A flagging home goods sector, muddled brand identity and competition from online retailers and mass-discounters set the stage for Big Lots’ decision to liquidate its remaining stores, analysts said Friday.
Big Lots and Nexus did not respond to a request for comment.
Advertisement “There really became nothing about a Big Lots that you couldn’t get elsewhere,” said Bill Read, executive vice president of Retail Specialists.
Big Lots may have been affected by the bankruptcy of Badcock Home Furniture and its parent company Conn’s HomePlus, which flooded the market with cheap inventory, Read said.
Earlier this year, Big Lots announced its intention to close more than 400 stores.
A flagging home goods sector, muddled brand identity and competition from online retailers and mass-discounters set the stage for Big Lots’ decision to liquidate its remaining stores, analysts said Friday.
A previously announced asset sale to an affiliate of the private equity firm Nexus Capital Management is no longer anticipated to be completed, according to Big Lots, which declared bankruptcy in September.
The Ohio retailer stated that it is proceeding with going-out-of-business sales at its approximately 900 U.S. locations, but it has not ruled out a sale to Nexus or another party by early January. S. . stores.
A request for comment from Nexus and Big Lots was not answered.
This development coincides with Big Lots and other discount stores experiencing financial difficulties this year, while other brands have prospered from consumers tightening their budgets due to economic pressures.
A December report from Coresight Research predicts that by the end of 2024, over 7,300 retail locations nationwide will have closed, up from roughly 5,500 in 2023. Compared to 25 last year, 48 retailers, including Express and Joann, have declared bankruptcy.
As Amazon, Walmart, and other companies that can leverage advanced logistics and supply-chain operations undercut Big Lots on price, analysts said it has become more difficult to maintain Big Lots’ reputation as a bargain-goods retailer.
In addition to having lower prices, online retailers and big-box stores typically provide more options and simpler shopping experiences. For instance, Joe Foudy, a professor at the business school at New York University, stated that customers can browse and buy at home or complete all of their purchases at a single location, like Target or Walmart.
The executive vice president of Retail Specialists, Bill Read, stated that there was nothing unique about a Big Lots that could be found elsewhere.
Some retailers, such as Shein and Temu online or Ollie’s Bargain Outlet, appeared to gain from promoting a bargain-hunting experience that appeals to the “animalistic spirits within the American consumer,” according to Brandon Svec, director of U. A. retail analytics for the CoStar Group, an information and analytics firm focused on real estate. He said Big Lots didn’t. According to Deborah Weinswig, CEO of Coresight, customers may have found its design and bazaar atmosphere annoying.
A lot of Big Lots’ products are related to furniture and home décor, whose sales have stagnated along with a generally calm housing market for the majority of 2024. Home goods retailers have been especially hard hit this year. Customers who “gorged themselves” on futons, throw pillows, and other similar purchases during the pandemic have also made the merchandise a low priority, according to Svec.
In recent years, similar pressures have been placed on other home-goods stores. In 2023, Bed Bath and Beyond liquidated hundreds of its expansive stores following years of decline and a Chapter 11 reorganization. After acquiring its intellectual property, the online retailer Overstock partnered with Kirkland’s, a home décor retailer, to open a small-format store this past October.
The bankruptcy of Conn’s HomePlus and Badcock Home Furniture may have had an impact on Big Lots by flooding the market with low-cost inventory, according to Read.
He claimed that this eliminated a previously lucrative category for them.
Additionally, Big Lots customers are generally less well-off than Burlington or T customers. The J. Svec claimed that when money is tight, people are less likely to buy home décor or other non-essential items.
The initial announcement that Nexus would buy some Big Lots assets caught Svec off guard because of the company’s years of poor financial results.
He stated, “The only thing that could have saved Big Lots would have been some outside rescue capital — someone recognizing the value in the assets, the business, and the brand.”. In addition to having few assets, “the brand wasn’t well-defined or even well-considered among the consumer base.”.
He stated that it appeared extremely unlikely that they would be able to secure a new or fresh source of funding.
Big Lots declared earlier this year that it would close over 400 stores. Placer Dot AI, a location analytics company, examined stores closing over the summer and found that many of the locations targeted for closure were in areas that serve higher-income customers. According to the analysis, those locations experienced a 19% month-over-month increase in visits in July, compared to the chain’s overall 2 percent increase, as a result of customers taking advantage of closeout deals.
