Placer.ai: Big Lots closures indicate chain will focus on lower-income markets
Big Lots’ rightsizing effort that’s leading it to shutter about 300 of its nearly 1,400 stores indicates that the value merchandise chain intends to focus more closely on lower-income markets.
An analysis of closing locations performed by the foot traffic analytics provider Placer.ai revealed that U.S. markets where Big Lots closures were underway tallied median household incomes of $73,500. The income average in markets where the Westerville, Ohio-based chain was keeping its stores open was $65,500. (The locations of the 300 stores earmarked for closing were announced before Big Lots filed for bankruptcy as part of a deal to sell “substantially all” of its stores and business operations to Nexus Capital Management.)
In Arizona, the closed-to-open store customer income ratio was $70,400 to $66,100. In Florida, it was $64,800 to $61,300.
Big Lots announced a revitalization strategy behind its closures that promises a focus on value and more extreme bargains for consumers — something that could produce better results in spaces with lower rents.
“The decision to shutter stores in more affluent areas may reflect a move by Big Lots to lean into its core audience of price-conscious shoppers — though higher-income customers can still benefit from the chain’s value offerings,” said Placer.ai analyst Lila Margalit.
Plenty of them have already benefited from those low prices at closeout sales at stores in their markets. Chainwide, monthly Big Lots visits increased by 1.9% in July. At stores about to go dark, traffic increased ten times as much, to 19%.
Which chains can expect to reap the benefits of Big Lots’ desertion of higher income markets?
A Placer.ai analysis of cross-shopping revealed that the vast majority of Big Lots visitors frequent superstores — especially Walmart. In this year’s second quarter, more than 90% of them shopped there.
Slightly more than half of Target shoppers are also Big Lots shoppers. Only one-fifth of Costco customers shop Big Lots.
Focus in on California, however — where Big Lots plans to close a majority of its 109 locations — and one finds things looking up for Costco.
Placer.ai did a traffic comparison of those three chains in the Golden State between April and June this year and found all of them chock full of Big Lots customers. Both Walmart and Target welcomed more than 70% of Big Lots customers in the state, while Costco hung close to their coattails with more than 60%.
But with Big Lots gone, Costco has a chance to draw an even greater portion its customers to its stores. Like Big Lots, Costco draws a high share of visits during mornings and afternoons.
“As Big Lots’ California footprint contracts, some of these mid-day shoppers may hop over to Costco, which is also bustling during these hours,” Margalit observed.
