SANTA CRUZ, Calif. — By studying which stores Top 100 retailer Big Lots is closing, location analytics company Placer.ai found evidence that the discounter is making a move toward recapturing more of its core consumer base.
Nationwide, Placer.ai says Big Lots drew visitors from areas with a median household income of $65,500 in the first half of 2024. In areas where it will close stores, the median household income was $73,500. In five measured states — California, Washington, Arizona, Florida and Ohio — areas with closing stores had higher median household incomes compared with areas where its stores aren’t closing.
In the report, Placer.ai noted that part of Big Lots’ revitalization strategy focused on value and extreme bargain offerings, and the decision to focus on lower HHI areas could be viewed as a way of trying to recapture some of the price-conscious shopper marketplace.
Meanwhile, the 280-some stores that are slated to close are drawing more of a crowd. In July, Placer.ai’s report notes that closing stores, which all have major markdowns on products, saw a 19.2% month-over-month increase in traffic, even as the retailer’s total traffic rose 1.9% for the month.
So which retailers stand to benefit from Big Lots’ departure from their markets? Placer.ai noted that nationwide, 92.3% of Big Lots visitors also visited Walmart between April and June. Looking at California, where 109 stores are scheduled to close, 74.6% of Big Lots shoppers also shopped Walmart, but Target and Costco showed higher crossovers than the national averages. In that three-month span, 71.1% of Big Lots shoppers in California also visited Target (compared with 52.2% nationally) and 61.2% also made time to shop Costco (vs. 20.8% nationally).
“Big Lots’ rightsizing strategy makes sense on a lot of levels,” said R.J. Hottovy, head of analytical research for Placer.ai. “Many of the underperforming stores it is closing are situated in higher household income trade areas, where they’ve faced greater competition from warehouse clubs, superstores and home furnishing and decor retailers.
“By closing these locations, the company can focus on smaller, more rural markets with less competition. The store closures should also help to accelerate the company’s efforts to increase its extreme bargain penetration to its value-conscious consumer, as it should be easier to secure the right assortment merchandise across a smaller store footprint.”
See also: Off-pricers are 4-for-4 in foot-traffic sweepstakes