I went to Big Lots and saw why the chain is closing stores and filing for bankruptcy

• Big Lots filed for Chapter 11 bankruptcy this week and is planning hundreds of store closures.
• Private equity firm Nexus Capital Management plans to acquire the retailer.
• I visited a Big Lots store in Maryland to see what it's like to shop there.

Big Lots is facing some big problems.

The discount retail chain filed for Chapter 11 bankruptcy on Monday after postponing its earnings report. It's also planning to shutter 295 of its roughly 1,400 stores, according to a filing in Delaware's bankruptcy court.

Private equity firm Nexus Capital Management plans to acquire Big Lots for an undisclosed amount after it emerges from bankruptcy, the retailer said on Monday. Nexus already owns several consumer brands, including Dollar Shave Club and shoe brand Toms.

Big Lots cited high interest rates and inflation among the factors that have held back its sales in a statement announcing the Chapter 11 filing. Many of its customers have cut back spending on home decor and other non-essential purchases that make up most of what Big Lots stocks, the company added.

Plenty of shoppers are trimming their budgets , especially for purchases they can live without, like eating out or upgrading their home appliances.

But Big Lots has long marketed itself as a place to find great deals. The company has said that it buys products cheaply from suppliers and other retailers, which enables them to keep prices low. That seems like a model that should be working at a time like this. Big Lots did not respond to a request for comment from Business Insider.

To see what shopping at the chain is like these days, I went to a Big Lots store in the Washington, DC, area. Here's what I found:

I visited a Big Lots store in Waldorf, Maryland.

This Big Lots location is one of a few that will remain open in the DC area. The company plans to close at least a dozen stores in the region, according to lists that it has provided over the past two months.

The first thing I noticed were these bags of potting soil and wood pellets for smoking meat.

I visited this store in mid-September, so it definitely wasn't peak planting or grilling season anymore.

I was surprised at all the food items that this Big Lots store had.

This Big Lots store had several aisles of shelf-stable grocery items, from chips to cake mixes.

Big Lots acquires many products from closeouts, which happen when the retailer's suppliers get rid of something at a sizable discount.

That strategy extends to food, which Big Lots acquires "for a variety of different reasons, including other retailers canceling orders or going out of business, production overruns, or marketing or packaging changes," the company wrote in its latest annual filing with the SEC.

There were condiments including ketchup and mustard...

I recognized some big food brands, such as Hellmann's mayonnaise. Others, such as "Totally Tomato" ketchup, were foreign to me.

...as well as bottles of Prime, the line of energy drinks that Logan Paul cofounded.

Prime is facing several lawsuits , including at least two that claim the brand's sales this year have been slower than anticipated, BI reported last month.

Big Lots also had a selection of cleaning and personal care products, such as this store-brand toilet paper.

I found it interesting that a store focused so much on selling closeout merchandise also has so many products under its own brand. Besides this toilet paper, I also found Big Lots-branded paper plates, markers, and puppy training pads.

I found a wider selection of products at Big Lots than I'd expected for a store of this size.

On average, Big Lots stores had an average of 23,000 square feet of selling space in 2023, according to the company's annual filing with the SEC. That's tiny compared to almost any big-box store: The average Walmart takes up 105,000 square feet, according to a company filing .

Yet Big Lots had a lot of departments, from kitchen supplies to furniture to groceries. The selection within each was limited, and it felt to me like the store was trying to be everything at once.

This display of products that cost less than $5 reminded me of a dollar store.

The 99-cent Halloween-themed socks were similar to what I've seen at Dollar General and Dollar Tree stores .

There was also a decent selection of furniture, from bed frames and mattresses...

Signs on the mattresses advertised Big Lots' own credit card, which offer interest-free payments on big purchases.

...to this TV stand.

It reminded me of Ikea's Kallax shelving units.

Even though this store isn't closing, I spied some empty shelves.

These shelves were next to a selection of plastic storage containers and other home goods.

Some of the products at this Big Lots store were from a different era.

I found this selection of DVD movies, including "Inception," released in 2010, and "War Dogs," which came out in 2016.

It's been at least a decade since I saw this many DVDs in one place.

This puzzle featuring characters from the John Hughes' "Sixteen Candles" was a prime example.

I found this puzzle in the toy section for $6. It was one of the most unusual things I found in the store, both because "Sixteen Candles" came out forty years ago and because the manufacturer leaned on the Blockbuster name.

It wasn't just the products: Shopping at Big Lots felt like stepping back in time.

Maybe it was just the rows of fluorescent lighting on the ceiling, but this Big Lots store felt like something out of the 1990s.

The deals didn't impress me, either.

Big Lots customers should still expect "extreme bargains" at its stores despite its ongoing bankruptcy, the company says on a website with information about the filing.

But this 2-for-$5 deal on two-liter bottles of Coca-Cola sodas was representative of the prices I saw at this Big Lots store: Big Lots' pricing was mostly in-line with other places where I could buy similar stuff.

I headed toward the checkouts with two purchases in hand.

In addition to the $6 puzzle, I found a pack of 100 disposable gloves for $1.99, a slightly better deal that I've seen elsewhere.

I left confused about the role that Big Lots is trying to play for shoppers.

Big Lots had the range of products that I'd associate with a big-box store like Walmart or Target. But it didn't have the same selection within each category that I'm used to at those stores.

The company's focus on closeout merchandise also reminded me of off-price retailers like TJ Maxx and Ross, but those stores seem to have a narrower focus on home goods, clothing, and accessories than Big Lots does.

And if you need ketchup, chips, or other groceries, there's no shortage of supermarkets near this Big Lots. I counted at least seven within a mile of the store, including an Aldi, a Safeway, and a local organic market — and each has fresh produce and meat as well.

Lots of retailers have gone through bankruptcy or closed stores over the last 20 years.

From Sears to Bed Bath & Beyond, plenty of once-prominent retailers have gone through bankruptcies , closed stores, and, in some cases, shut down completely. At the same time, Walmart, Target, and Amazon have continued to attract customers.

Based on my trip there, I don't see a reason to keep shopping at Big Lots. If the chain wants to survive — and avoid the fate of Sears — it will need to offer shoppers something that they can't get anywhere else.

Do you work at a major retailer and have a story idea to share? Reach out to this reporter at abitter@businessinsider.com

Read the original article on Business Insider