Big Lots 2013 Annual Report Download - page 4

We believe how we source our product, specifically closeouts which are an important part of our
heritage, is a key strategic advantage. It is equally important to recognize that Jennifer wants
some level of consistency in our store, which can be complicated when closeouts are not always
available. As a result, we will introduce more consistency of product in those "need, use, buy
most" categories, particularly in Food & Consumables. We will supplement this initiative with
the rollout of our Cooler and Freezer program to over 600 stores this year, and likely a similar
number in 2015. This provides not only consistency, but also enables our stores to begin to
accept EBT and SNAP as an additional form of tender for those customers utilizing these forms
of government assistance. The recent economic downturn left many Americans relying on
government assistance, and it is important for us to be able to meet their needs and accept this
form of payment. In a similar light, we are rolling out what we have called internally a Furniture
Financing program to the majority of our store fleet in 2014. More specifically, this is a lease-to-
purchase program that we believe is an important service to a portion of our customer base …
again, taking down a barrier to shopping our stores.
Our merchandise assortments must provide great value and improve consistency, and we
recognize we have to significantly improve the quality and taste level of our offerings as well.
In customer focus groups, Jennifer repeatedly mentions a lack of trust in the quality of our
merchandise, and we have responded by putting in place processes and disciplines focused
on grading potential product purchases based on their quality and taste level … and where the
product is in its life cycle or demand curve with the customer. In addition to improved buying
disciplines, we believe our vendor base has become too broad which has inadvertently caused
us to become less relevant in the vendor community. We have a full court press on improving our
relationships with our key vendors … our top 200 vendors will make a difference in our product
offerings and ultimately the quality and value Jennifer sees in our stores.
Marketing: We’re simplifying everything we do to focus on Jennifer and how she wants to
be communicated to and share information with her friends. In the near term, traditional print
advertising will continue to be a part of our strategy. More importantly, our focus longer term
has to evolve our television messaging and move swiftly and aggressively into other forms
of media, particularly digital marketing and social media as well as the ecommerce and
omnichannel space.
We are building a team with extensive experience in all areas of consumer engagement and
messaging including enhancing our presence online and our use of social media. For instance,
our social media launch of #thriftisback – a campaign around what was previously the Hostess®
Thrift store business – is a small example of what we see as the opportunity to build our brand
socially with Jennifer and allow her to share more about Big Lots with her friends and followers.
This is a totally new approach for Big Lots … incremental activity to anything we have done in the
past, again aimed at more consistency with our customer base.
We’re also working diligently to develop an ecommerce solution that fits our business model and
will lead to omnichannel capabilities to leverage our brick and mortar presence. We know we are
behind most of retail in this area, and we know these capabilities have customer engagement
and sales opportunity. We also know Jennifer wants to buy online from existing or expanded
assortments and pickup product in our stores. Right now, we believe ecommerce is likely to go
live some time in 2015.
ASSOCIATES
Throughout my retail career, I have seen time and time again … you win with People. Given the
changes in our strategy and the need for different thinking and expertise, we have experienced
a significant change in the senior leadership of our team and throughout many areas of the
organization. We have attracted top-level talent … now our job is to retain our talent and
continue to look for the best in the industry. Do we have a solid succession plan? What are our
It is critical to
focus our resources
on merchandising
categories that
are top-of-mind
with Jennifer.