Still feeling strain on their budgets from ongoing macroeconomic challenges, consumers are cutting out pricy nonessential purchases, according to Big Lots.
On Thursday (June 6), the discount home goods retailer, which has more than 1,300 locations across the country, reported lower-than-expected first-quarter fiscal 2024 financial results, attributing its 10.2% net sales decrease in part to shoppers’ belt-tightening behaviors.
“We missed our sales goal due largely to continued pullback and consumer spending by our core customers, particularly in high-ticket discretionary items,” Bruce Thorn, president and CEO of Big Lots, said. “The consumer environment softened in the first quarter, as both consumer confidence and sentiment declined due to concerns about inflation, unemployment and interest rates.”
He highlighted especially high pullback for indoor and outdoor furniture. Consumers are evidently tightening their belts, focusing more on essentials and less on luxury or non-essential purchases.
Indeed, the data bears out that many consumers are sticking to necessities. According to the February/March edition of the PYMNTS Intelligence “New Reality Check: The Paycheck-to-Paycheck Report,” which surveyed over 4,200 U.S. consumers, 60% of respondents have scaled back on nonessential retail purchases due to price increases.
In response to these economic pressures, consumers are increasingly gravitating toward bargains. The study also found that half of shoppers have begun opting for more affordable retailers amid inflation.
Big Lots has observed this shift and is adapting its strategy to meet the demand for value. Thorn emphasized the company’s focus on bargains and on communicating “unmistakable value” to attract price-sensitive shoppers. This approach is resonating well, as evidenced by the success of their extreme bargain offers, which have favorably shifted sales trends in several categories.
The company’s strategy involves significantly increasing the proportion of its assortment classified as bargains. By the end of the year, Big Lots aims for 75% bargain penetration, with extreme bargains accounting for 50% of this.
“Our closeout rate or extreme bargain rate at 28% is the highest [it’s been] since I’ve been with the company in nearly 10 years and, so you can see where this is going,” Thorn said. “We’re accelerating into this, and we see no ceiling at this point.”
One category in which the extreme bargain rate has grown in grocery, reflecting consumers’ particular desire for more affordable food options. Earlier this year, a PYMNTS Intelligence survey of over 1,700 U.S. consumers revealed that 86% have adjusted their grocery shopping habits due to rising prices. Among the respondents, 44% reported switching to more affordable retailers, while 34% indicated they had opted for lower-quality products.
Big Lots is leveraging digital campaigns and effective store layouts to highlight their bargains, making it easier for customers to identify and take advantage of the deals. The use of social media influencers to promote monthly bargains has also led to higher engagement rates, with consumers increasingly responsive to digital and social media marketing efforts.
As shoppers increasingly prioritize essentials and seek out value in the face of inflation and economic uncertainty, Big Lots is doubling down on its bargain-focused approach. By significantly increasing its assortment of extreme bargains and leveraging digital marketing strategies, the retailer aims to capture the attention and loyalty of budget-conscious shoppers.
The business landscape is challenging, but firms are increasingly flush with innovations designed to beat back any operational challenges with cutting-edge tech.
Artificial intelligence, for example, has become a linchpin of modern financial operations, reshaping processes from fraud detection to credit risk assessment. As companies warm toward harnessing AI-powered algorithms, efficiency and precision are being positioned at the forefront of operational improvement.
At the same time, B2B payments are undergoing a parallel transformation.
Legacy systems, which often relied on manual processes and paper-based invoicing, are being replaced by streamlined, digitized platforms. Businesses are turning to integrated payment solutions that enhance efficiency, security and transparency.
What is the reason for the accelerating digital transformation of back-office technology stacks and payment workflows?
A prominent root cause is the ongoing uncertainty afflicting the business environment. This includes escalating trade tensions marked by the imposition of tariffs, which have introduced a wave of hesitation across various sectors, impacting middle-market companies.
As economic uncertainties persist, financial management has become paramount, and, as the B2B news this week shows, few things support agile decision making and real-time forecasting better than the digitization of previously manual workflows.
Read also: AI Agent Systems Are Here — Will They Transform B2B?
One of the trends in B2B is the integration of AI-powered solutions to enhance operational efficiency. The adoption of agentic AI solutions is being explored to empower chief financial officers and treasurers by enabling autonomous financial decision making and operational efficiency.
Payments technology firm Transcard announced Tuesday (April 1) that it added agentic AI capabilities to its vendor network management solution. The changes to the company’s SMART Exchange are designed to streamline payment interactions between buyers and suppliers, with agentic AI automating onboarding and know your business (KYB).
Tesorio added an AI agent for supplier portals to its platform for accounts receivable automation, collections and cash flow management Thursday (March 27). The company’s new Supplier Portals Agent autonomously manages portal-based invoicing, from invoice submission to payment tracking, eliminating the need for finance teams to submit and track invoices across portals, a task that Tesorio said has become “one of the most manual, fragmented and error-prone parts of the AR process.”
AI-driven platforms can offer CFOs and treasurers insights and analytical capabilities, helping them navigate complex finances. The collaboration between agentic AI and financial operations is one potentially poised to unlock growth by empowering executives to make data-driven decisions with greater confidence.
See also: How CFOs Can Solve for Resource Bottlenecks in Back-Office Innovation
Beyond AI, the B2B sector is witnessing innovation in payment systems and risk management. Mastercard, for instance, launched a program Monday (March 31) aimed at encouraging the adoption of virtual cards for commercial payments. The initiative seeks to provide businesses with a more seamless, consumer-like experience, particularly in the realm of digital transactions.
Meanwhile, EasyPost on Tuesday introduced Forge, a B2B shipping solution designed to optimize logistics and reduce costs for enterprise clients. The development highlights the growing demand for specialized solutions that address the unique needs of B2B commerce, where efficiency and cost-effectiveness are paramount.
Risk management remains a concern for businesses operating on a global scale. To address this, Zip, also on Tuesday, rolled out a supplier risk management solution aimed at helping organizations assess and mitigate potential vulnerabilities in their supply chains. As geopolitical tensions and supply chain disruptions persist, such tools are key for maintaining operational resilience.
See also: What Treasurers Can Learn From How Central Banks Approach Risk
The ongoing evolution of FinTech is also shaping how businesses manage their assets and navigate economic uncertainties. A growing number of treasurers are turning to unconventional assets like bitcoin and gold as part of broader capital allocation strategies. The trend reflects a desire for diversification and a hedge against currency volatility, particularly as inflationary pressures and geopolitical risks continue to loom.
For CFOs, the challenge of maintaining financial visibility in a volatile environment is ever-present. Enhanced financial visibility tools are proving essential in navigating tariff uncertainties and ensuring liquidity management remains robust. These tools empower executives to forecast potential disruptions and respond proactively rather than reactively.
Supply chain transparency is another area receiving heightened attention. Inspectorio’s partnership with Open Supply Hub aims to promote greater transparency through open data platforms. The collaboration is intended to enhance accountability and ensure that sourcing practices adhere to evolving regulatory and ethical standards.
Looking forward, the question is not whether these technologies will continue to gain traction, but rather how quickly and effectively they will be adopted at scale.
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