Big Lots, an Ohio based discount retail chain burdened with 3.1 billion debt, filed for Chapter 11 Bankruptcy in September 2024. Operating since 1967 Big lots has weathered economic meltdowns before, so what really happened now?
There isn’t a definitive reason behind the bankruptcy, rather an accumulation of diverse causes.
- Rise of e-Commerce: Last year alone 187.5 million users placed at least one online order in the US, either through mobile app or browser.
- Inability to Compete: Running cost of a physical store is a lot higher than an online store.
- Poor In-Store Experience: Many customers complain that it is time consuming to find what you need as the store layout and organization of goods lacks coordination.
What does this Mean for the US Economy?
Big Lots is just the tip of a sinking retail business, many big names such as Conn’s, American Freight, Rooms + Spaces, Pirch, BBB and Oka have already closed their stores. How does this affect the economy?
- Mass Job Losses: Thousands of people are losing their jobs.
- Relocation Challenges: People’s ability to find similar positions are limited.
- Impact on Customers: People unaccustomed to online shopping will have to find new stores, a challenge for those who have limited mobility.
- Impact on Investors and Creditors: The biggest impact of Big Lots going bankrupt is on the investors, creditors and shareholders.
- Impact on Real Estate: Malls, property owners and landlords are suffering from decline in value and lower business due to closure of stores.
- Impact on the Environment: Rise of e-Commerce means more pollution as the amount of deliveries and usage of packaging material would increase.
What does the Future Hold for Big Lots?
During the bankruptcy proceedings, Big Lots attracted a lot of attention.
- Nexus Capital Management was the first to negotiate a deal, however, in December 2024 Nexus backed out.
- Gordon Brothers Retail Partners entered into an agreement with Big Lots to transfer their assets.
- Variety Wholesalers Inc. has acquired 200 to 400 of Big Lots stores and two of the distribution centers.
- Ollie’s Bargain Outlet has acquired several of the store locations.
Is it too Late?
Although it seems that Big Lots will not restore to their former glory, they still continue to operate online and through some of their stores. However, the future of retails seems bleak as more and more people turn towards online shopping to save time and money.
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