Big Lots celebrates National Bargain Hunting Week from August 12-18, 2024, with daily “Bargain of the Day” deals with discounts ranging from 20% to 75% on items such as furniture, pet supplies and personal care products. The event coincides with National Smile Week, a connection inspired by Debbie Keri-Brown, who created National Bargain Hunting Week to reflect the joy of finding bargains. Big Lots aims to attract savvy shoppers with new closeouts, overstock and liquidations.
We hope this action will have a positive impact on Big Lots’ branding and relevance and help restore consumer awareness of the company as a leading discount retailer.
But Big Lots is on the verge of bankruptcy. The retailer is struggling financially and had originally planned to close 35 to 40 stores this year amid fears it might file for bankruptcy. The company has now increased that number to as many as 315 stores across the country, according to a filing with regulators.
“While the majority of our businesses are profitable, we have made the difficult decision to close certain underperforming businesses,” a company spokesperson said, according to CBS News.
The retailer has been facing declining sales, a 10.2% decline in revenue between the first quarter of 2023 and the first quarter of 2024, and rising long-term debt. In the first quarter, the company reported a net loss of $205 million, which is not much better than the year before, when it lost $206.1 million.
In June, Big Lots also filed a statement with the SEC expressing doubts about its ability to continue operating, despite a recent partnership with Uber Eats. It was this statement that initially sparked the bankruptcy rumors.
It states: “Based on our current cash and liquidity projections, as well as the uncertainties surrounding the mitigating effect of management’s plans, the Company has concluded that it is more likely than not that it will not be able to satisfy the overavailability clause under the 2022 Credit Agreement and the Term Credit Facility within the next 12 months, which raises significant doubts about the Company’s ability to continue as a going concern.”
In another attempt to boost sales, the retailer in February acquired the entire inventory of Hearthsong, a well-known children’s toy brand, to bolster its reputation as a provider of extreme bargains. The acquisition brought more than 500 new products to market, including indoor and outdoor toys, games and craft items, all of which were 50 to 70 percent below the original retail price.
Despite recent strategies, Big Lots continues to face challenges in the retail market. However, bargain hunting itself seems to be quite popular.
A recent survey conducted by Big Lots in partnership with MarketVision Research highlights the psychological benefits of bargain hunting and how it “offers consumers even more than just saving money.” According to the survey, 85% of shoppers enjoy the thrill of discovering bargains, while 62% find the activity therapeutic. The survey also found that 69% of shoppers bargain hunt out of habit, with the most popular categories including apparel, pantry items, seasonal items, decor, furniture and electronics.
Another recent survey concluded that “not only do shoppers feel a measurable ‘high’ when they find a good deal, but they’re also becoming more adept at finding savings. 82% of Americans are searching for deals more often than ever before. It’s clear that bargain hunting has become something of a national pastime.”
In addition, bargain hunting has aftereffects, as the typical American experiences a feeling of euphoria after making a purchase that lasts exactly 216 minutes, according to the study of 2,000 American adults. “That’s three and a half hours of pure bargain happiness,” the study states.
But where do bargain hunters shop when sales at Big Lots are declining?
In December 2023, PYMNTS claimed that “Ollie’s Bargain Outlet stands out as the go-to place for discounts.” Financial reports from that time showed that the retailer had made significant improvements in almost all areas, with over 60% of its product categories posting positive gains. In a more recent earnings report in June, Ollie’s also reported positive results, such as a 10.8% increase in total net sales to $508.8 million and a 49.6% increase in net income to $46.3 million.
With more than 500 locations, Ollie’s enjoys a significant advantage in securing deals for a wide range of products and suppliers. According to PYMNTS, the robust deal pipeline underscores the critical role bargains play in Ollie’s business. In addition, the Ollie’s Army membership program continues to grow, and last December “recorded a nearly 5% year-over-year increase and accounted for over 80% of revenue in the quarter.”
Home Textiles Today also praised Ollie’s, stating that “visits to Chainsaws in 2023 were up 13.0% year-over-year, hitting a nerve with both value-conscious consumers and rural shoppers.” Ollie’s trade area also includes a higher proportion of working-class suburbs and baby boomer suburban areas compared to other discount and dollar store competitors. This “diverse target audience appears to set it apart from other discounters,” according to Placer.ai.
TJX Companies, a company that specializes in off-price department stores, also seems to be doing well with bargain hunters. “The brand’s treasure-hunting experience is becoming increasingly attractive to all income and age groups,” said CEO Ernie Herrman during a recent earnings call. “Our off-price business model is extremely flexible and resilient, and I believe we are poised for a long period of exciting growth in our regions around the world.”
And as RetailWire BrainTrust member Jeff Sward noted, TJX may have the safest business model in the retail market right now.
