Big Lots Store Closure: How Struggling Omnichannel Retailers Can Avoid Similar Fate
Big Lots, the iconic discount retailer with over 900 stores nationwide, recently announced its liquidation, marking the end of a long-standing retail legacy. Founded in 1967, Big Lots was a powerhouse in the discount retail space, generating $6.15 billion in revenue as recently as 2021. However, by December 2024, its doors were closing for good.
The story of Big Lots offers valuable lessons, particularly for omnichannel retailers. While much of the analysis may focus on branding or customer loyalty, the real opportunity for resilience and growth lies in optimizing the supply chain—a critical area that often determines whether retailers sink or swim in today’s complex market.
This isn’t just about avoiding Big Lots’ fate; it’s about future-proofing your business to meet customer expectations across multiple channels while staying profitable.
The eCommerce Boom—and Bust
The pandemic brought a seismic shift to retail, with eCommerce seeing unprecedented growth during lockdowns. But as the world reopened, many retailers overestimated the long-term demand, leading to inventory gluts and financial strain. Big Lots wasn’t alone in struggling to adapt. Across the industry, omnichannel retailers grappled with balancing in-store and online fulfillment strategies, often finding themselves burdened by high operating costs and inefficient networks.
For today’s retailers, the message is clear: supply chain agility and data-driven decision-making are essential to navigating rapid changes in consumer behavior.
Omnichannel Retail’s Supply Chain Challenges
Succeeding in omnichannel retail requires meeting customers where they are—online, in-store, or through hybrid options like buy-online-pickup-in-store (BOPIS). However, this convenience comes with unique operational challenges:
1. Balancing Inventory: Retailers must decide what to stock in stores versus online, avoiding overstocking one channel while understocking another.
2. Fulfillment Complexity: Managing eCommerce pick-and-pack logistics alongside traditional store replenishment often leads to inefficiencies and rising costs.
3. Competing Priorities: Retailers face tough choices about whether to prioritize in-store shoppers or online customers, all while avoiding channel cannibalization.
These challenges underscore the need for smart supply chain strategies that integrate real-time data and foster agility.
Strategies for Omnichannel Success
To thrive in an omnichannel world, retailers must adopt targeted strategies that streamline operations, reduce costs, and enhance the customer experience.
1. Embrace Data-Driven Decision-Making
A strong supply chain starts with robust data. Key metrics include online and in-store sales trends, shipping costs, transit times, and customer preferences by region and channel. Insights from this data can drive critical improvements:
Optimize inventory placement to reduce transportation costs.
Identify opportunities to consolidate physical stores where online demand can meet customer needs.
Improve demand forecasting by understanding customer buying patterns.
2. Leverage Distributed Order Management
Flexible and integrated fulfillment strategies are essential for seamless operations:
Ship-from-store: Use stores as mini-warehouses for eCommerce orders, reducing shipping costs and delivery times.
Ship-to-store: Encourage in-store pickups to boost foot traffic and cut last-mile delivery expenses.
Dynamic fulfillment: Fulfill orders from the closest or most cost-effective location, whether a store, distribution center, or directly from your supplier.
By adopting these methods, retailers can boost customer satisfaction while keeping fulfillment costs under control.
3. Optimize Freight Operations
Shipping costs are a significant expense, especially with the rise of small parcel shipments for eCommerce. Retailers can mitigate these costs through:
Freight consolidation: Combine smaller shipments into larger loads to reduce the cost per unit.
Zone skipping: Ship consolidated loads to regional hubs for local delivery, cutting last-mile costs.
Dynamic routing: Use analytics to determine the most efficient shipping methods for each order.
Why Network Optimization Matters
An optimized supply chain network aligns inventory, fulfillment, and operations to meet demand efficiently. This approach transforms stores into fulfillment hubs, supports both eCommerce and in-store operations from distribution centers, and allows inventory to flow dynamically across the network. Retailers who achieve this level of coordination unlock cost savings while delivering exceptional customer experiences.
How FlexChain Can Help
At FlexChain, we specialize in supply chain solutions for eCommerce and omnichannel retailers, focusing on practical, actionable services rather than generic services or costly software overhauls. Here’s how we can help:
Analyze shipping data to uncover freight consolidation opportunities that save millions. We can then execute these freight shipments seamlessly.
Develop strategies for optimized inventory placement to minimize transit times and costs.
Implement solutions to streamline complex fulfillment networks while leveraging your existing systems.
Our expertise helps retailers realize seven- and eight-figure savings, all while improving their ability to serve customers across multiple channels.
The Big Lots Lesson: Adapt or Risk Obsolescence
The closure of Big Lots serves as a cautionary tale for all retailers, especially those navigating the complexities of omnichannel operations. But it’s also a call to action. By embracing data-driven strategies, optimizing networks, and aligning operations with customer expectations, retailers can not only survive but thrive in an ever-changing market.
If your business is struggling with rising shipping costs, inefficient inventory placement, or complex logistics, FlexChain is here to help. Let’s build a supply chain that supports your growth—without breaking your budget.
Reach out to FlexChain today to explore how we can optimize your supply chain and unlock new opportunities for your eCommerce or omnichannel business.
