Discount Retailers: Positioning,
Differences, Retail Categories, economic, slowdown
Big Lots: A Premium on Being Cheap
During a period of economic
slowdown, discount retailers are all the rage. As consumers are forced to
become more frugal, stores like Big Lots are attracting more business. Big Lots
is known as a closeout retailer. They purchase discontinued or repackaged
products and sell them for up to 70% off the suggested retail price. The range
of products is wide-furniture, clothing, health products, and even household
appliances such as vacuum cleaners. Because Big Lots is experiencing such
success, it has become a favorite on the New York Stock Exchange. Now, the
question is whether Big Lots can sustain this level of performance.
Big Lots does not want to compete
with retailers like Wal-Mart. Under the guidance of chief executive Michael
Potter, Big Lots is staying true to its roots by offering products that may be
slightly less current or lower in quality for the best pricing. This has been a
great niche for consumers at this time.
Michael Potter’s goal is to
continue growth by focusing on internal procedures, and not acquisitions or new
store grand openings. The main company also operates stores under the names of
Odd Lots and Pick ‘n Save-but now those stores will all be converted to the Big
Lots brand name, in order to save on marketing costs. In addition, the stores
are now focused on being cleaner, well lit, and more organized, which were not
some of its strengths in the past. Low prices were the only lure that was used
to draw consumers into the stores. These store makeovers will cost about
$80,000 per store, but it is expected that the investment will pay off. That is
what investors are hoping for.
? Even though Big Lots and
Wal-Mart are both discount retailers, explain why they are not in the same
retail category?
? What do you think is the main
difference in service at Big Lots versus Wal-Mart?
? Think about positioning, and how
Big Lots may have a new place in the minds of consumers.
? Why don’t all consumers buy on
low price?
SOURCE: Tsao, Amy. “Big Lots:
A Premium on Being Cheap.” BusinessWeek Online, 14 August 2002.
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