Big Lots 2013 Annual Report Download - page 167

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In order to support our realigned merchandise categories, we updated our merchandising management organizational hierarchy
by adding general merchandise managers, who report directly to our chief merchandising officer, back to our management
team. Their responsibility is to ensure that our merchandise offerings are cohesive across merchandise categories throughout
the year and to introduce and implement broader programs associated with merchandise execution. The expected outcome of
our new strategies, re-alignment, and enhancement to our merchandising management team is to increase our total company
comparable store sales (“comps”). We will focus our performance review of merchandise management on comps by
merchandise category, as we believe it is the key metric that will drive long-term company net sales performance. By focusing
on growing merchandise categories, which includes managing contraction in certain departments, we believe our merchandise
management team can address our customer's changing shopping behaviors and implement more tailored programs within each
merchandise category, which will lead to growing our comps by merchandise category in 2014.
Marketing
In the fourth quarter of 2013, we began shifting our marketing efforts to focus on connecting with our core customer in new
forms of media that she now uses in her daily life. Historically, our marketing communication efforts have involved a mix of
printed ad circulars, television advertising, email advertising, and in-store signage. In the later parts of 2013 with the shift in
the management team, we began a more concentrated effort on embracing social media as a method of communicating with our
core customer through outlets such as Twitter, Facebook, and YouTube. With the continued proliferation of online and mobile
technologies, we need to better compete for our core customer's attention and drive both brand and product awareness on
platforms in which our core customer communicates. For example, in early 2014, we introduced a new campaign - “The Thrift
is Back” - via social media which promotes our newly formed arrangement with Hostess, where we will effectively be
functioning as Hostess’s thrift outlet locations. We believe Jennifer responds to our brand-name offerings, therefore we want to
ensure our message and promotions are delivered to her in a timely and meaningful way. In 2014, we intend to grow our
presence and use of social media to connect with customers as we introduce new programs and campaigns.
Our core customer remains active in electronic communication, and as such, we continue to market to our Buzz Club Rewards
members through email campaigns and promotions. In 2013, we restructured our rewards program from a cumulative
transaction approach for issuing promotional discounts to a program based on targeted promotions expected to attract members
to our stores for new merchandise or promotional events. The goals of the promotions can vary from attempting to tailor the
shopping experience based on past purchasing behaviors, to introducing products that a member has previously not purchased
from us with the hope of changing their shopping habits. As we continue to learn additional information about our members,
we will refine our methodologies for incenting our rewards members.
In 2014, we will continue to communicate our product offerings in order to grow comps through the following traditional
approaches to advertise, in addition to social media and our rewards program:
• Printed advertising circulars and promotional pricing to create excitement surrounding the deals that we offer;
• Television commercials broadcast nationwide to promote our brand and, from time to time, promote items or special
discounts in our stores; and
• In-store signage initiatives that focus on promoting value.
Shopping Experience
During 2013, we tested a variety of initiatives aimed at improving our core customer’s shopping experience with an overall
goal of driving increased comps. Specifically, we identified two programs that we will be rolling-out on a broader scale during
2014 to further demonstrate our customer-first mentality.
First, we tested a cooler and freezer program in approximately 100 stores in 2013. The goal of the program was to increase the
convenience of the shopping experience for our core customer in our Food category. We determined that our core customer
could not complete a portion of the weekly grocery shopping in our stores, as we did not offer refrigerated and frozen food
products needed to complete her basket. Our test results were positive; therefore, we will be implementing our cooler and
freezer program to approximately 600 additional stores in 2014. Additionally, by introducing coolers and freezers, the Food
assortment that we will offer in many of these locations will qualify for certain governmental assistance programs, such as the
supplemental nutrition assistance program (“SNAP”), which will provide our customer with another source of funds to spend at
our stores. We believe these programs will help drive comps in both our Food and Consumables categories.