Big Lots pursues creative sourcing to lessen product shortages


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Dive Brief:

  • Big Lots leaned on alternative sourcing to mitigate product shortages following the abrupt closure of the retailer’s largest supplier United Furniture Industry in November, according to a May 26 earnings call.
  • Since then, Big Lots has been sourcing from over-inventoried mass retailers, distressed retailers and vendors through new overseas sourcing partnerships to fill the gaps, CEO and President Bruce Thorn said during the call. The company has also sent out teams to India and Vietnam to source new products.
  • Big Lots has begun to see stabilization in its furniture business and this month started phasing in Broyhill collections from new suppliers, Thorn told analysts. The company expects to fully mitigate the impact of UFI’s closure by end of Q2.

Dive Insight:

Big Lots has been implementing a range of procurement strategies to fill inventory gaps after UFI’s closure last year.

Aside from sourcing from bankrupt competitors and retailers with excess inventory, Big Lots has also been able to procure Broyhill merchandise at a significant discount from its former vendor UFI.

Although Big Lots was unable to access any products after the supplier’s closure, banks have subsequently “work[ed] things out to the point where we could access some of that Broyhill product that was made exclusively for Big Lots,” the CEO said.

The retailer has been receiving a significant amount of inventory throughout the quarter at a closeout price, which will help the company as it transitions to new Broyhill products from other vendors, according to Thorn.

Big Lots also brought in some “mitigation furniture” late last year after UFI’s closure, however, the CEO told analysts that the product has been harder to market online as they are separate pieces instead of a complete furniture set. To make room for the new Broyhill sets coming in, Big Lots has been implementing promotions through Q2.

Big Lots isn’t the only company diversifying its furniture sourcing strategy. Many furniture retailers have been targeting new sourcing destinations throughout the last few years as backlogs and shortages persist. For instance, furniture company Lovesac has been working to move production out of China in favor of countries like Vietnam and Mexico to further diversify its supply chain.

Williams-Sonoma also has been looking to relocate some of its sourcing away from China, but struggled to find “high-quality vendors” for furniture products in other countries.

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