For as long as anyone can remember, Big Lots Survey has been a household name for those looking for bargains. From cheap couches to food items, the company has secured its place in the retail sector. Despite that, in the past few elections, the firm has reported increasing losses which in turn made it shut down more than 300 of its locations. With all that being said, why are Big Lots closing their shops?
By the end of this article, we will outline some of the few explanations regarding the issues, consumer reality, and the issues to the employees and customers. So let’s start with a broad overview and see what is really happening.
Big Lots Declines Financially
The Rise and Fall of Big Lots
For quite some time, Big Lots was able to enjoy the reputation of being a successful discount chain. However, it seems that their glory days are behind them as the company is currently facing dire financial trouble. Some of the reasons that caused this situation are the following:
Some people wonder why are Big Lots closing. For them, citing huge losses could easily address such queries. Recently, the company’s management filed for a chapter 11 bankruptcy which signifies that it is under financial distress and needs restructuring.
The company suffered greatly from growing inflationary rates and increasing interest rates precisely because the discretionary spending of individuals on non-essential goods sold by them reduced tremendously.
there are severe debts and poor sales, which make operational survival difficult. Big Lots has been in a dire strait that compelled it to close many stores because of the debts, that it could not service anymore, and to also cut on operational expenses and in turn the overheads while still trying to look for a viable business strategy.
Store Closures
How Many Stores Are Closing?
Although Big Lots is not redeploying all its stores, the number that will be considerable. The number of closures that have been proposed are around 300 which would leave the remaining locations with a 21% drop in its store count, here’s the pie cut, Lowry.
- Current Number of Big Lots Stores: 1389 all locating in the US
- Stores Closing: 300+
- Remaining Locations: Approximately 1000
This downsize in store count is common across the United States, while some regions are more affected than others. Let’s take a look at some of the areas affected:
Regions that Will be Crippled by Store Closures
- California: Among the list are several Los Angeles and San Francisco stores operated by Big Lots
- Texas: Some stores in essential counties such as Dallas and Houston are also likely to be shut down.
- Florida: Consumers in the areas of Miami and Orlando are also expected to lose their stores close by.
Acquisition by Nexus Capital Management
How does it feel to be taken by surprise? Big Lots has had to taste what an unexpected turn taste like because Nexus Capital Management, a well-known private equity firm, has made a serious business acquisition and bought this company. What future does this lead to Why are big lots closing?
The Acquisition Deal
Now it will be easier for Big Lots to have a growth due to the acquisition deal in which Nexus Capital Management in conjunction with a new management team will focus on restructuring Big Lots.
Please Talk About Future for Big Lots
It is still in its early stage when talking about the acquisition being finalized the way it intends to be. So far, here are a few that may arise:
- Debt restructuring – This is expected if Nexus Capital decides to buy out Big Lots since this will be in their best interests.
- Store Closures The company could begin, in stages, to close stores which are no longer bringing any value however this time around the moves will be made in a firming way.
- New Focus: Perhaps Big Lots will be more selective with its pool of customers and their offers in their new business concept.
Big Lots is a relatively restructured company hoping to achieve better under fresh management and what looks like a very promising start. It is yet to be seen what will be however such a scenario seems very much possible. This is after making the purchase under the acquisition at a bid captured perk.
Overall Outlook on Discount Retailers
It is not just Big Lots that is struggling to penetrate the retail market. Other similar stores such as Big Lots are facing similar issues. Let us analyze the wider developments:
Struggling Discount Retailers
- Dollar General: This company is popular in every U.S state yet, it has been struggling with increasing debt levels and reduced consumer spending on sales
- 99 Cents Only Stores: The same issues that affect Big Lots, primarily those related to making profits and executing the market’s expectations in terms of growth affects this chain too.
The Bigger Retail Picture
Many players include Big Lots and Dollar General for the sake of competition in the market and are going through the same issues which makes the outlook for discount retail different:
- Consumer Behavior: The present economy dominated by inflation and higher interest results in the doors closed for many consumers as they have grown selective in what they want to buy.
- Competition: The increasing online shopping trends, and the variety of customer-friendly online stores have transformed physical discount stores to harder competitors.
- Operating Costs: The labor force and supply chain costs increasing by each day makes it even harder to retain low price for customers.
Discount retailers like Big Lots, Dollar General, and 99 Cents Only Stores are all facing similar struggles, including rising debt, reduced consumer spending, increased competition from online shopping, and higher operating costs.
Effect on both Employees and Customers
The closure of Big Lots stores significantly impacts both employees and customers, leading to job losses and limited access to products.
The effect on both employees and customers due to Big Lots’ closures highlights the challenges faced by workers losing jobs and customers losing convenient access to their favorite stores, answering Why Are Big Lots Closing?.
Loss of Employment
With the close of shop or stores, it is often the employees who suffer most. Here’s what employees of Big Lots stand to endure:
- Job Cuts: The shutting down of stores precedes the process of cutting down of jobs and many employees will be affected.
- Severance Payments: Lastly, people can sometimes be promised severance payments or given other enough employment in other places, which is not always the case.
Effect on Customers
For many dedicated customers of Big Lots, the shutting down of stores might be infuriating. So, here are a few things that the customers should look forward to:
- Stocking Up: For customers who are fans of products from Big Lots, and want to stock up, they might be forced to do so quickly before the affected stores get emptied out.
- Sales and Discounts: Discounts would be the order of the day as the stores would be closing down, which gives customers the last opportunity to buy what they need.
- Other Target Areas: Customers who are still big fans of the offering would have to go even further for the nearest Big Lots.
Employees face job cuts, while customers may experience frustration due to fewer store locations and potential loss of their favorite products.
Conclusion
The high inflation, real estate selling, and the store closing that exclusively makes Big Lots lose revenue, actually answers the question of Why Are Big Lots Closing? These moves may seem detrimental in the short run, but they form part of a larger scheme geared at restructuring in order to enhance the company’s overall future performance.
Achievement of Big Lots is possible thanks to Nexus Capital Management. It must be said though that these alterations could be quite sentimental for a large number of staff members and clients. Over the coming years, it will be crucial for retailers to evolve with the changing market. And it’s the consumers that will ultimately determine if Big Lots in the future is on the recovery path or has already become another victim of the retail transformation.
