What is a Fire Sale?

A fire sale is a sale in which goods are sold at extremely low prices, typically well below retail value and sometimes even below the wholesale price. As a general rule, the goal of a fire sale is to get as much merchandise as possible out the door, with the store owner being sometimes willing to take a small loss in order to do so. Fire sales are sometimes billed as “closeout” or “blowout” sales, reinforcing the idea that goods are on sale at very low prices, and that consumers need to act fast if they want to get in on the action.

This term is a reference to sales held by stores after literal fires. Historically, when a store's merchandise was damaged by fire, the choice was to sell it or throw it out. Sometimes goods would be perfectly usable, if a bit smoky, and it would be better to make some cash than to discard everything. Until the merchandise was cleared out, the business would not be able to make repairs and restock, so it had an incentive to sell everything as quickly as possible.

Fire sales can also be held after other disasters, such as floods, building collapses, and so forth. While not all of the goods will be salable, minimally damaged goods can often be picked up at low cost at a fire sale. This is especially true in cases where consumers are willing to repair small damage or live with items which smell a little smoky for a few months. Often, stores are already getting the full replacement value from the insurance company, so the fire sale just gives the business a little bit of extra capital.

People also use this term when businesses sell off their products during bankruptcy proceedings. Businesses filing for bankruptcy hold fire sales to reduce the amount of their assets, and to come up with ready cash to handle the bankruptcy. Some unscrupulous business owners may also use a fire sale to convert assets into cash which can be moved or hidden, allowing them to pocket some funds to help them recover from the bankruptcy.

A fire sale can be a great way to get really good deals, especially for people who are willing to bargain and haggle a bit to decrease prices even more. Fire sales are often listed in the newspaper or advertised in the media, as the business wants to get as much exposure as possible. Attending the fire sale in the later days tends to yield better deals, although the selection will be more limited.