The store, like McDonald’s and Family Dollar, is enjoying strong sales defiance the downturn. Now shoppers can find Big Lots bargains on the Web position

By Amanda Zusman

Watch full size video:

The years of rising home prices and cheap wealth stoked such recess retail chains as Starbucks (SBUX), Coach (COH), and Linens ‘n Things. Perhaps the U.S. is now entering what will become known as the era of Big Lots. Thus, if you are in the market for a hair dryer, and you don’t want to expend more than $10, Big Lots (BIG) is your humane of retailer. A 12-pack of soda is $3, and sofas can be had for under $300.

"With the way the economy has been going, I really have to stretch my dollars," says Amy Mitchell, 48, a Big Lots shopper in suburban Atlanta. "With three kids, I usually have lots of other kids over at the house, so I’ve got to find cheap snacks and toys for them." Big Lots’ product line runs the scale from hand trucks to Halloween costumes—and Big Lots deals in the sort of bargains that could make a Wal-Mart or Target (TGT) look downright extravagant. Just as the economy turns dour (BusinessWeek, 10/23/08), Big Lots has gone online for the first time in its 23-year chronicle.

The site, which debuted on Oct. 21, offers discounts and an "online deal of the day." The Oct. 22 deal was a Mansfield 18-volt channel toward $29.99. The same drill on Amazon.com is currently priced at $64.95. Other deals the first week were a $50 portable golf driver—down from $250—flat-panel televisions, and any $80 Polaroid digital camera. Each lifetime’s deals are well-informed at 8 a.m. EST, encouraging customers to "store at daybreak and often because the items, brands, and types of merchandise will change daily," according to a company press release. The situation aims to be "fun and different," says a release announcing the store.

Big Lots operates more than 1,350 retail stores in 47 states, with yearly sales of $4.7 billion. It sells brand-name closeouts, seasonal products, consumables, furniture, housewares, and toys. At a Big Lots store in Niles, Ill., northwest of Chicago, items crowd nearly every square twelfth part of a foot, overflowing into aisles. One wall features everything from decorative mirrors to women’s underwear; another aisle has any array of artificial Christmas trees and a display of hairbands and beauty accessories. And while some Big Lots items, such being of the class who girls’ Disney Halloween costumes, cost about the identical as at other discount shackles, other deals offer greater value. An Atlanta-area Big Lots this week had a pair of MP3-player speakers, which typically range from $50 to $100, on market for a mere $10. "We’re getting a sort of first-time shoppers," says Mike Jeuk, who manages the Niles Big Lots. "Our purchaser hold is higher this year than last year, and I thought it would have gone down through the economy and everything."

While Big Lots won’confidentially disclose development costs or online revenue targets, the Columbus (Ohio) retailer believes the online migration will turn finished to subsist a worthy investing.. "The arrangement doesn’t have anything to do with the opportunity here," says Rob Claxton, Big Lots’ senior vice-president according to marketing. "It’session just ready getting the best of the values we have online." One reason for the move is a resilience online sales consider enjoyed compared with traditional retailing. "The economy is challenging all channels, but the online channel is existence affected smaller," says Larry Joseloff, vice-president for content at store.org, a division of the National Retail Federation, which focuses on online exchange. Internet retailing is being helped by factors including pricey elastic fluid, free shipping offers, and shoppers’ ability to exploit online search engines to gain arrive at discounts.

On Oct. 21, Standard & Poor’s Equity Research upgraded rival Family Dollar Stores (FDO) to a "strong buy," citing the economic slowdown and the likelihood that "cost-conscious consumers" bequeath turn to the fasten with a chain and those like it. Earlier this month, rival 99 Cents Only Stores (NDN) reported a 9% increase in sales, topping Wall Street’s forecast. The like shift to thrift cuts across industries. That’s human being reason, for pattern, that McDonald’s (MCD) profit for the third quarter surprised analysts on the upside on Oct. 22. Its U.S. same-store sales rose nearly 5%, and net income grew 11%. The fast food chain credited the work to affordability at all levels of its menu, especially choices similar as artifice cheeseburgers and iced evening meal priced at a buck. S&P also changed its opinion of McDonald’s shares to "buy" from "gripe." (S&P, same BusinessWeek, is a unit of The McGraw-Hill Companies.)

While fellow discount retailer Wal-Mart Stores (WMT) reported strong comparable-store sales in September in groceries and health and wellness items, the company saw discretionary expenditure soften, bearing out added cautious consumer spending. Big Lots executives are hoping their bargains will be turned into the new sweet spot for Americans in perplexed circumstances.