1 BIG LOTS REPORT

Big Lots! Inc.

Management 3000­01, Fall 2014 Dr. Shirine Mafi Kaitlyn Graham Dylan Schalmo Nicole Cimino

2 BIG LOTS REPORT

Table of Contents

Industry overview………………………………………………………………………. 2

External Environment (General)........................................................................... 4

­Economic…………………………………………………………………….... 6

­Technology……………………………………………………………………. 9

External Environment (Task)................................................................................ 12

­Customers………………………………………………………………………12

­Suppliers……………………………………………………………………….. 13

­Competition…………………1…………………………………………………. 15

Organizational Environment (Internal)...................................................................15

Interview………………………………………………………………………………….20

Burning Issue…………………………………………………………………………… 23

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Industry Overview

Big Lots Inc. is America's largest broad line closeout retailer. Closeouts are the

same first­quality, brand­name products found at other retailers, but at substantially

lower prices (Big Lots Corporate, 2014). As a result of the recession, value conscious

customers turn to the closeout, or discount stores, when they are on a tight budget, or

simply to buy things cheaper in bulk. Big Lots Inc. has many items; ranging from

groceries, cosmetics, cleaning supplies, clothing, kitchenware, home furnishings and

many more generic products that provide customers with more for less money (Big lots,

2014, August 12).

Discount stores have been around since the early 1900’s, but after World War II

the industry picked up greatly because of the need for cheaper, same quality products.

With the conclusion of WWII came an increase in demand for consumer goods. To

satisfy this demand many discount stores formed. (Variety store, 2014). The discount

stores were known as ten­cent stores, where one could go in and a store clerk would

provide personal or household items to the customer for 10 cents or less. The Dayton

Company was one of the emerging founders of discount retail stores in the 1960’s, and

was also the role model for the founding of Target, Kmart, and Wal­Mart. The origin of

these three super stores transformed the industry into the low­price, self­service system

that we know today.

Currently, the discount and variety store industry employs around two million

people making an average of $9.17 an hour and working a weekly average of 28.7

hours (Variety stores, n.d.).

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The target clientele for these discount stores is the lower to upper middle class

but varies greatly from store to store. Target’s average shopper earns $63,000 of

income a year whereas most shoppers at Wal­Mart fall well below the national average

of income per year, which was 44,888.16 in 2013 (Trends in discount, n.d.). As of 2011

there were over 37,000 discount stores with the majority being national chain stores in

the United States. With the decline of the economy a few years ago the market for

discount stores has risen tremendously and new variety stores open weekly around the

United States to serve the demand (Trends in discount, n.d.).

The discount store industry includes merchandise stores, discount departments

stores, warehouse clubs, and supercenters. The major competitors in this industry

include big names such as Costco, Wal­Mart, Target, Sam’s Club, Sears, and Family

dollar. With the decline of the economy a few years back, many smaller chain stores

including Five Below and Ollie’s Bargain Outlet begun opening around the nation. The

discount and variety store industry brings in around $130 billion in revenues annually

and is dominated in sales by Wal­Mart which has revenue of $476,294,000,000 and

Target, which has revenue of $72,596,000,000 (“Yahoo Finance,” 2013).

There are not too many barriers to entry but this industry highly competitive. The

main barriers to entry include; startup cost, challenges with hiring new employees, and

competition from more established companies (Gershon, 2013, March 29, p. 1). Startup

cost can be a significant amount of money for someone looking to create a business in

this field. Hiring employees may also be a problem because without an established

system finding the right people may be hard to find. There will be a lot of trial and error

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with having the right people for the job. The main barrier is competition against already

established companies. Many people do not like change and if they have a pick an

expected during hard times. When most consumers could not afford to pay full prices for

products they turned to these stores for bargains. The discount retail industry was also

hurt by the downfall of the economy. When consumers were faced with less income

they started to between going somewhere new or somewhere they know, then most

people will stick with what they know. Opening a new business in this area would be

very tough because of competition with businesses like Walmart and Target.

The average annual growth of the industry from 2009 to 2014 is 0.8%. Compared

to the average Big Lots was under by ­0.29% (Historical growth rates, 2014). Big Lots

was almost right at the average for this industry. Apparel and electronics make up

around 28% of the industry so this hurt the retailers slightly. Today, this industry is on a

good path. With the economy back on the upswing, consumer confidence has lifted.

External Environment (General)

The general external environment is made up of elements existing outside the

boundary of an organization that have the potential to affect the organization indirectly.

It includes sociocultural, economic, legal/political, international, natural, and

technological factors that influence all organizations about equally (Daft & Marcic, 2013

p 54). The sociocultural dimension represents the demographic characteristics as well

as the norms, customs, and values of the general population (Daft & Marcic, 2013, p.

56), while the economic dimension represents the general economic health of the

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country or region in which the organization operates (Daft & Marcic, 2013, p. 60).

Consumer purchasing power, the unemployment rate, and the interest rates are part of

an organization’s economic environment. The legal­political dimension includes

government regulations at the local, state, and federal levels, as well as policies

designed to influence company behavior. The natural dimension includes all elements

that occur naturally on earth (Daft & Marcic, 2013, p. 61). The international dimension

represents events originating in foreign countries as well as opportunities for U.S

companies in other countries. Lastly, the technological dimension of the general

environment includes scientific and technological advancements in a specific industry

as well as in society at large (Daft & Marcic, 2013, p. 58). Out of all the elements that

make up the external environment, the most important in the discount and variety store

industry are the economic and technological aspects.

The reason that economic and technological dimensions are the most important

is because the state of the economy heavily influences what consumers are going to

purchase. If the economy is doing poorly, then people are less willing to buy

non­essential products. Technology is the other most important factor because without

technology there would be no expansion or progress for any business. Technology has

impacted the value of this chain, from manufacturing to distribution to packaging.

Technology has been able to speed up the process and make businesses more

efficient.

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Economic

One of the most important influences in the U.S. discount retail industry is the

economy. Retailers in this industry want low unemployment rates, low interest rates,

high consumer purchasing power, and an expanding economy.

The first economic factor that influences retail is the consumer purchasing power.

“Purchasing power measures the value of goods that can be bought with a specific

amount of currency” (Ingram, 2014, p. 1). Purchasing power is dependant on factors

such as inflation and wage rates and employment level. Inflation is the number­one

enemy of economy­wide purchasing power. Inflation is the process whereby prices

slowly rise throughout all sectors in an economy (Ingram, 2014, p.2). When inflation

raises, it causes the value of the dollar to fall and not be able to buy as much. For

instance, in 2009 if you were to buy something for $20.00 that same item would have

cost $21.72 in 2013 (US inflation calculator). Employment levels and average salaries

can have a tremendous effect on economy­wide purchasing power as well. The more

people who are employed, and the more money they earn, the more discretionary funds

they will have to spend throughout the economy (Ingram, 2014, p. 5). For the first time

in three years consumer spending rose by 3.3 percent in 2011 (Mahapatra, June 1,

2013, p. 1).The rise in spending was probably linked to an increase in Americans’

average annual income before taxes, which rose by 1.9 percent from 2010 to 2011.

Retailers in the discount industry want a high purchasing power in order for

customers to continue to come back and spend money in their stores. With a higher

purchasing power, people are able to get more out of their dollar causing them to want

to spend more. Increased purchasing power of the work force would generate $5 billion

in additional annual sales for the retail sector. Research shows that average American

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household allocates 20 percent of their total expenditures toward retail goods

(Ruetschlin, 2012, p. 8).

The second factor influencing the retail business is the unemployment rate. This

is the measure of how many people in the labor force are unemployed and actively

looking for work. The unemployment rate hit a high in 2009 with 10% (Labor force

statistics from the current population survey, 2014) which has continued to drop since to

about 6% in 2014.

Unemployment affects this industry in a variety of ways. If there is a high

unemployment rate, then staffing for quality managers and employees will be a very

difficult process. With the high unemployment rate, a job posting will bring hundreds of

applications and resumes. In order to find the best candidate it would take a long time to

go through all applicants to find the best people to interview (RBDenterprics, 2013, p.

3). Even if managers can narrow down the applicants, there is still a chance they

missed the best person for the job. Unemployment has a very negative consequence on

this industry and is something to take very seriously. Along with not having quality

staffing, unemployment also makes it so there are less people shopping. The higher the

unemployment, the more people that are without jobs resulting in fewer people able to

purchase items. “People have less money to spend on goods and services when they

are out of work” (Bolden­Barrett, p. 3). One last reason unemployment effects this

industry is because many people on unemployment are content with their situation.

They receive benefits and they do not see an incentive to work.

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The third effect on the retail industry are two interdependent rates­­interest rates

and inflation rate. Both of these rates can have either a positive or negative effect on the

industry. Interest rate is the amount of interest paid by a borrower to a lender while

inflation is the rate at which a good or service rises (Folger 2014 p.1).“In general, as

interest rates are lowered, more people are able to borrow more money. The result is

that consumers have more money to spend, causing the economy to grow and inflation

to increase.” For the discount industry, big businesses would want this to happen

because they thrive when consumers have more money to spend (Folger, 2014, p.1 )

One last factor that affects discount retail stores are the income of the people.

Discount stores target middle and lower income families. Income is influenced by all of

the economic factors and can fluctuate year to year, so targeting the middle and lower

class can be slightly unpredictable. Some families may lose their job or a stable income

altogether, others may have their hours cut and are forced to conserve, and others may

have to take time off for many different reasons. If income of families decreases, then

they will be less willing to buy products causing the retail industry to lose business.

Family Dollar announced that its profits had declined 35% in the second quarter

as comparable store sales fell 3.8%. Its profit of $90.9 million, or 80 cents a share,

missed analyst estimates of 90 cents (Zillman, 2014, p. 1). There are a multitude of

factors causing sales to slow. Some of it is due to the fact that penny­pinched

customers who downgraded to discount stores during the recession are now reverting

back to their preferred retailers. Sales grew in this sector by 6.4% in 2008, then 7.9%,

and 9.6% in the following two years. Then Family Dollar announced that its profits had

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declined 35% in the second quarter as comparable store sales fell 3.8%. Its profit of

$90.9 million, or 80 cents a share, missed analyst estimates of 90 cents. They are

expected to grow only by about 3% in the next two years (Zillman, 2014, p. 5).

The economy plays a very important role in the environment of this industry. This

industry is targeted towards lower and middle class citizens and when they see a drop

in income then they will be less frivolous with their money and only buy the essentials.

Technology

Whether it be through mobility, visibility, globalization, showrooming, points of

sales, and competition; technology is an important aspect for this industry.

Technological advances have transformed retail to a whole new level and will continue

to shape this industry in a variety of ways.

One way technology has made a difference in this industry is through mobility

and visibility (Foley, 2014, p. 13). The mobility concept refers to being able to move

freely and easily. From a technology standpoint, shopping on a smartphone is great but

mobility allows much more. Now, some stores have employees equipped with tablets to

help customers; these tablets have a variety of capabilities including point­of­sale

options. Another use for these tablets may be helping a customer shop. For instance, if

a shopper has a question about some item, the employee is right there and can answer

it. Visibility allows for the ability of employees to tell customers when their shipment will

arrive. Visibility can also help tell managers when they will likely run out of a product

and need to place an order with their supplier. Retailers need comprehensive inventory

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planning, replenishment, warehouse management capabilities, and must be able to

share this information with their customers and suppliers (Foley, 2014). Visibility also

helps retailers reduce out of stocks, meaning that it is easier to know what products are

selling quickly and making sure those do not run out. Equally beneficial is for the stores

to find out quickly what products are not selling so that they liquidate them faster.

A second way that technology helps in this industry is that it improves customer

relationship. Retail is a two­way street and sometimes it can be very hard for managers

to make a connection with their customers. Even if the connection is made, customers

will expect this connection to be made every time they come into the store. This may be

hard to maintain (Foley, 2014 p.16). Technology is helping solve this problem through

cloud solutions and apps. Some stores have created a loyalty app which can help

bridge the gap between customers and employees. These apps have the capability to

see when the customer shops at a particular place and then, after a certain price is

spent, or some other indication is reached, the store gives rewards to that customer.

Customers want to feel as though the company they are shopping at is privileged to

have their business. Customers want to feel like they are receiving special treatment

and reward apps can do this. They may receive a discount or other rewards for their

loyalty that others may not receive.

A third way technology plays a key factor in this industry is through facilitating

globalization. Businesses are now able to market to other countries more quickly and

effectively. The ability to do this has caused huge growth opportunities for the retail

industry. According to Duff (2014, p. 2), “Globalization has encouraged the growth of

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the independent apparel, furniture and giftware designer industry in the U.S. because

relaxed trade allows these small companies to outsource their manufacturing offshore,

resulting in lower costs of production, greater profits, and lower costs of goods to U.S.

retail consumers and other small businesses.” Businesses can now afford to get their

products out for the world to see, something that was nearly impossible without the

internet. Globalization has connected the world’s entire markets and allowed the retail

industry to lower the cost of goods for American consumers. Globalization has gotten so

huge to the point that every 30 seconds over $1.2 million is spent. This is something

that was unfathomable just 20 years ago. Online shopping is becoming more common

resulting in lesser need for a physical store. Many different retailers (i.e., Best Buy) have

combated this issue by price matching with Amazon or other online “electronic

commerce” websites so the store still manages a sale without shoppers walking out to

buy goods online. With technology, physical stores can cater to the needs of customers

and stand a chance against online shopping. Globalization has made it possible for

industries to reach consumers across the world, making it possible to reach every

consumer available to them.

A fourth way technology affects this industry is showrooming. The popular

practice of showrooming—where consumers go into a store to browse, then make

lower­priced purchases online—is a cause of angst for employees trying to make a sale.

Now store retailers can fight back with real­time price matching and by equipping

in­store employees with mobile technologies and information that puts them on an even

keel with smartphone­carrying shoppers (Foley 2014).

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One last effect technology has is on competition. The ability to see what people

are doing in similar areas of business can affect organizational decisions and increase

performance. With technology, businesses can track their competition and adjust their

strategies accordingly. For instance, they can lower or raise prices, give out promotions,

or adjust their products where necessary.

Technology has progressed exponentially since the invention of the personal

computer. Technology has impacted almost everything one way or another. It has made

life easier and more enjoyable.The retail industry has benefited from technology as well.

The ability to get their products out to the world or becoming more user friendly,

technology has played a crucial role in this industry.

External Environment (Task)

“The task environment is closer to the organization and includes the sectors that

conduct day­to­day transactions with the organization and directly influences its basic

operations and performance. It is generally considered to include competitors, suppliers,

customers, and the labor market” (Daft & Marcic, 2013, p. 56). In this section we will be

looking at the first three of the four factors.

Customers

Big Lots is a nationwide chain of stores with a large number of shoppers. The

main customers in this market include lower­middle income people. At Big Lots they

have a target customer whom they call Jennifer (Levin, 2013, August 30, p. 4). They

came up with this name because it is the most common name registered to their Buzz

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Club Rewards program. Jennifer is a female between the age of 29 to 54 who is married

with two kids and has an annual household income of around $54,000 (Levin, 2013,

August 30, p. 13). After conducting research and collecting data over time, the company

created Jennifer to represent their core customer. They discovered her likes and

dislikes and also her shopping habits. By creating Jennifer, Big Lots’ employees know

who they should expect to come through the door and how they should be treated. The

employees know what Jennifer likes so they know products they can push with success

and ones that they might as well not even bother with. For instance, Big Lots found that

Jennifer enjoys shopping the stores seasonal and furniture sections. On the other hand,

the sections that were not consistent included food and consumables. Perhaps Big

Lot’s food and consumable section was not as strong as the other sections of the store,

which led the customer to skip over the area in general. After seeing this data and

noticing a store weak spot, one of the first moves Campisi made was to install food

freezers in stores. By doing this he opened a whole new field of products to sell to try to

boost the sales in the food category. Most Big Lots stores around the country now are

able to sell dairy products and frozen foods to make shopping easier for Jennifer,

because they now can be a one stop shop for groceries.

Suppliers

The suppliers of Big Lots are stores that the average shopper shops at

frequently. Big Lots buys most of their products over stock from large companies when

they have too much or it is not selling as expected. “We buy closeout merchandise from

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manufacturers who want to reduce inventory as a result of package changes, canceled

orders, product discontinuation or test market products” (Big Lots Corporate, 2014).

Although they are buying overstock, Big Lots mainly goes through a third party for

procurement. When Campisi took over the company in 2013 he made an immediate

change to how the suppliers were viewed. Prior to Campisi, suppliers were just treated

as stores they were buying product from and not much more after that. When Campisi

took over he placed the suppliers par with customers of his stores. He said in an

interview that before suppliers were embarrassed to sell to Big Lots because we did not

treat their products well and just threw them on the shelf. After he remodeled the stores,

he put a new emphasis on the products.

Another change Campisi made was narrowing down the list of their suppliers.

With a new broad list of suppliers, all of the excess inventory must be stored

somewhere. After looking at a list of these suppliers, it was discovered that most of

them are located in specific geographical locations including southern California and

Chicago (Edwards). Big Lots has a total of five distribution centers strategically placed

around the country to make it convenient for these suppliers to provide goods to them.

These distribution centers are located in Columbus, OH; Tremont, PA; Montgomery, AL;

Durant, OK; and Rancho Cucamonga, CA (Edwards). Total, these centers average

around 1.2 visits a week per store.

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Competitors

Big Lots faces many competitors.Being in the discount retail industry invites a

long list of major competitors. Although Big Lots is included in the discount retail

industry, it is more of a broadline closeout company which puts them in a class of their

own. The closest competitors Big Lots has is Family Dollar and Dollar Tree stores

(Yahoo Finance, 2013). Family Dollar and Dollar Tree run a much larger scale

operations than Big Lots does. At the end of 2013 Dollar Tree had 4,500 stores in the

United States and 140 stores in Canada (Dollar tree, 2014, June 12). Family Dollar has

8,100 stores in the United States (Family dollar, 2014, July 12). In comparison, Big Lots

operates around 1,500 stores in the United States and 79 stores in Canada (Big lots,

2014, August 12). Even with these two companies as competitors, Big Lots is still the

largest of its kind. Most customers would prefer to shop at Big Lots for most of their

things as compared to Dollar Tree or Family Dollar due to the wider range of offering at

higher quality. Also, Big Lots offers more brand name products where as the Dollar

stores mostly sell knockoffs.

Big Lots also has competition with big name stores such as Walmart and Target.

Although Big Lots offers much lower prices than these companies, Walmart and Target

can offer an even larger selection of products for customers wants and needs.

Organizational Environment (Internal)

Big Lots mission statement is “Surprises* in every aisle, every day

*Unexpected prices, items, and brands” (‘Big lots corporate,” 2014). This is a very broad

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statement and targets the customers that come into Big Lots, showing that the company

has a variety of different items, brands, and outstanding prices that challenge their

competitors. Big Lots’ vision states the company is “recognized for providing an

outstanding shopping experience for our customers, valuing and developing our

associates, and creating growth for our shareholders” (Big lots corporate, 2014, p. 3)

This statement is very direct and shows that Big Lots puts a large emphasis on its

customers, associates, and shareholders. Maximizing shareholder wealth is one of the

most important goals a firm has, and without its shareholders the firm would cease to

exist. Their values are “Exceed customer expectations. Treat people with respect and

dignity. Be a passionate leader. Participate and contribute, pursue excellence, work as

a team, share knowledge, make quick, responsible decisions, listen and communicate,

and have fun” (Big lots corporate, 2014, p. 4). Their core principles are designed around

honesty and integrity. They want to be sure to have honest workers and try to resolve

any issues that arise.

History

According to Big Lots Corporate (How we got here, 2014, p. 2­18)

1967 Sol shenk founded Consolidated International, Inc. ­ the company that is now Big Lots

1982 Consolidated Stores Corporation launches the Odd Lots closeout retail chain, with the first being in Columbus, Ohio

1985 Company makes its initial public offering on the American Stock Exchange. The name Big Lots is first launched.

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1986 Company shares begin trading on the New York Stock Exchange

1989 Sol Shenk retires

1993 The company celebrates its first billion­dollar year

1994 Company acquires Toy Liquidators, adding 82 stores in 38 states

1996 Company purchases KB Toys, Consolidated Corporation doubles in size and sales.

1998 Company acquires Mac Frugal Bargains expanding market coverage from coast to coast

2000 Company sells KB toys

2001 Big Lots begins to convert all its stores to single national brand

2002 Completes its conversion to a single national brand

2003 Company opened 86 new stores, remodeled 211 existing stores.

2010 Opens 17 new stores and surpasses the 1,400­store threshold

2013 Closes wholesale division and introduces first Big Lots in Canada

2014 Shut down all Canadian stores

Management and Leadership

The president of the company is David Campisi. His extensive merchandising

experience, collaborative leadership style, and operational expertise positioned him for

his role (Big lots corporate, 2014). Before Big Lots Campisi was CEO of Respect Your

Universe, an apparel company. The chief information officer and senior vice president is

Stewart Wenerstrom. He is responsible for information technology. He has been in Big

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Lots since 2003 (Big lots NYSE: BIG).The chief operation officer and executive vice

president is Lisa Bachmann. She is responsible for merchandise planning, allocation,

and replenishment for more than 1,500 retail stores. She also oversees mission­critical

information technology for all areas of Big Lots, including supply chain management,

merchandise planning, allocation, distribution, store operations, finance, human

resources, and business processes (List of public companies worldwide, 2014). The

Chief financial officer and executive vice president is Timothy Johnson. He joined Big

Lots in 2000 as Director of Strategic planning and is a certified public accountant.

The leadership of this company is based on a collaborative leadership style (“Big

lots corporate” 2014). This is a management practice which is focused on the leadership

skills across functional and organizational boundaries of the business. Big Lots has

many different positions filled by different people and does not solely rely on one person

to make all the decisions. When faced with a difficult decision many of the top heads of

the company will come together and try to come up with a solution. If there is a problem

in one department, the head of that department does not solely make the decision. They

will ask many others for their input and based on what others have to say a solution will

then be reached.

Culture

The culture of Big Lots is very important to the company. One of the

dominant symbols of Big Lots is the orange exclamation mark found at the end of the

name. This symbol is extremely noticeable and is something that comes to mind when

thinking about the Big Lots brand. It is there to signify that they are ready to help

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customers and really make a point that they have enthusiasm and are happy to be work

for this company. The main hero of this company would be the founder Sol Shenk, who

was thought to be one of the major visionaries of the discount retail marketplace. He

was the founder and leader of this company until he retired. He was looked up to by

many of his workers and set a great example of what a leader is. Big Lots’ slogan is

"Brand Names! Closeout Prices!", which is something that Big Lots is proud of and

wants people to hear. When customers think of Big Lots, they associate the name with

quality products and inexpensive prices. Big Lots is a fast paced environment and the

culture is closely related to it as well.

Employees/Facilities/Products and Services

Big Lots is comprised of over 13,000 employees with a total of 1,500 stores in 48

states. Big Lots distribution system is designed to get great deals into shopping carts

faster. “Our five major distribution centers have nearly nine million square feet of space

and use highly automated systems to receive, prepare, load, and ship merchandise”

(Big Lots Corporate, 2014) .Big Lots hires people who will flourish in our fun and

fast­paced environment. Their associates are encouraged to try new ideas, make

decisions, and take on greater responsibilities. Employees need have high energy,

enthusiasm, and dedication customers (Big Lots corporate, 2014). Big Lots sells a wide

variety of merchandise, including packaged food and beverages, toys, furniture,

clothing, housewares, and small electronics, much of which is closed out or overstocked

merchandise from other retailers. Many of the items in these stores sell out quickly: in

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the store one day, but gone the next, with no replenishments coming. Many other items,

such as foodstuffs, are stocked continually.

Interview

1. Introduce yourself (background, years of experience, current position, how you

reached this position)

Beth Graham, District Manager for Big Lots Stores has been with the company

for 25 years. 10 years as a store manager and 15 years as a district manager. I started

in retail while I was attending college, majoring in education. After graduation, I was

looking into the education field when I was offered a position as a department manager

at Gold Circle. I took that job and was very happy in that company. I stayed with them

for 12 years holding a variety of positions including customer service manager,

warehouse manager, merchandising manager and finally as an assistant store

manager. I accepted a position with Target in Memphis, Tennessee after Gold Circle

went out of business. Shortly after my move to Tennessee, Big Lots offered me a

position as a store manager in Dayton, Ohio.

2. What made you want to become a manager?

In my positions with Gold Circle I felt my education background worked very well

as I was still using my degree to educate associates in the retail industry.

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3. Which aspects of your job do you enjoy most?

The training part of my job is probably the most satisfying. I have been able to

see many of the people that I have trained over the years be promoted and move

forward in both in and out of retail field.

4. Which aspects of your job you do not enjoy?

Dealing with customers can sometimes be the most frustrating experiences as

most customers are very aware that they are asking for an unrealistic and

unreasonable request but they still expect to get it.

5. What is a burning issue you face in your job?

One of the burning issues that we deal with constantly is hiring the right people for

our business. We need to hire associates that have an open availability but trying to

hire at a part time status at minimum or close to minimum wage does not bring us the

quality staff that we are looking for. If we hire above the minimum wage, then the

associates we have previously hired get upset due to wage discrepancies resulting in

friction amongst the associates. Also the number of hours that we are able to give the

associates is usually less than 20 hours a week and most can not make enough money

to keep just one job because they are trying to juggle two and three jobs in order to stay

afloat. Then availability when we need them becomes less attractive for scheduling on

a weekly basis. That is why hiring is the biggest issue we have on an ongoing basis.

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Because the hours are better during the holiday season, we can usually attract a better

group of people. After the Christmas shopping season, we keep some of these

seasonal associates on a more permanent basis.

6. What things are you responsible for in your job?

I manage 16 stores around the Dayton, Ohio area. I must visit each store multiple

times a week to make sure it is running well and everything is under control. I also deal

with any problems that the managers of the stores cannot handle.

7. What is your favorite part about working for the company?

One of my favorite things about working for Big Lots is the way that they treat

their employees. We have many team meetings a year where we do fun activities to

promote teamwork and togetherness. I know that if I ever have a question or issue I can

call one of the district managers in a surrounding region and they can help me to solve

the problem.

8. How do you judge success?

One of the ways that I judge success is through the satisfaction of the customer.

If the customer comes into the store and has a good experience that is considered a

success. If they come in and the store looks messy, the employees are not friendly and

they have a bad experience than I need to look at how I can make it better the next time

they shop with us.

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9. What attributes does someone in your position need to be successful?

Time management, patience, level­headedness, organization.

10. Has your role changed since you’ve been with the company?

Yes, when I first started with the company I was a store manager in charge on

one store. When the district manager of the Dayton area retired, I was chosen to take

on the role. In the beginning I started with just a few stores. Now I am responsible for 16

across the Miami Valley.

Solutions

A high employee turnover rate is something that no company wishes to have.

The Wall Street Journal estimated that it costs twice the employees’ salary to hire and

train new people when someone leaves (How to reduce employee turnover (n.d.)).

There are a couple of ways that Big Lots could think about resolving high turnover.

Some of these would include offering higher wages and providing more hours. Although

these would be ways to solve the hiring issue, these are not quite realistic ideas.

By raising the pay rate you provide to your employees you will end up losing money

yourself. Also if you begin to raise the wages of employees working minimum wage jobs

such as cashiers and shelf stockers, some managers might complain and request a

raise themselves. Some companies have strict caps on salary that would not allow for a

raise in pay, the manager should make it clear to an interviewee about these policies so

25 BIG LOTS REPORT

that they are aware not to expect anything in the near future. Providing more hours to

employees can also be tough. Big Lots in specifically is given a set number of hours

each week that they are allowed to schedule workers for. They cannot go above this

number without the ok from a higher up manager. When a strict guideline of hours is

given like this it makes it hard to provide more work for part time employees. Again the

only solution to getting the right applicants in this case would be to disclose that they will

only be able to work around 20 hours a week.

A company stating that they are only able to provide minimum wage and low

hours reduces the amount of quality candidates by a great amount. Big Lots must walk

a fine line between not disclosing this information and hoping a good candidate will stay

on board and disclosing it and hoping that a hard worker in a tough spot will come in

and apply. Even when they do get the occasional hard worker in desperate need of

employment this person is not apt to stay long due to the fact that they could probably

work in a higher position further on down the line after gaining some experience.

A more realistic solution that Big Lots may look into is a reward system to help

motivate some of the lazier workers into putting more effort into their jobs. The opposite

of rewarding employees by punishing them could also prove effective. Our manager

also mentioned that no­call, no­shows were a huge problem with this company. If Big

Lots were to put a system in place that hinders the worker by not coming to work it may

push them to come more often.

Improving the work environment in a few different ways could prove to benefit the

company greatly. One of the the possibilities for solutions to the turnover issue could be

26 BIG LOTS REPORT

offering a small pay raise or benefits. This gives employees a greater incentive to work

hard in the company, developing a deep commitment to the job.

Another solution that is easily attainable could be the potential for advancement

within the company. This would include rewarding smart, resourceful, hardworking

employees more important job titles within the company by giving them a promotion with

a more important job title. Because hiring workers seems to be a sticky situation, we

would recommend promoting employees within the company. This way you already

know the work ethic of the person and how they would act in certain situations which

helps greatly with the turnover problem.

Another idea that would help the business would be conducting regular

employee reviews and Exit interviews. If a business is suffering from a high turnover

rate, one reason to figure out why is to ask them personally. Being able to meet and talk

with employees to figure out what they like and what they don’t like can greatly help the

operations within a business. These reviews can also give you great ideas because

employees look at things from a different perspective.

Overall, the burning issue can be helped if one were to take the necessary steps

to avoid turnover. Giving small benefits and rewards, promoting within the company,

and conducting regular employee interviews and exit interviews will help in the long run

for maintaining the internal business.

27 BIG LOTS REPORT

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