step.
Waiting for the deepest cut therefore trades price against availability, and the trade is steepest in categories where fit matters most.
The endpoint most shoppers never see
Stock that survives the final markdown does not simply sit there. It is consolidated into fewer stores, sold to a jobber in bulk, or routed to an outlet site.
Jobbers buy by the pallet at a fraction of cost and resell through discount chains and market stalls, which is how branded goods surface in unexpected shops.
The chain ends where storage costs more than the goods recover. Everything in the markdown plan is an attempt to reach a buyer before that point arrives.