California’s Santa Cruz Location analytics startup Placer.ai discovered indications that discount retailer Big Lots is moving to reclaim more of its core customer base by examining which of its Top 50 locations are closing.
Placer.ai reports that in the first half of 2024, Big Lots attracted tourists from around the country, with a median household income of $65,500. The median household income in the areas where it is closing stores was $73,500. those with shutting stores showed greater median household incomes than those without closing stores in five of the states that were studied: California, Washington, Arizona, Florida, and Ohio.
According to Placer.ai’s analysis, Big Lots’ revitalization plan included value and extreme bargain products. The company may have been attempting to reclaim some of the price-conscious shopper market by concentrating on lower HHI locations.
In the meanwhile, more people are visiting the approximately 280 stores that are scheduled to close. According to Placer.ai’s study from July, even though the retailer’s overall traffic increased 1.9% for the month, visitors to its shutting stores—all of which feature significant product markdowns—saw a 19.2% spike from the previous month.
Which retailers will profit from Big Lots leaving their markets, then? According to Placer.ai, 92.3% of Big Lots customers countrywide also went to Walmart between April and June. In California, where 109 Big Lots locations are slated to close, 74.6% of Big Lots customers also shopped at Walmart; nevertheless, crossover rates at Target and Costco were greater than the national averages. During that three-month period, 71.1% of Californian Big Lots customers also went to Target (as opposed to 52.2% nationwide) and 61.2% also made time to shop Costco (vs. 20.8% nationally).
“There are many reasons why Big Lots’ rightsizing strategy makes sense,” stated R.J. Hottovy, Placer.ai’s head of analytical research. “Warehouse clubs, superstores, and merchants of home furnishings and decor have increased their competitiveness in higher household income trade areas, where many of the failing stores it is closing are located.
“The corporation may concentrate on smaller, more rural markets with less competition by closing these locations. Since it should be simpler to acquire the correct assortment of items over a smaller store footprint, the store closures should also aid in accelerating the company’s efforts to boost its extreme bargain penetration to its value-conscious consumer.
