Big Lots Expands into Twin Cities
Although it boasts 1,400 stores around the United States and logged $1.5 billion in sales in the fourth quarter of 2010, Big Lots never had much of a presence in the Minneapolis-St. Paul area. But that’s about to change since the Columbus, Ohio-based deep discount retail chain snapped up a significant amount of vacant, or soon-to-be vacant, “junior box” space in the Twin Cities in March.
“Big Lots had a number of stores in the Minneapolis-St. Paul market in the past, but they were small stores in second- and third-rate locations,” said Welsh Companies senior associate Bob Minks, who brokered the deals. “With the downturn, Big Lots came back a year-and-a-half ago and said, ‘We want to take another run at the Twin Cities market,’” he added. Big Lots’ three new suburban locations--which total 90,000 square feet of space--are the first step in the company’s big push into that market. And, owners are looking to cut deals because of 6.6 million square feet of vacant retail space there, including empty junior box space due to the closing of chains like Circuit City and CompUSA.
“Big Lots is taking advantage of that situation to use the Twin Cities as a test market for its drive to broaden its appeal from the ‘dollar store’ shopper to a more well-heeled suburban clientele by signing leases in A locations and building bigger, better stores,” Minks pointed out. Eight bigger stores in A locations in other states performed well last year. Those stores, which were opened as tests in 2009, averaged more than $4 million in sales and generated around $300,000 per store in cash.
Industry experts observe that Big Lots’ plan is a continuation of a larger commercial real estate industry trend, in which deep discount retailers are replacing more up-market stores that have closed during the recession. Big Lots’ three new Minneapolis-St. Paul area stores in prime suburban centers will open later this year.