A Tale of Two Retailers: Big Lots and HomeGoods’ retail market dominance
Key Takeaways:
Big Lots moved strategically to position itself as an “Essential Retailer” at the onset of the pandemic, allowing it to double its January 2020 sales, in April 2020. Big Lots changed its inventory to include more consumable items and therefore established itself as a place where shoppers can find both furniture as well as consumables and other pantry items.
HomeGoods was cautious when the pandemic started and closed its doors during the latter half of March and all of April. Despite this 1.5-month loss of business, HomeGoods has remained competitive with other discount retailers since late 2020 and even surpassed Bed, Bath & Beyond and Big Lots in monthly sales in March 2022.
Don’t let their low prices and heavy discounts fool you. The market share for discount retailers like HomeGoods and Big Lots is anything but small. In the 1Q 2022 YipitData Home Goods Market Share Index, Big Lots ranked #5 with a 6.67% of market share and HomeGoods came in at #3 with a market share of 8.08%. Although both retailers are close in ranking, their performances from the start of the pandemic to present-day differ.
Big Lots’ big gains during the pandemic
While many retailers severely reduced their hours at the start of the pandemic, Big Lots kept its doors open and repositioned with an inventory mix shift. Big Lots distinguished itself as a store where customers can buy anything from toiletries to patio furniture. In 2020, the discount retailer made a noticeable change when it reallocated floor space from Food products to Consumable products as part of its Pantry Optimization project.
In addition to the shift in product inventory, Big Lots also implemented Buy Online Pickup In-Store (BOPIS) options in 2019. In 2020, Big Lots added curbside pick-up options as well. Furthermore, the retailer provided same-day delivery options at several locations through partnerships with Instacart and PICKUP.
Between being open for business more often than some of its competitors and its strategic decisions around inventory changes and delivery options, Big Lots was able to establish itself as an essential retailer at the onset of the pandemic. While sales for other retailers completely flatlined during March and April 2020, Big Lots continued to generate revenue. In addition, its strong performance wasn’t relegated to 2020. Despite sales trending downward for most retailers in 2022, Big Lots has remained competitive and even surpassed Bed, Bath & Beyond and the other discount retailers in monthly sales for the first time in two years this past May.
Indexed Monthly Sales
United States, January 2020 to May 2022
HomeGoods rebounds from pandemic store closures
HomeGoods’ sales performance at the onset of the pandemic was a different story. The discount retailer closed all of its doors nationwide in response to the pandemic on March 19, 2020 and those doors remained closed till the beginning of May 2020. Given this, HomeGoods’ sales plummeted. But since reopening its doors, its climb to home goods retail dominance has been impressive. In March 2022, HomeGoods topped Big Lots and Bed Bath & Beyond in sales due to the discount retailer logging more consistent and steady sales since late 2020 compared to competitors that have experienced sharper sales decline. This feat is quite remarkable given that for most of 2020, Bed Bath & Beyond had twice as many sales as HomeGoods on a monthly basis
According to HomeGoods’ annual report, a large part of its success came from having its doors open more days out of the year. For example, their stores were temporarily closed for about 20% of fiscal year 2021. However, in 2022 year-to-date, their stores have remained open. In addition to keeping their stores open for longer, HomeGoods attributed their first-quarter success to increased customer traffic and increased average basket size. According to YipitData’s proprietary email receipt data, HomeGoods consistently over-indexed for distinct monthly customers in 2021, and had more distinct customers in December 2021 than in December 2020.
Indexed Monthly Distinct Customers
United States, January 2020 - May 2022
HomeGoods and Big Lots have recently thrived despite the retail market grappling with the pandemic, inflation, and supply chain issues. As the economy and other world events continue to impact the market, it will be interesting to monitor the performance of these discount retailers to see if their market share dominance will endure.
Source: Proprietary email receipt data, card transaction data.
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