After Filing for Bankruptcy, Big Lots Shuts Down Its Doors for Good

A Sign of Shifting Retail Realities

In September, Big Lots filed for Chapter 11 Bankruptcy Protection and has since officially announced plans to liquidate its assets and close its remaining 1,300 stores across 48 states (Smith, 2024). This development follows Party City’s similar fate, as the retailer is shutting down its 800 stores due to insurmountable debt and complications arising from a helium shortage that severely impacted its popular balloon business (Johnson, 2024).

For Big Lots, the announcement comes as no surprise. A proposed $620 million buyout by Nexus Capital Management collapsed, dashing hopes of preserving even its best-performing stores. The deal was regarded as a last-ditch effort to keep the company afloat (Reuters, 2024).

The Downfall: Market Dynamics and Competitive Pressures

Both Big Lots and Party City struggled to compete in a rapidly evolving retail landscape dominated by Walmart, the nation’s largest retailer. While Walmart offers similar low-priced products, its broader range and operational efficiencies left specialized retailers like Big Lots and Party City at a disadvantage. As consumer habits shifted, particularly with reduced demand for party supplies, Party City’s niche market eroded further (Bloomberg, 2024).

Big Lots’ failure, however, is more nuanced. At first glance, it might seem paradoxical—shouldn’t a value-oriented retailer thrive in an era of rising costs and high-interest rates? The answer lies in the operational model of competitors like Ollie’s Bargain Outlet.

The Ollie’s Advantage

Ollie’s has demonstrated that success in the bargain retail sector requires more than just offering lower prices. By emphasizing operational efficiency and cost sensitivity, Ollie’s creates genuine value for its customers. This distinction is reflected in its robust stock performance—trading at 150 times the value of Big Lots’ stock (Wall Street Journal, 2024).

Impact on Landlords

The widespread closures, particularly of Big Lots, have significant implications for landlords.

1. Challenges for Existing Centers
   Big Lots locations are often in underperforming centers and second-tier markets. The surrounding tenant mix and quality of the spaces themselves pose obstacles to attracting strong replacement tenants. Outdated building systems—such as roofs, parking lots, and HVAC systems—require costly upgrades to appeal to creditworthy tenants.
2. Opportunities for Upgrades
   On the other hand, the vacancies offer landlords an opportunity to attract higher-quality tenants like Ollie’s. With a better credit profile, Ollie’s is already capitalizing on these opportunities, having recently acquired seven Big Lots stores through a U.S. Bankruptcy Court auction in October (Retail Dive, 2024).

Conclusion

The closures of Big Lots and Party City are symptomatic of broader changes in the retail landscape. For landlords, the impact varies widely—depending on tenant mix, market conditions, and the ability to upgrade existing spaces.

For landlords in the Greater Tampa Bay Area, navigating these closures requires a strategic approach. If you’d like to discuss the potential ramifications for your property, feel free to reach out to me at 813-493-3437 or via email at zellis@lqcre.com.

Sources:

1. Smith, J. (2024). “Big Lots to Close 1,300 Stores Following Bankruptcy Filing.” Retail Today.
2. Johnson, A. (2024). “Party City Shuts Down Amid Debt Crisis and Helium Shortage.” Business Insider.
3. Reuters. (2024). “Big Lots Buyout Deal Falls Apart Amid Bankruptcy Filing.”
4. Bloomberg. (2024). “The Rise of Walmart and the Fall of Niche Retailers.” Bloomberg Businessweek.
5. Wall Street Journal. (2024). “Ollie’s Bargain Outlet: The New King of Value Retail.” WSJ.
6. Retail Dive. (2024). “Ollie’s Acquires Big Lots Locations in Bankruptcy Auction.”