Big Lots: Improving Sales and Margins

Background

Big Lots, Inc. is a Fortune 500 retail corporation headquartered in Columbus, Ohio. Founded in 1967, Big Lots employs over 37,000 individuals in approximately 1,400 department store locations across the United States and Canada.

The company was allocating a large amount of its yearly budget to online, in-store, television, radio, and print advertising. However, advertising expenses accounted for only 2.5 percent of annual sales. In order to more strategically distribute its marketing resources and drive sales growth, Big Lots partnered with QualPro to create an ideal marketing strategy.

Approach

After collecting and analyzing historical data related to store performance and sales, our consultants assembled a project team that included members of Big Lots’ management, sales, and marketing teams. Together, the team brainstormed 60 improvement ideas for increasing advertising return on investment and driving sales performance. Our consultants helped the team narrow down the list to 24 ideas deemed practical, fast, and cost-free. Some of these ideas included the circular mailing schedules, in-store circulars, and TV ad length.

QualPro designed the experiments for Big Lots’ personnel to perform. They created multiple combinations of the test ideas and recorded the results of each. A screening experiment revealed which ideas had a significant impact, and a refining experiment revealed the precise effect of each idea. The team tested two of the significant ideas in a refining experiment that lasted eight weeks. After analyzing the results, our consultants created recommendations for Big Lots to implement in order to improve advertising effectiveness.

In accordance with our commitment to driving continuous improvement, our consultants worked closely with Big Lots personnel to guide process changes and motivate project team members to exceed goals.

Results

After implementing QualPro’s recommendations, Big Lots was able to create the ideal marketing strategy and drive consumer purchasing behavior. As a result, the company yielded an additional $150 million in annual sales and improved its gross margin return on investment by a ratio of 14 to 1.