Media has its favorites. Some founders and CEOs are exciting. They are media-savvy. They articulate well. Or, PR firms milk their VC funded customers and get them in front of the press every week. So depending on how much more budget there is to spend, you'd hear about one company re-inventing rental apparel, saving sweathouses in Bangladesh, supporting black lives, and being endorsed by a Youtuber. Occasionally they'd get organic press for the CEO walking around 42nd avenue on barefoot after getting a cool severance package. Then there are companies like Big Lots! that no one cares about. When we look at the pandemic-in-motion world of retail, there are two narratives:
Interestingly, RTR is founded by two Jennifers who met at Harvard. Big Lots! has a name for its core customer - 'Jennifer'. All their marketing communication revolves around how relevant they are to Jennifer. The similarity ends with the names. Big Lots! actually turned in impressive quarterly results.
I was looking for the reasons why Big Lots! is doing impressively well in spite of the pandemic. They too rationalized stores but it is seen as a positive unlike the case of RTR. Why? Just like Target, Big Lots! has been reinventing the place of the store, recently invested in curbside pickup, shed its image as a 'closeout retailer', and rebranded itself a community retailer and infused a lot of purpose into its private label by rethinking its private label brand architecture. They acquired Broyhill the furniture brand for some intellectual property and designs that would fortify its plan to be seen as a 'quality retailer' and not 'closeout shop'. If you read their annual reports and their website or CEO interviews, it talks a lot about community, helping Jennifer serve her community and servant leadership. I dug into it further to spot a Peleton-esque community engagement baked into the retail experience. I didn't find any. I looked at all 3,000 open jobs. Hardly I saw any job related to community engagement. But I was looking at it the wrong way. Numbers don't lie. It turns out you don't need activewear wearing fitness ambassadors sweating it over iPads to get a sense of community. You can build a community and keep them by doing exactly what they expect from you and some more
Big Lots! built a strong and loyal community by talking to consumers and then looking inward to fix what was not working and continuing with what customers like.
As embarrassing as it sounds, in our four-year existence, for the first time, we are doing a customer survey next week. If you are one and you get our survey do help us with honest inputs! Big Lots! started with an extensive consumer perception survey covering 5000 customers and what they expected out of Big Lots!
A 'closeout retailer' does not mean that the store has to look like a rundown corner store. People who shop for discounts like to be respected. Good aesthetics and well-organized stores convey that respect. Big Lots! is reorganizing its stores to be more friendly and welcoming while giving prominence to categories that balance between 'revenue per square feet' goals and customer satisfaction with the in-store experience.
Again, with merchandising too, Big Lots! balances between close-out merchandise and never-out merchandise. Customers associate Big Lots! with value shopping. Closeouts are one way to get there. But private labels are a means to the same end. But until a couple of years ago, they had a haphazard approach towards store brands - until a 'brand architecture' put in place over the last 36 months gave a cohesive message to consumers about the value of their store brands.
Customers take pride in their smartness. A low-income family's head would derive immense pleasure in knowing that he or she has been spending responsibly on consumables and home goods by finding the right products in Big Lots!. They are a part of a larger community. I saw several interviews where the senior executives talked about helping Jennifer solve her community's problems and serve them solutions. While I don't see evidence of Big Lots! engineering moments where Jennifer could offer shopping advice to her peers in the community and championing the cause of Big Lots!. IMO if they are not already doing it they should, as it presents a big opportunity to extend their reach while staying true to their core purpose.
It is hard to build a community but it is easy to be a part of one. I saw this in Big Lots! social media guidelines
and this on their website
Building a brand (direct to consumer or otherwise) is hard only because talking to customers, facing the truth, and executing by acknowledging the truth are all unnerving and tiring. Often, the short term costs are high. Doing it while being scrutinized by the public markets is harder. But, if there is one crisis that you cannot waste, it is the 'mother of all' that we are in now.
Big Lots! had a head start of 36 months in preparation for the new world. Their stock rally shows how well it has capitalized on the time it had. The surviving retailers of this crisis have a short term survival fight to put. But, as they say, it's not how long you live but what quality of life you have in the last years that matter. It's not about merely surviving the crisis but coming out prepared for a future with healthy metrics is what matters.
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