Is Bed Bath & Beyond smart to draw the line on coupons?
Bed Bath & Beyond last week said it is taking a number of steps to reduce its reliance on coupons as a traffic driver in order to shore up profitability.
Those moves include coupon exclusions, adjusting its value offers and limiting coupon availability.
On the retailer’s fourth quarter conference call with analysts, Steven Temares, CEO, said, “Of course, actions like these do have a near term impact on sales, but they benefit our overall profitability. While early, these actions are beginning to take hold, contributing some moderation in our coupon expense rate in the fourth quarter of fiscal 2018 and our plan to continue as the year progresses.”
Bed Bath & Beyond is known for its 20 percent-off coupons and dollar-denominated coupons such as $10-off on purchases over $30.
The company expects its comps to decrease in the low- to mid-single-digit percentage range in 2019 due to continued declines in traffic as well as moves such as de-emphasizing coupons to improve margins.
Longer term, Bed Bath & Beyond sees its revenues recovering to single-digit growth due to enhancements to assortment, including new proprietary brands and continued growth in personalized products such as engraved teddy bears. In-store innovations and building on its baby business are also expected to help.
From a marketing standpoint, Bed Bath & Beyond is incorporating enhanced branding and a greater focus on personalized messaging. The retailer is hoping to leverage investments in pricing tools to modify algorithms across initial, dynamic and local pricing and markdown strategies. The company will apply analytics to coupon distribution as well.
“Now that we have much better analytics and the ability to look at these coupon transactions, the lifetime value of a customer, [and] the attachment to what items and what channel, we’re able to make better decisions about it.” said Mr. Temares. “So, the decisions that we’ve made do impact sales, but they’re also driving profitability.”
Historically, a number of retailers, notably J.C. Penney and Jos. A. Bank, have faced challenges downplaying coupons without overly impacting traffic and sales.
- Bed Bath & Beyond Inc. Reports Results For Fiscal 2018 Fourth Quarter And Full Year – Bed Bath & Beyond
- Why Bed Bath & Beyond’s Plan to Boost Profits Could Backfire – Motley Fool
DISCUSSION QUESTIONS: What would be the best way for Bed Bath & Beyond to reduce its reliance on coupons? To what degree do you think coupons should continue to be part of its marketing approach?