What is Big Lots in 2024? The Closeout Retailer Explained
With over 1,400 locations across 47 states, Big Lots is a leading discount store focused on helping customers "find big savings on great stuff." But what exactly is behind this closeout retailer? What products does Big Lots carry and how does it offer such steep discounts?
In this comprehensive guide, we‘ll explain everything you need to know before shopping at Big Lots in 2024.
Overview of Big Lots‘ Business Model
Founded in 1967 as Consolidated Stores, Big Lots has grown predominantly through acquisitions of regional closeout chains. After gaining scale, the company rebranded all locations under the Big Lots name in 2000 to drive national brand recognition.
As a discount retailer, Big Lots differentiates itself in two key ways:
It specializes exclusively in closeout merchandise and overstocks. This allows Big Lots to source products below wholesale prices and sell at everyday low prices.
The product assortment is ever-changing. Big Lots buys opportunistically based on manufacturer deals, which creates a “treasure hunt” experience for customers.
This model has allowed the company to drive strong growth for over five decades. In fiscal year 2021, Big Lots generated $6.15 billion in total sales and $427 million in operating profit.
Merchandise Sourcing and Category Breakdown
The flexibility of the closeout model is the core advantage of Big Lots’ buying strategy. With no fixed assortment, the company can respond rapidly to purchase manufacturer overstocks across over 100 merchandise categories.
However, the top categories represent the majority of Big Lots’ sales:
- Furniture (25%): Mattresses, upholstered furniture, dining & kitchen furniture
- Food (25%): Packaged foods, refrigerated & frozen items, candy/snacks
- Seasonal Products (15%): Garden supplies, holiday décor, summer furniture
- Soft Home (10%): Towels, storage items, small kitchen appliances
In total, each Big Lots store carries approximiately 50,000 to 55,000 SKUs at any given time to offer a “treasure hunt” shopping experience. Approximately 65% of products are brand name items from leading manufacturers.
To source these closeout deals, Big Lots has a merchandising team of over 100 buyers constantly negotiating with thousands of vendors. This scale and specialization in the closeout space gives Big Lots procurement advantages.
How Big Lots Offers Steep Discounts
As a discount retailer, Big Lots targets at least a 20% price discount relative to traditional mass retailers on comparable merchandise. Certain closeout items are marked down even more significantly.
For example, here is a sampling of recent deals that showcase Big Lots’ price positioning:
| Product | Big Lots Price | Walmart Price | Target Price |
|---|---|---|---|
| Farberware 15-pc Kitchen Tool Set | $19.99 | $39.97 | $31.49 |
| Intex Inflatable Comfort Airbed Queen | $29.99 | $39.97 | $50.00 |
| Rocker Swivel Barstool Set (2 pk) | $199.00 | $264.00 | $289.99 |
As this sample indicates, Big Lots delivers significant savings even compared to leading discount chains. This allows shoppers to find unbelievable deals on home goods, furniture, and more.
Recent Performance and Store Growth
Despite inflationary pressures causing consumers to pull back on discretionary purchases, Big Lots delivered steady results in 2022:
- Total sales for the first nine months reached $4.21 billion, up 2.7% vs the same period last year
- Comparable store sales increased 3.1%, indicating modest growth in average basket size
- Operating profit did decline 30% from 2021 peaks to $153 million due to margin pressure
In terms of network expansion, Big Lots typically closes around 3% of stores each year while opening new locations focused on suburban markets. In 2022, this led to 43 net new stores bringing the total to 1,422 locations nationwide.
As economic conditions potentially worsen, the closeout model positions Big Lots favorably to deal hunt for merchandising opportunities and value-focused consumers.
Big Lots vs Other Discount Retailers
The closeout merchandise mix allows Big Lots to maintain lower average prices than dollar stores and mass discounters. Based on internal pricing studies, Big Lots prices are on average 20-40% less than discount chains for comparable items.
However, dollar stores like Dollar Tree and Dollar General compete for similar consumers by offering primarily fixed-price assortments. This delivers certainty and convenience that “treasure hunt” retailers like Big Lots cannot match.
Among mass discounters, retailers like Walmart and Target leverage their scale, omni-channel capabilities, and brand affinities. However, Big Lots curates deals these giants simply cannot match.
As demands accelerate for value offerings, Big Lots is distinctly positioned to capitalize. The differentiated assortment, catalytic closeout model, and price competitiveness relative to other discounters make Big Lots a retailer to watch closely in 2024.
