Big Lots' Financial Health and Future Plans

Contrary to popular belief, Big Lots holds a significant stake in the home retailing industry; with competitors like Target and Walmart, the organization provides their audience with niche housing products that solve their consumer's housing needs. With plans of expanding their retailing domain to 80 new locations annually, Big Lots is focusing on market development to satisfy the consumer's need for home retailers.

With the crux of Big Lots' business appeal being reliable and easily accessible products, the corporation is utilizing their strengths to open a multitude of locations in the upcoming years; more specifically, the corporation plans on targeting rural and smaller towns when opening their 500 new locations (Meyersohn, 2021). Big Lots currently has over 1400 stores in 47 states. Despite a majority of retailers being closed during the COVID-19 pandemic, Big Lots' fleet of retailers were able to remain open as they were classified as an essential business; by being able to remain open, the company benefited from a surplus of housebound shoppers that were focused on updating and redecorating their homes. According to CNN business, the organization "saw a comparable sales increase of 16.1%" (Meyersohn, 2021).

Unfortunately, Big Lots' upswing in sales has recently seen a dip due to the increase of third-party logistical and domestic operating expenses. The organization reported their comparable sales have seen a 4.7% decrease through October 2021. Alike many companies that outsource from Asian producers, the supply shortages and increase transportation costs played a significant role in the decrease in profitability margins. According to the Wall Street Journal, "the spot price to ship a 40-foot container from Shanghai to Los Angeles earlier this month was 75% higher than the same time last year" (Smith, 2021). In addition to shipping expenses, Big Lots has been subject to labor wage increases. As of January 2022, the state minimum wage has been increased within 21 of the 50 United States (EPI, 2021). The combination of logistical and labor wage expenses has deterred Big Lots' profits, but still plans on continuing its expansion plan over the next decade.

References:

Meyersohn, N. (2022, January 12). Big lots is opening 500 stores. CNN. Retrieved April 13, 2022, from https://www.cnn.com/2022/01/12/business/big-lots-furniture-store-openings/index.html

Smith, J., Berger, P., & O'Neal, L. (2021, December 19). Shipping and logistics costs are expected to keep rising in 2022. The Wall Street Journal. Retrieved April 13, 2022, from https://www.wsj.com/articles/shipping-and-logistics-costs-are-expected-to-keep-rising-in-2022-11639918804

Twenty-one states raised their minimum wages on New Year's Day: Federal action is still needed. Economic Policy Institute. (n.d.). Retrieved April 13, 2022, from https://www.epi.org/blog/states-minimum-wage-increases-jan-2022/