On Sunday, the once mighty home goods retailer Bed Bath & Beyond declared bankruptcy after years of poor sales and mounting debt. The company will start closing its 360 locations today and has stopped accepting the big blue coupons that made the brand famous in better days that have long gone. In recent times, Bed Bath and Beyond faced increasingly choosy consumers who avoided the retailer in favor of competitors with better selections and e-commerce capabilities. The company enjoyed a reprieve in the early years of the pandemic as customers splashed cash on home goods, but this temporary turnaround ended as inflation rose along with supply chain problems.
This swift fall would have seemed inconceivable a decade ago when Bed Bath & Beyond boasted more than 1,100 stores across the country. The company got to that impressive point by offering customers larger selections of home goods than they could find at stores like Macy’s. Coupons also captured the attention of consumers: Bed Bath & Beyond eventually became famous for its blue vouchers that took 20 percent off and never expired. The retailer could offer these deals thanks to its decentralized warehouse strategy, which allowed managers to be more flexible about ordering products that would appeal to shoppers at their location. Bed Bath & Beyond’s store experience helped move merchandise as well, with many items accompanied by instructional videos that showed shoppers how to use a product at home.
Still, one thing the company failed to invest enough time or money into was the online shopping experience. While competitors like Amazon, Target, and Walmart built up strong e-commerce platforms, Bed Bath & Beyond focused on buying up other brick-and-mortar chains to increase its store count. This oversight steadily chipped away at the retailer’s revenue, until the pandemic came along and sales quickly took a nose-dive. Not only was Bed Bath & Beyond missing out on vital online business, but its decentralized stocking system also failed under new supply chain strains. Then the company fell behind on its payments to suppliers, who soon asked for cash up-front for all orders. “It’s a death spiral,” said retail analyst Neil Saunders. “If you can’t get the stock, you can’t make the sales. If you can’t make the sales, your credit deteriorates. If your credit deteriorates, people are less willing to supply you. That cycle seems impossible to break.”
Questions:
- How did the pandemic affect sales at Bed Bath & Beyond?
- What sort of qualities helped Bed Bath & Beyond become a retail powerhouse, and why did the company fail to maintain this success?
Source: Jordyn Holman and Lauren Hirsch, “Bed Bath & Beyond Files for Bankruptcy,” The New York Times, April 23, 2023. Photo by Kevin Dooley.