Off-price is a retail model in which businesses sell branded items at low prices to generate customer loyalty or off-load excess stock.
As a retail model, off-price enables customers to get branded or designer items at a significant discount — typically 40-60% — of their full price. Businesses usually use this model because they have excess inventory that isn’t selling at full price. Off-season designer clothing, jewelry, or accessories, for example, are often moved into an off-price retail model.
Businesses might also shift to off-price when facing large-scale economic instability, abrupt changes in consumer trends, or overstocking. In many cases, brands will sell excess inventory to other off-price retailers, allowing both parties (and customers) to benefit.
The off-price retail model helps brands avoid warehousing payments, stocking fees, and lost sales due to obsolete inventory. To monitor inventory turnover and optimize their costs, many brands use inventory management systems, which not only track where items are in the supply chain, but also provide analytics on how quickly items are moving off of shelves.