samael1986/Depositphotos.com
The bankruptcy of Big Lots and recent liquidations of Bargain Hunt and 99 Cents Only show closeout retailing isn’t a cake walk, but Ollie's Bargain Outlet, by all accounts, continues to thrive.
With a recent opening of a store in Omaha, Ollie's entered its 34th state with 599 stores, most located in the eastern part of the country. It claims to now be the largest retailer of closeout merchandise and excess inventory in the U.S., with Big Lots! shrinking from nearly 900 stores pre-bankruptcy to 219 with its sale to Variety Wholesalers.
With a slogan of “good stuff cheap," Ollie's promises to offer “real brands at real bargain prices up to 70% off the fancy stores!” Merchandise ranges from housewares and flooring to apparel, food, toys and electronics.
Ollie's Humor Could Be a Selling Feature, While Ollie's Army Membership Thrives
Ollie's stands out for its sense of humor, including its mascot, Ollie, a cartoonish caricature of co-founder Oliver "Ollie" Rosenberg. Ollie regularly appears in advertising, as well as pun-driven marketing copy and in-store signage, with such playful lines as “Confusion is our most important product.”
“They’re quirky as hell,” Walter Holbrook, principal of Yoda Retail Consulting, told Modern Retail last year. “It’s just all kinds of just stupid slogans throughout the store that is, I think, the complete reverse of a pretentious atmosphere. It’s very down-home marketing, and I love it.”
It has also driven steady traffic with its free Ollie's Army loyalty program, which offers discounts based on purchases, two exclusive members-only events and other surprise offers. In its first quarter, membership grew 9% to 15.5 million.
Ollie’s CEO Eric van der Valk said of the program in an analyst call, “Our Ollie's Army members are our most dedicated, who account for more than 80% of our sales, spend close to 40% more per visit, and shop more frequently.”
Ollie's Relies on its Buyers To Make Smart Purchases
Like other off-pricers and closeout sellers, much of the credit to Ollie’s success is attributed to opportunistic buys, which come from overstocks, package changes, manufacturer-refurbished goods, irregulars as well as leftover stock from closures at other retailers.
“Our buyers have incredible acumen for sniffing out the absolute best deals out there,” van der Valk recently told Nexstar Media.
Ollie’s took advantage of marketplace disruption to recently acquire 63 former Big Lots stores, speeding up its expansion. However, van der Valk said on its recent quarterly call that store closures -- notably Joann, Party City and Big Lots -- have also “created a tremendous amount of excess inventory.” He further said the chain’s “growing size and scale continue to benefit our buying power.”
Ollie's Still Faces Headwinds Tied to Competition, Inflation
Ollie’s still faces many of the same pressures that doomed Big Lots, Bargain Hunt and 99 Cents Only. All three cited the impact of inflationary pressures and heightened competition from a wide range of retailers among the causes for their collapses.
Big Lots said in bankruptcy court papers, “Some of these competitors are large in scale and, as a result, have greater resources and purchasing power than Big Lots, making it increasingly difficult for the company to compete while maintaining solid profit margins.”
Asked by an analyst about Ollie’s ability to remain price competitive amid tariff-driven disruption, van der Valk said the chain would continue to lean on its “fluid and flexible model” to secure deals. He said, “We're constantly sourcing and counter-sourcing product on a daily basis. This is the nature of the business. And we feel very good about our ability to maintain price gaps.”