After the recession of 2008, Bed Bath & Beyond emerged stronger than ever. Bed Bath & Beyond grew by purchasing additional stores while rivals like Sharper Image and Linens ‘n Things went bankrupt. Big Blue coupons for discounts on towels and cooking tools at its home-goods superstores drew customers in like magnets.
Bed Bath & Beyond has fallen from prominence as the U.S. economy enters a new time of uncertainty because of its cumbersome organisational structure and its inability to adequately account for the rise of internet shopping.
What happened to the firm is illustrative of the factors that will shape the retail environment in the wake of the epidemic. The recent economic worries have exposed the shortcomings of corporations like Bed Bath & Beyond, whose financial issues were hidden while customers hurried to spend their stimulus money. As consumers reduce their discretionary spending, it will be even more important for stores to modify their strategies.
Retailers have had a rough go of it over the last several years. All three of these companies declared bankruptcy in 2020. However, in the previous two years, businesses have profited from shoppers’ increased spending confidence in the United States. More businesses are at danger now that consumers are more selective in their purchasing decisions.
Bed Bath & Beyond was founded in 1971 to take on the home goods divisions of department stores, at a time when the retail environment looked quite different. The first locations in the business were established in New York and New Jersey by company founders Warren Eisenberg and Leonard Feinstein. The company’s initial name, Bed ‘n Bath, reflected the limited scope of its offerings.
The new shop claimed to have more options for linens like sheets, towels, and shower curtains than department stores like Macy’s. In 1987, the company changed its name to Bed Bath & Beyond to reflect the growing scope of its product offering and number of locations. Initially publicised in 1992.
It encouraged new ideas, according to former managers and workers. Bed Bath & Beyond eschewed television commercials in favour of word-of-mouth marketing and the massive coupons it sent to the homes of millions of Americans. Many customers would preserve the 20% discount coupons in their glove compartments or desk drawers in case they ever needed a new toaster, for example.
Bed Bath & Beyond’s decentralised warehouse model also gave local store managers greater leeway in stocking their shelves with products likely to be in highest demand.
It also pioneered the use of digitally integrated technologies in retail. Displays of SodaStreams and juicers, for example, would have how-to films playing in front of them to give customers an idea of what they can do in the house. In 1999, it launched its website.
Bed Bath & Beyond has 311 locations in the year 2000. Ten years later, it had 1,100 members. They bought out Harmon Stores, Christmas Tree Shops, Buy Buy Baby, and Cost Plus World Market between 2002 and 2012. According to Richard McMahon, who held various executive positions at the company, including chief strategy officer, over the course of 17 years before leaving in 2015,
Bed Bath & Beyond lost ground as rivals like Amazon, Target, and Walmart poured resources into improving the online shopping experience. Since the 20% off discounts were not reflected in internet searches, customers were misled into thinking that competitors like Amazon had better prices.
By issuing $1.5 billion in bonds to repurchase shares in 2014, Bed Bath & Beyond made its debut in the debt market. Many stores stay away from debt because they know how fast the retail business can cause even manageable amounts of debt to become unmanageable. The action was hailed as a “seminal event” by UBS analyst Mr. Lasser, who speculated that it was an effort to boost the stock price in order to stave off activist investors.
If that was the plan all along, it backfired. In 2019, three activist investors, Legion Partners, Macellum Advisors, and Ancora Advisors, prevailed in a dispute with the retailer, earning them the right to vote for four new board members and, ultimately, the appointment of Mark Tritton as Target’s first chief executive from outside the company.
Many aspects of the work environment at Bed Bath & Beyond changed rapidly. Workers were let go. The discretion of shop managers over the products carried was reduced. Former CEO Tritton, who resigned last year, was unwilling to discuss his time at the firm.
Bed Bath & Beyond joined other businesses in coping with supply chain issues brought on by the epidemic. However, problems were further complicated by the company’s decentralised structure, and its e-commerce technology lagged behind that of many of its major rivals.
The company’s intention to utilise a public stock offering to generate almost $1 billion saved it from bankruptcy in early February. Hudson Bay Capital Management’s strategy was conditional on Bed Bath & Beyond’s stock price remaining at or above $1 per share. The store terminated the agreement this month because its conditions had been broken. On Friday, its stock price ended the day at 29 cents.