Why Is Big Lots So Cheap? (10 Reasons Why)

Currently, Big Lots is among America’s favorite retail stores, as the company strives to help customers save more by maintaining discounted prices for all items.

However, due to extremely low prices and numerous discounts, most people wonder why Big Lots is so cheap. If you’re wondering the same thing, here are 10 reasons why!

Why Is Big Lots So Cheap In 2022?


1. Big Lots Is a Liquidation Store

Big Lots products are cheap because the store is a liquidation store, meaning it outsources items that haven’t been sold in other stores and restocks them on its shelves.

Additionally, Big Lots acquires inventories from other companies at big discounts and sells them to consumers at affordable prices.

The other companies are nearly out of business and need a quick sale in most cases.

 Another instance of selling inventories is that the company needs to pay off debts urgently.

For this reason(s), Big Lots takes advantage of the situation and acquires products on clearance.

This way, the company can manage to set low prices for its consumer base.

2. Big Lots Is America’s Largest Closeout Store

As a liquidation store, Big Lots attracts more customers, which eventually leads to a strong brand name.

Hence, the store is currently recognized as America’s largest closeout store.

Due to the store’s popularity, Big Lots has managed to maintain a flow of suppliers as well as customer loyalty and trust.

With the influx of vendors willing to sell its clearance items to the closeout stores, Big Lots has attracted more customers and maintained its affordability.

As a result, Big Lots has captured a majority of consumers who maintain its cash flow and consequently help the company maintain its low pricing strategies.

3. Some Groceries May Be Near Expiration Date

Since Big Lots often purchases closeout or clearance items from other stores, some groceries might be near their expiration date, hence quick sales.

Therefore, to reduce the shelf life of these grocery products, Big Lots sells those groceries at competitive prices that are consistently below the prices of other competitors.

For instance, a one-pound box of Nabisco Saltines may go for $2 at Big Lots, compared to  $2.99 at Giant and $2.56 at Walmart. 

Similarly, a 12.5-ounce box of Honey Nut Chex cereal can go for approximately $2.80 at Big Lots and be sold for $3.98 at Walmart and $3.79 at Giant.

The low pricing for some of the products in the grocery section is aimed at luring customers to purchase the items before they reach their expiration.

4. Big Lots Purchases Items in Bulk

Just like most retailers, Big Lots purchases items in bulk so that the company can increase its bargaining power and profit margin in the long run.

When Big Lots buys items in bulk, the cost for each unit is reduced, hence, Big Lots spends less than when it chooses to purchase fewer items.

Therefore, the savings made from the bulk purchases can be passed to the customers, and hence most customers find Big Lots as cheap.

Stocking up and buying items in bulk also helps to maintain customers’ demands on certain products by avoiding the risk of selling out.

This further maintains the company’s cash flow and pricing strategy.

5. Big Lots Has Strong Omni-Channel Initiatives

5. Big Lots Has Strong Omni-Channel Initiatives

Big Lots maintains its low pricing strategy by successfully implementing its strong omnichannel initiatives.

The company strives to leverage its marketing strategies with e-commerce enhancement, loyalty databases, and appeal to more customers in the long run.

The long-term effect of enriching customers’ omnichannel experience is that the company expands its customer base and maintains all initial practices to keep prices low.

6. Big Lots Maintain No Frills in the Store

Simple structures and designs often maintain Big Lots stores to maintain operational costs as low as possible so that it can maintain its cost-leadership strategy. 

The design of these stores is simple and cheap, with minimal store décor to help the company save money and ultimately pass the savings to its consumers.

The store keeps low-cost flooring and cheap shelving to further keep maintenance costs as low as possible.

As a result, Big Lots has set up a system that maintains minimum spending on structures and designs so that it can sell items at the lowest possible prices.

7. Big Lots Has an Efficient Supply Chain System

Big Lots has managed to maintain an efficient supply chain system, even with the current disruptions in the retail industry.

The company has strong control over its supply chain and delivery processes to ensure that the store remains in business, even when challenges within the market shake competitors.

Additionally, the company maintains long-lasting relationships with vendors and suppliers to ensure that the stores receive an unlimited supply of merchandise.

The strong control of the company’s supply chain ensures that the company is always stocked and meets the consumers’ demand.

8. Big Lots Offers Promotions Through the Big! Rewards Programs

Big Lots keeps items’ prices low through discounts offered by the Big! Rewards program.

The Big! Rewards program is an initiative by the company to help consumers save more and, in the long run, promote customer loyalty and retention.

Customers have to subscribe to the program at no cost in order to receive additional discounts on Big Lots purchases.

Through this program, customers can receive loyalty points and other benefits such as discounts and rewards whenever they shop from the store.

9. Big Lots Reduces Losses by Closing Under-Performing Stores

Among the reasons why Big Lots maintains low prices of items is that the company minimizes losses from underperforming stores by closing up the stores and relocating to areas with more traffic.

In the past, Big Lots has closed stores with the US retail market and, in return, opened up more stores in locations that have proven to have a strong threshold for business continuity.

In 2014, the company closed all Canadian operations to focus more on the American retail landscape and strategize on how to maintain high sales.

These strategies have helped the company to avoid the extreme effects of company losses, and hence the company can manage to maintain low prices.

10. Big Lots Operates Effective Marketing Strategies

Big Lots has effective marketing campaigns that investigate customers’ needs, which are then delivered.

Through these campaigns, Big Lots attracts more customers, which helps the company to maintain a steady cash flow and offer products at the lowest possible prices.

To know more, you can also read our posts on who owns Big Lots, who makes furniture for Big Lots, and where are Big Lots.

Conclusion

Big Lots items are remarkably cheap because the company strives to keep its purchasing cost and operational costs low.

This is achieved through the company’s stocking structure, as Big Lots is a liquidation store.

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Marques Thomas

Marques Thomas graduated with a MBA in 2011. Since then, Marques has worked in the retail and consumer service industry as a manager, advisor, and marketer. Marques is also the head writer and founder of QuerySprout.com.

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