Mark Tritton, Bed Bath & Beyond CEO, opening a store, July, 2021 – Photo: Bed Bath & Beyond
What worked at Target didn’t work for Mark Tritton at Bed Bath & Beyond
Mark Tritton came to Bed Bath & Beyond with great fanfare in 2019 after his tenure as the chief merchandising officer at Target. Mr. Tritton relied heavily on his Target experience in his plans to turn his new company around. In the end, however, Mr. Tritton learned that what worked for Target just didn’t at Bed Bath & Beyond. The news came today that Mr. Tritton is out as president, CEO and a board member of Bed Bath & Beyond.
Sue Gove, an Independent director on the retailer’s board and chair of its strategy committee, has been named Interim Chief Executive Officer. Ms. Gove has a career spanning more than three decades in retail in senior financial, operating and strategic roles. She previously served as president and CEO of Golfsmith and COO of Zale Corporation.
“We must deliver improved results. Our shareholders, associates, customers, and partners all expect more,” said Ms. Gove in a statement. “We are committed to providing customers with a one-stop destination to meet their needs through our assortment, experience, and services, whether online or in stores. Top-tier execution, careful management of costs, greater supply chain reliability, prudent capital spending, a stronger balance sheet, and robust digital capabilities will all be important to our success. I’m eager to start working more closely with our leaders and our associates across all banners to make the necessary strategy adjustments and create a brighter future.”
Mr. Tritton seemed to be taking many positive steps during the early months of his tenure as the company improved its financial stability, upgraded its omnichannel capabilities and went out trying to create a point of difference with its owned brand merchandise. Stores were being remodeled to improve the customer experience.
Business initially improved during the pandemic as consumers focused on buying items to make living in lockdown more comfortable. The pandemic, however, didn’t take long to throw a wrench into Bed Bath & Beyond’s plans as the retailer appeared to be plagued more than most with supply chain disruptions.
The retailer today reported that its comparable physical store sales fell 24 percent year-over-year in the first quarter ending May 28. Online sales dropped 21 percent.
“Our first quarter’s results are not up to our expectations, nor are they reflective of the company’s true potential. The initiatives we are instituting today are just the first steps in putting our business on firm footing to drive our future success,” said Ms. Gove.
Discussion Questions
DISCUSSION QUESTIONS: What went wrong and right during Mark Tritton’s tenure at Bed Bath & Beyond? What will Sue Gove and the next CEO of the retailer need to do to turn Bed Bath & Beyond’s business around?
Poll
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Ultimately the CEO is accountable for results. Full stop. However boards (especially those with activist directors), often place unrealistic expectations on their leaders. Tritton appeared to have everything required to turn Bed Bath & Beyond around, but let’s not forget that he started in 2019 – and then the pandemic hit. Good luck to the interim CEO — I expect it will take a considerable amount of time to recalibrate the business and find another CEO. What will Sue Grove need to do in the short-term? Successfully execute some of the plan that Tritton laid out.
His plan wasn’t the right plan.
It sound like she is going to focus on management rather than strategic leadership.
Good turnaround strategies in retail need two ingredients: an understanding of the current customer and a clear view of who the future customer might be and how to win them over. The common ingredient is the customer; it’s always about the customer!
Sadly, Bed Bath & Beyond failed on both fronts. When he arrived at the company as CEO, Mark Tritton put in place a strategy that he largely copied from his former employer, Target. He spruced up stores, introduced new brands, and moved Bed Bath & Beyond away from its promotional roots. But he didn’t ask those critical questions about customers – and remember Bed Bath & Beyond’s customers are not the same as Target’s customers.
Fast forward to today and the results are plain. Bed Bath & Beyond has lost its some of its traditional promotional shoppers – the ones who were driven to buy by the coupons the store gave out. But it has not gained many new customers because the new brands and stores are undifferentiated and bland – and nowhere near as good as the competitors from which Bed Bath & Beyond would like to steal share. External conditions are unhelpful, but they are not the root cause of all these problems.
Sadly, with losses nearing a third of a billion dollars in just one quarter and with sales down by 25%, the market has completely lost confidence in leadership and Mark Tritton has lost his job. The customer, it seems, is both the king and the kingmaker.
One-hundred percent correct. A lot of what was used successfully in the past (regardless where you came from) in the retail sector will/should work – however when you throw a pandemic in there, all bets are off. Customer habits changed dramatically, and Bed Bath & Beyond did not pivot as quickly as other retailers did. There was no differentiation, no value proposition, no delivery that got customers excited to go to Bed Bath & Beyond. I hope the next CEO can take the lessons and carve a different path to continue forward.
They have a “value proposition” video on their investor site, but it just shows customers using things they presumably bought from BB&B.
I agree. Strategy always begins with a vision for how to better fulfill the needs of customers in a new and unique way.
I don’t think in all honesty anyone can tell us the roots of what went wrong with the company. However I think this change of leadership comes at the right time. We are all attentive to the forces of the economy and what their potential impacts can be on retailers. Looking at the second half of our year may give us enormous challenges, with shoppers looking for lower prices on all staples, etc. along with looking for new retail experiences, which perhaps will shift their loyalties. This could be a good time and opportunity to regenerate consumer excitement. Hoping a new leader will work the magic.
Bed Bath & Beyond can’t be compared to Target, they operate on completely different business models with very different value propositions and customers. The biggest challenge at Bed Bath & Beyond is that they haven’t yet figured out what they want to be. They sit at the intersection of discount department store, value priced home goods with some off price health and beauty thrown in the mix. With all of these categories the lowest price is the driver, which is a game only won by Walmart or Amazon because of their massive scale. Trying to shape Bed Bath & Beyond in this way was never going to work. They need to find new ground to attract the shopper, and optimize online sales by leveraging their physical stores. Perhaps if they developed a line of white label products that could garner a following – like Trader Joe’s, but that takes time. A better route to speed up turnaround would be to become a selling partner for high quality online-only brands who need brick and mortar to thrive. Are Oprah’s favorite sheets really that soft? Let’s go to Bed Bath & Beyond to find out. Is that Article sofa comfortable? A Casper mattress? Made-in cookware sets? By becoming a partner to brands needing physical gravitas to improve profits, Bed Bath & Beyond can offer something unique and valuable to shoppers.
Instead, they developed their own product lines with no brand recognition or apparent advantage, but adding a lot of complexity to their commercial and supply chain operations. And they tried to broaden the variety of low-price point products to ostensibly compete with Amazon and Walmart which — and you are right — they can’t win that game. I like your idea of being a retailer of higher-end products.
There are many parallels between this story and the story of Ron Johnson. Both left successful retailers, both tried to implement tactics that had worked at their former employers. But also failed to recognize the differences in customer base, shopping trip drivers, and economic challenges. Bringing your experience to a new challenge is fine, but don’t assume what worked there will work here. Use what you know to forge a new path.
Remember when execs from General Electric were being poached to be CEOs? Most of them tried and failed to turn run their business like GE.
Poor company economics and lost market share during the pandemic overshadowed a talented CEO and team. Structural business weakness continues to face worsening economic headwinds and points to an unsurvivable future for Bed Bath & Beyond.
Coming from Target could have and should have meant a better experience, or at least some colorful ads, and it didn’t. It proves Target is the result of two things; 1.) The sum of its parts and 2.) Cornell.
Sometimes when the turnaround CEO arrives with the “right” strategy it is years too late. I think that’s the case here.
My feeling is that Bed Bath & Beyond was already left with the most unprofitable, promotional-oriented customers, and others less price-sensitive ones moved their loyalties to Amazon and other outlets.
This means when your changes try to turn you a little more mainstream, you end up driving away the only customers left. It’s the recipe for a tailspin.
Not too dissimilar from what happened at JCP. You can’t turn a donkey into a horse.
There is a big difference between the chief merchandising officer and the chief executive officer. It seems that Bed Bath & Beyond has been a one-trick pony for the last several years — the trick being 20 percent-off coupons.
As we have seen, the problems with Bed Bath & Beyond go much deeper than being fixed by their single trick. I suspect Mr. Tritton’s experience at Target did not include the operating breadth that was needed.
Ms. Gove’s background in finance, operations, and strategy are what is needed at Bed Bath & Beyond. The big question is, “is it too late?”
Bed Bath & Beyond is not Target. The retailer has its own set of challenges and issues. The owned brands and cleaner stores were not at the top of the list to fix, but that is where leadership focused first. The real work needs to be done behind the scenes. Realignment of the organization, enhanced systems, fixing the fulfillment process. While as a marketer I appreciate the speed to tell a good story, the executive team was too quick to share a story not yet written. Changing signage, developing private label lines and stripping away the talent on day one was the wrong first step.
Honestly, this felt like watching a train wreck in slow motion. With good intentions the CEO trotted out shiny new “improvements” on finance channels but it all sounded surface level – OK, we all knew Bed Bath & Beyond’s two most glaring issues were the coupons and the clutter but it is management’s job to dig under the surface to see stronger and more game-changing opportunity: stronger digital transformation and massive improvement in front line experience.
The turnaround and transformation strategies necessary at Bed Bath & Beyond required an authentic approach, as opposed to the lift and shift approach leveraged by Mark Tritton put in place from the Target playbook. Every aspect of Bed Bath & Beyond’s transformation strategies had to be focused solely on the customer, the customer experience, and competing in the new digital-first landscape.
While Bed Bath & Beyond’s transformation plans included significant capital investments in the store renovations, a micro-fulfillment strategy including BOPIS and curbside pickup, along with a wider private label assortment, the missing component was paying close attention to the Bed Bath & Beyond core customer. Bed Bath & Beyond is famous for its promotional strategies and couponing approach, which may appear outdated on the surface. However, unlike the Target customer, the Bed Bath & Beyond customer prefers this method of shopping.
Some of Bed Bath & Beyond’s transformation plans were disrupted by the pandemic. However with comp-store sales falling 24 percent year-over-year in the first quarter ending May 28 and digital sales dropping 21 percent, it speaks to the fact that the core customer is not satisfied with what Bed Bath & Beyond has to offer.
I think Bed Bath & Beyond is another category killer whose time has passed. There were lots of spurious moves over the years — leasing out a health and beauty aids department, honoring the infamous 20 percent discounts but trying to change those discounts to have an actual expiration date.
We can talk about bad plans and poor execution, but I actually think the days of the strip-mall based category killer are just coming to an end.
Weaning customers off promotions is risky. This is the second high-profile attempt that failed. It does raise the question, if you only court discounters, who will make up the difference? And if you limit them, will they leave you weaker than if you never offered them? There are several brands with a constant supply of discounts including Gap. I wish Mr. Tritton had not come aboard with the added weight of a pandemic on him, to see where his vision could take it.
Mr Tritton’s Target-style solutions (narrower assortments and less sales promotion) clearly didn’t work, despite the bad timing of the pandemic. Perhaps the Bed Bath & Beyond core shopper enjoys a wider choice and those coupons.
All that in hindsight, now what does the company and its new leadership plan to do? A clear vision, focused on core consumers and well-executed, is key to the company’s survival.
What works for one retailer doesn’t always equate to another and Mr. Tritton – with all his experience – should have known that applying a cookie cutter approach to Bed Bath & Beyond as if he was still at Target would not end well. Clearly the Q1 numbers are horrific and Ms. Gove has an enormous task on her hands to shore up the business. But it can be achieved. I was just shopping in Bed Bath & Beyond last week and there is tremendous potential in the brand. She will have to address every aspect of the business with product assortment, store execution and omni-channel as primary areas to improve.
The idea that success at Target (an existing strong store with excellent brand and merchandise) would deliver success at Bed Bath & Beyond (a store, struggling to build an identity other than “cheap” and “cluttered”) is probably the most common error in hiring. Past success is no indicator of future success. Yet boards make this mistake constantly.
This situation seems like a less dramatic version of the Ron Johnson/J.C. Penney’s hire. In that hire, somehow it was lost on all involved that the success of Apple stores came from Apple products — so Johnson’s experience failed to include anything really useful for J.C. Penney.
I know we need heroic semi-celebrity CEO hires to support the stock price. But they deliver far less structural value than boards hope.
The problem is that all of us – especially those who live in the C-suite – are victims of our past success. Not only is Bed Bath & Beyond not the Target where Mark Tritton flourished, neither is Target. Retail environments, consumer sentiments and behavior, and competitive forces change every second of every minute of every hour of every day. You either accept that and evolve or you fail. Sue Gove, and/or whoever succeeds her, will have to reconnect with Bed Bath & Beyond’s core consumer base and identify pragmatic and realistic ways to expand it. To paraphrase James Carville, “It’s the customer, stupid.”
There is no compelling reason, save a 20% off coupon (perhaps), to shop BB&B. There hasn’t been for many years and there is likely to be none in the future.
You mean the 1% reward structure — spend $500 and get a $5 coupon won’t totally disrupt their economics and fuel the turnaround … tongue in cheek…. 😉
I knew Sue Gove back in her days at Zale Corporation. She is a solid marketing and operations pro. To turn the business around as indicated, they must start with inventory — having supply chain issues is not satisfying especially in a high-volume retail space. As shared, the new Welcome/Welcome+ program is and will be a disaster. Really hate to put it that way, but the “new” program launched will only hurt their performance unless and until it is fully re-freshed to a customer-friendly, value-based design/strategy.
It was evident from the start, that this strategy was going to fail. I’ve been saying it ever since it started.
Cheapening the merchandise mix into a Target copycat of off-brand stuff (not unique at all), and eliminating the higher priced branded items from the stores (those items were a bit harder to find in town at a physical store, but all very readily available online) was a terrible strategy. They lost the high dollar customers and did not gain many Target customers (because those people had no reason to leave Target).
So now they are stuck with stores full of a bunch of weird private label products that look very much like Target private label products in design, packaging, and even brand names. Nobody wants these items, at least not at the prices they are charging.
It will be interesting to see what happens.
I think the chain needs to significantly downsize then get back to a cleaner and more refined version of its old merchandise mix that focused on better branded products, but it may be too late.
Chances are even if this CEO had not made all of these changes, the chain would still be struggling. Recall the previous management was stuck in a situation of far too many SKUs in the store, many that did not sell, overstocked, outdated website, outdated products, but at least they were making sales and had strong foot traffic in the stores … this chain was already very broken before all of this. This just broke it further.
Bed Bath & Beyond has not been relevant as a retailer for nearly the past decade. And as they became more irrelevant they started making decisions that limited their reach even further. By decreasing their assortment and emphasizing limited options and product that could get even more promotional was a mistake.
The store used to straddle the line of a department store home goods section and a big box retailer’s selection, but lately they have eschewed those higher-end products and only focused on the lower end. Fewer options limit your reach dramatically, and also take away that sense of excitement of “what else is here.”
I see a lot of similarities in their demise and the demise of Lord & Taylor. Both couldn’t figure out how to get their consumers off of coupons, and both couldn’t get the right mix of product and consumer.
I’m not sure anyone can turn this around. Most people have just forgotten that this store even exists.
It is amazing how they can pay someone $27m a year who doesn’t have the slightest clue about strategy. Strategy is about gaining ground or putting distance on competitors. By definition, this requires creating unique value through using a unique set of activities. This means that your business model has to be different than your competitors to better fulfill the needs of customers.
BB&Bs strategy contained no unique strategic activities. Instead they simply tried to catch-up by doing things that their competitors have already done including: improving its web-site, creating a customer loyalty program, curbside pick-up, same day delivery, reducing supply costs and inventory, closing stores, providing products with a lower price-point, Much of this was attempted by Sears. And we know how that turned out.
BB&B did create their own product lines but it is not apparent how these could better sufficiently fulfill the need of customers to be considered strategic
It takes imagination to be a strategist. Most CEOs lack this so they implement what they know, follow business trends, consultant’s advice or copy successful competitors. None of these actions necessarily result in strategic opportunities. These might help you stay in the race, but, they can’t help you win it.