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Market Management The purpose of any store or super market is its liquidity. That is the reason why the store managers are constantly looking for the new ways of how to draw consumers attention to their goods and persuade customers to make their purchases that at their stores. Big Lots and Wal Mart are the two giant discount retailers. The existence of such type of stores on the market becomes urgent. This phenomenon can be easily explained by the lowering standards of living and economic slowdowns. None of the discount retailers is more popular than Big Lots.
It is targeted at the customers, which buy discounted and un packaged goods from manufactures at extremely low prices. Big Lots merchandises a wide range of goods from sofas to toothbrushes and blue jeans with 70 % discount from retail prices. Big Lots and Wal-Mart are both discount retailers, but all in all they are not in the same retail category. The difference between Big Lots and Wal Mart is evident.
Big Lots buys up excess goods at a cheap price from manufactures. These goods predominantly are discontinued or repackaged. It will be difficult to sell them through other shops because most of the products are defective or damaged. That is why Big lots can propose goods with a 70 % discount. The quality of products, however, is not the same as the other stores propose. Jeff Naylor, chief financial officer, admits that: "We were solely focused on price. " Wal Mart, in contrast to Big Lots, proposes goods with fewer discounts but of high quality.
It tries to cover all types of products, except for the cheapest ones. Therefore, the main difference between Big Lots and Wal Mart is in their market and customer policy. These stores are designed for a public that likes to go bargain hunting and that describes just about everybody these days, says retail-industry analyst Kurt Barnard, publisher of Barnard's Retail Trend Report. If the makeover has a lasting effect, Big Lots stock may be a long-term winner. What do you think is the main difference in service at Big Lots versus Wal Mart? Big Lots proposes much poorer service than its competitive - Wal Mart.
The premises are usually not as clean, well lit and well presented. The sales staff is not numerous and professionally trained. The administration of big Lots does not pay much attention to good-mannered and qualified staff, considering it is less important because of the low price of the goods. It is quite logical, since if Big Lots had a numerous staff, it will cause increase in prices, which does not coincide with Big Lots market strategy. On the contrary, Wal Mart provides their clients with excellent sales service and tries to make them feel at home. At Wal-Mart, customers receive exceptional service.
Think about positioning, and how Big Lots may have a new place in the minds of consumers. Recently, Big Lots has started to change its solely focused on price policy. It considers that the changes and improved marketing are boosting sales approximately by 1 %. Big Lots desires to improve its reputation as a reliable place to shop. For this reason they decided to improve the sales and started using contract manufacturers to keep some 500 consumable items. As a result of this new policy, Big Lots now has key products in stock 90 % of the time, up from just 50 % previously.
Another step Big Lots is going to make is Back to Basic policy. It implies that Big Lots has returned to its roots as a closeout retailer, carving out a demographic niche just below Wal-Mart. This way, they will target at consumers willing to accept a product that may be somewhat less current or lower in quality if they can pay less. Trying to change companys policy and profile Big Lots wishes to become a new type of store and take a new place in the mind of consumers. Potter is trying to jumpstart internal growth, rather than depend on the acquisitions and new-store openings that have propelled much of the companys expansion in the past.
The turnaround program has gotten the company out of the woods. But a lot more improvements in comparable store sales and incremental profitability are to come, says Brad McGill, analyst with Banc of America Securities. The next important question is Why don't all consumers buy on low price? There can be given some explanations of the questions.
The first one concerns prestige. If a family profit is high, it can afford buying expensive goods. In this very case it pays for prestige doing shopping at fashionable stores. A second reason is that a consumer pays for famous trade-marks, brands and excellent service. They prefer to have a choice of high quality goods, than to choose between low-priced products. Recently, bargain hunting used to be something reserved for the low and middle class, but retailers like Wal-Mart have taken the shame out of shopping at these kinds of stores.
Changing the image and appearance of Big Lots to be more upscale may be the key to winning over more consumers, who would not shop at their stores before. Is it good or bad, prestigious or not to do shopping at retailers like Big Lots is up to every consumer. It depends upon his or her budget and preferences, but, the retailers like Big Lots try to rebuild not only the interior of the premises, but also make change in their sales policies. Big Lots would like to provide its consumers with the same level of service as more fashionable retailers.
It will cost them approximately $ 80, 000 per store. The administration, however, is hoping for an increase in Big Lots profit levels. So, Big Lots proves its name of a Premium on Being Cheap. References Tsao, Amy. "Big Lots: A Premium on Being Cheap. " Business Week Online, 14 August 2002.
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