Photo: Getty Images/SeanPavonePhoto
Bed Bath & Beyond CEO’s turnaround plan may just work
It’s been not quite a year since Mark Tritton started at Bed Bath & Beyond (BBBY) with a plan to turn the struggling retailer around. While it may be too early to declare victory, there is growing evidence that the CEO is checking off his to-do list in quick order.
The most recent example is the sale of the 800-store Christmas Tree Shops chain and a Massachusetts distribution center that supplies those locations. That deal, along with the sale of Linen Holdings, a business that sells supplies to the healthcare and hospitality industries, and another of a distribution center in New Jersey, is expected to generate roughly $250 million for BBBY.
“Today’s announcement builds on the purposeful steps we have made throughout the year to simplify our portfolio, unlock capital and create clear strategic focus to accelerate our plans to build our authority in the Home, Baby, Beauty and Wellness markets,” said Mr. Tritton in a statement. “Customers are responding well to the introduction of our new omni-always services, and we will continue to invest in our digital-first experience with a customer-inspired assortment that makes it easy to feel at home with Bed Bath & Beyond.”
BBBY has certainly been among the retailers that has benefitted as Americans stay at home due to the novel coronavirus pandemic, but it’s also clear that steps put in place under Mr. Tritton have helped, as well.
The retailer posted a six percent gain in same-store sales in the second quarter, the first time it has done so since the first quarter of 2016. BBBY, which has focused on improving its digital operations under Mr. Tritton, achieved an 89 percent gain from the channel, helping to offset a decline of 12 percent in store sales affected by the virus outbreak. It also managed to modestly improve its gross margin during the quarter.
Since assuming the top spot, Mr. Tritton has:
- Established a five pillar strategy for the business focused on product, price, promise, place and people with an immediate concentration on omni-always and creating a differentiated shopping experience in stores;
- Brought in a new executive team to help him lead the company;
- Completed a sale-leaseback deal of stores, a distribution center and offices that netted $250 million;
- Sold PersonalizationMall.com for $252 million;
- Announced and implemented a corporate restructuring plan reducing annual expenses by $85 million;
- Added same-day delivery of online orders with Shipt and Instacart.
- Bed Bath & Beyond Announces Significant Milestone In Plan To Sell Non-Core Assets – Bed Bath & Beyond Inc.
- Bed Bath & Beyond Inc. Reports Results For Fiscal 2020 Second Quarter – Bed Bath & Beyond Inc.
- Bed Bath & Beyond Inc. Announces Extensive Changes To Leadership Team – Bed Bath & Beyond Inc.
- Bed Bath & Beyond’s CEO cleans house – RetailWire
- Will ‘five pillars’ provide the foundation Bed Bath & Beyond needs to succeed? – RetailWire
- Bed Bath & Beyond Inc. Announces Completion Of Sale-Leaseback Transaction Generating Over $250 Million In Net Proceeds – Bed Bath & Beyond Inc.
- Bed Bath & Beyond Inc. Announces Strategic Restructuring Program To Simplify Operations And Reset Cost Structure – Bed Bath & Beyond Inc.
- Bed Bath & Beyond Inc. Announces Agreement To Sell PersonalizationMall.com – Bed Bath & Beyond Inc.
- Will same-day deliveries be a difference maker for Bed Bath & Beyond? – RetailWire
- Bed Bath & Beyond banks on private brands – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Are you becoming a Bed Bath & Beyond believer yet? What else are you looking to see that says the retailer has turned the corner and is in a position to grow again? Do you think Mark Tritton has made any moves that he will later regret?
Poll
BrainTrust
Zach Zalowitz
Founder, Salient Commerce Consulting
Bindu Gupta
Loyalty & Marketing Strategist, Comarch
I am becoming a fan of Bed Bath & Beyond and the decisive, meaningful steps Tritton and his team are making. Unlike other turnarounds where the moves were incremental and modest, it’s clear that Tritton isn’t afraid of making substantial changes. I like where Bed, Bath & Beyond is heading and I encourage Tritton to keep his foot firmly on the gas pedal. There’s still much more to do.
I am a firm believer in Mark Tritton and I agree with all of the steps he is taking. They are both logical and customer-centric. Under his leadership, I have no doubt that Bed Bath & Beyond will improve. However this is going to take time. Many stores have not yet changed and still exhibit the old “pile it high” mentality which makes them look cluttered and unappealing. The brand also needs to work harder on its point of differentiation, including private label products. All of this needs to be done against a backdrop of increasing competition and a market that may soften after this year’s boom. In short, Bed Bath & Beyond is in the right hands but it still has some convincing to do!
I’m making the call now – Bed Bath & Beyond will look and feel more like what Target is now by this time next year. You’ll start to see more internal and celebrity brands and a less cluttered store (CFO announced earlier). Step 1, the “put the team together” step, looks complete. I think they have what it takes to execute, but staying focused and on-message wasn’t always the strength in the last regime — so I’m curious to see how well they focus on change management!
Look more like Target? OK. But let’s hope it is very unique itself.
I like the moves. They are strategic and make sense financially and for targeting the consumer. I see no regrets in the future. However “turning the corner” is a long way off. The real question is how relevant a Bed Bath & Beyond store is in today’s marketplace.
The cemeteries are filled with attempted retail turnarounds. It is a sad history. The reason is simple. Once a consumer changes a habit or desire, it is tough to change it back.
Mark Tritton continues to make smart and bold moves to turn the Bed Bath & Beyond business around. Divesting divisions of the company that aren’t part of the forward strategy is the right move. I have personally used their BOPIS and it was seamless, however the store still needs to be refreshed. I’m looking forward to more changes to improve the customer experience!
Time will tell, but Bed Bath & Beyond has for years suffered from poor store performance due mainly to poor customer service if we look back to pre-pandemic. You could walk into a Bed Bath & Beyond and have a fantastic and positive shopping experience. But then you could visit 10 other stores and they could all be a disaster with no one around to help you look for something you wish to purchase, no one to answer your questions, and long lines at the register when only one cashier is working. Where are all the store associates? They have always had plenty of them. But where are they too often? In the back room. They are mostly doing tasks, and even those on the sales floor are doing a successful job of avoiding the customer. Sadly, it’s not a difficult problem to fix. But rather than address that, Bed Bath & Beyond spend too much time attempting failed concept stores, buying other companies, and experimenting with a failed subscription program in hopes of eliminating their never-ending coupons.
Looking at Bed Bath & Beyond today, assuming Mr. Tritton is aware of what is taking place at the store level and can successfully correct it, I see a retailer with a great future. The one benefit they have had for years is that they are the only chain of their kind. So they should be successful!
I have always been a fan of Bed Bath & Beyond and it was hard – because I am not a marketer – to understand why every customer of Bed Bath & Beyond’s didn’t feel like a kid in a candy store. Some of the things that will help with the recovery are: improvement in some IT aspects, weaning customers from the 20 percent-off coupons unless Bed Bath & Beyond can subtly make up the deficit in marking up the products, and constantly working on a friendly, service-oriented, product-knowledgeable store labor force. There is no substitute for this last effort in a footprint that large. We have some ideas…
Bed Bath & Beyond’s transformation was a long time coming and they have the leadership in place, starting with CEO Mark Tritton, to continue to make the necessary moves to be relevant and profitable. While the turnaround and restructuring plan included closing unprofitable locations, curating assortments, and driving value-driven private label offerings, there also was an element of human capital restructuring/job eliminations to meet the needs of a digital-first customer.
It’s clear that more of the same, which included piling assortments high and taking a push approach to retail, was not going to resonate with a marketplace that has shifted to how Target does business across digital channels. With that said, these first steps have proven to be successful — Bed Bath & Beyond has the right team in place.
The home sector was once disrupted by Bed Bath & Beyond 30-plus years ago, however consumer behaviors have changed. Bed Bath & Beyond is on the right path yet there is still much to be done.
Mr. Tritton’s quote in this discussion signals what looks like a great plan structure, so if executed well things should continue to improve. Rather than focus on just digital, e-commerce and related omnichannel, he mentions the customer-inspired assortment. You can have all the greatest omnichannel this/that, but if your experience and offerings fail to connect or are not priced right then it’s all wasted. It shows also the underlying inference here – that the omnichannel digital work and assortment decisions feed off one another based on the underlying data and analytics.
Nine months later, yes improvement was positively made in the direction of Tritton’s “omni-always” goals. Bed Bath & Beyond’s new website is clean and simply merchandised with nice visuals allowing a shopper to instantly change product colorways, especially in bedding, which many Bed Bath & Beyond competitors fail to address. Tritton’s five-pillar strategy focused on product, price, promise, place, and people is the real challenge. Product, price, place is much easier to master than people and promise. Transitioning years of inbred “this is how we do it” behavior into authentic customer-centric in-store customer service is extremely difficult on so many levels in so many stores in so many geographical regions. The risk of failing to change the hearts and minds of front-line associates, as a means to fulfill the new Bed Bath & Beyond promise, is very real. My bet is on Mark Tritton.
Bold moves by Mark Tritton to make Bed Bath & Beyond successful again! His five pillar strategy for the business focused on product, price, promise, place and people with an immediate concentration on omni-always and creating a differentiated shopping experience in stores seems on-point. Now it all comes down to aligning all teams under the same goals which is easier said than done.
The stores in my area continue to look terrible. However, they do have some foot traffic since they reopened after the COVID restrictions lifted.
One store which is the higher volume store no longer “piles it high” and is full of empty shelves even down at customer level (of course the high shelves are empty but still up) and has been this way now for close to a year. The store looks like it is going out of business. I do notice new private label merchandise in this store, prominently displayed. They continue to have a clearance area in the back center of the store that is attempting to sell visibly damaged merchandise “as-is no further coupons” and this really brings down the store and everyone who walks the store sees it since it is in such a prominent spot.
The other two stores still “pile it high” and are pretty well stocked (very low volume stores), but the products they have and their pricing are solid “misses.” Lots and lots of old dated inventory. I don’t even notice their new private label merchandise in this store.
As far as making the chain feel more like Target, is that really what the customer wants? If the customer wants Target, won’t they just go to Target?
These early signs indicate that BBBY is on the right path to reinvention. Particularly, streamlining their business holdings to increase focus on four core categories is just smart business. No doubt that extra revenue can help soften the blow of declining in-store sales.
While BBBY definitely stepped up their online game amidst store closings earlier this year, I’d still like to see a more user-friendly website experience from this retailer. Beyond that, I expect they can bring a savvy intelligence and unique point-of-difference to the Home, Baby, Beauty and Wellness Categories. Looking forward to see how Tritton and Team make continued impact over the next 12 months. Then we will have a solid indication of sustainable success. I will be rooting for them in the meantime.