Bed Bath & Beyond emerged victorious from the 2008 recession. While competitors such as Sharper Image and Linens ‘n Things declared bankruptcy, Bed Bath & Beyond grew its company by acquiring additional retailers. Its home-goods emporiums full of towels and kitchen aids — all available at a discount with that Big Blue coupon — were magnets that drew customers back.
Now, as the US economy enters another period of instability, Bed Bath & Beyond is no longer on top, owing to an increasingly cumbersome corporate structure and a failure to fully account for the rise of internet shopping.
On Sunday, the 52-year-old retailer announced its intention to file for bankruptcy in the United States Bankruptcy Court for the District of New Jersey.
The company stated in its Chapter 11 petition that it expected all stores to close by June 30.
It will no longer accept coupons after Wednesday, when its store closure deals begin. Customers have until May 8 to redeem their Bed Bath & Beyond gift cards. The business did not explain when its retail apps would be discontinued, simply that users could use them at this time.
The company’s demise reveals the factors defining the post-pandemic retail scene. For corporations like Bed Bath & Beyond, whose financial troubles were hidden while consumers hurried to spend their stimulus money, the recent economic concerns have exposed those flaws.
As consumers cut back on discretionary spending, merchants’ ability to react will become even more critical.In 2023, we will see the Darwinism of retail, said Michael Lasser, a retail analyst at UBS who has tracked Bed Bath & Beyond for 16 years.
For retailers, the last few years have been turbulent. J.C. Penney, Neiman Marcus, and J. Crew all declared bankruptcy in 2020. However, shops have benefited from the propensity of US customers to spend in the last two years. As consumers become more cautious about their purchases, more businesses will be put at risk.
When Bed Bath & Beyond was founded in 1971 to compete with department store home goods divisions, the retail landscape looked very different. Warren Eisenberg and Leonard Feinstein, the company’s founders, opened the chain’s initial outlets in New York and New Jersey. The company was previously dubbed Bed ‘n Bath, a reference to its limited product offering.
The upstart business claimed a bigger range of bedsheets, towels, shower curtains, and other home needs than a store like Macy’s. In 1987, the shop was rebranded Bed Bath & Beyond as their goods assortment and store base expanded. In 1992, it went public.
Former leaders and staff believed the company encouraged creativity. Instead of television commercials, Bed Bath & Beyond relies on word-of-mouth marketing and huge coupons given to millions of Americans’ mailboxes. Countless customers would save those 20 percent off cards in their cars or junk drawers as a reminder to visit the store if they were in the market for, say, a new toaster.
Bed Bath & Beyond also used a decentralized warehouse system, which allowed store managers to be more flexible in buying products that would be most appealing to shoppers in their area.
It was also among the first to deploy integrated digital technologies in its stores. Instructional movies would play in front of displays for things such as SodaStreams or juicers, giving buyers an idea of how they could be used at home. It first launched their website in 1999.
Bed Bath & Beyond had 311 shops in 2000. It had 1,100 a decade later. The company bought Harmon Stores, Christmas Tree Shops, Buy Buy Baby, and Cost Plus World Market between 2002 and 2012.
If such was the intention, it was not a sustainable solution. In 2019, a group of activist investors — Legion Partners, Macellum Advisors, and Ancora Advisors — won a battle with the retailer, gaining access to four new board members and, eventually, a chief executive they supported: Target’s Mark Tritton, the company’s first top executive to come from outside the company.
Bed Bath & Beyond’s company atmosphere quickly transformed. There had been layoffs. Store managers have less control over what items were stocked in their stores. Mr. Tritton, who departed the company last year, declined to comment.
Revenue in 2020 will be $2.6 billion, a 16% decrease from 2019. What was once a modest debt load became untenable.
As the firm sought for ways to save money, it began to undo the things that customers liked about Bed Bath & Beyond. The business announced in 2020 that it would discontinue mailing its trademark coupons. It shifted away from well-known national brands in favor of developing its own private label brands, which often offer higher profits. It removed goods and demolished its 14-foot-tall towel tower to make stores feel more open. Shoppers took note.
