The problems facing Big Lots came to a head in December as the closeout retailer took its first steps toward closing stores.
Big Lots filed for bankruptcy this summer and began talks to find a buyer. It is not alone in its struggles. Dollar-store and discount chains have also been roiled by problems in 2024. Dollar General, Family Dollar and Dollar Tree have all shuttered stores. Now, store closures have arrived at Big Lots, which operates over 1,000 stores in 48 states.
Big Lots is currently No. 227 in the Top 1000. The database is Digital Commerce 360’s ranking of North America’s top online retailers by annual web sales. Digital Commerce 360 projects that Big Lots ecommerce sales will reach $389.36 million in 2024.
Big Lots closing stores
The latest sign of Big Lots’ struggles emerged when the chain commenced going-out-of-business (GOB) sales at all of its stores. The company officially announced the action on Dec. 19. It took the action in response to a collapse in talks with Nexus Capital Management LP, which sought to buy the troubled chain.
“We all have worked extremely hard and have taken every step to complete a going concern sale,” said Bruce Thorn, president and chief executive officer at Big Lots. “While we remain hopeful that we can close an alternative going concern transaction to protect the value of the Big Lots estate, we have made the difficult decision to begin the GOB process.”
The chain will operate on precarious parallel tracks for the next couple of weeks. On one hand, the company is holding liquidation sales. Still, at the same time, the company is still actively trying to salvage the deal with Nexus or find another buyer.
Digital efforts at Big Lots
As recently as November, Big Lots was making plans for the future, unveiling a new app to better cater to digital customers.
However, the outcome for Big Lots doesn’t look encouraging, according to Michael Zakkour, founder and chief analyst at 5 New Digital, a retail consultancy. Zakkour has been following Big Lots’ plight.
“In retail, spy thrillers and America, we never say never,” Zakkour told Digital Commerce 360. “That said, we are savvy in laying the odds on Big Lots, which is not good.”
He explains how Big Lots lost its way.
“They never understood or adjusted to consumers’ emergence and embrace of cross-border commerce, featuring super-low prices that offered convenience with a tolerable wait time,” he said.
In addition, Zakkour also believes that Big Lots strayed from its commitment to offer items otherwise well outside the purchasing power of its average customer.
Outlook for Big Lots
“They broke the promise of the dollar item product mix and did not understand a completely new asymmetrical online/offline consumer journey,” Zakkour assessed.
He added that the company’s business model and margins were rooted in a 20-year-old system that did not demand investment in tech, people, processes and channels. Zakkour said time is running out for Big Lots to find a savior.
“There is little chance of the ‘White Knight’ getting things back on track,” he stated. “There is a better chance that someone will come in and buy and sell the parts of the whole for profit.”
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