Will ‘five pillars’ provide the foundation Bed Bath & Beyond needs to succeed?




It’s been said that the stock market is forward-looking with share prices calculated on how a given company is likely to perform in the future. If that’s the case, then investors seem to think Bed Bath & Beyond (BBBY) is in for more difficult times ahead. The retailer’s share price fell eight percent in extended trading yesterday after it reported third-quarter sales and earnings that came in below Wall Street’s expectations.
Same-store sales were down 8.3 percent during the period, below the minus five percent consensus among analysts, CNBC reports. BBBY lost 38 cents per share during the quarter, compared to gain of two cents expected.
Mark Tritton, president and CEO of BBBY, called the company’s results “unsatisfactory” and pledged to “move quickly to course-correct and drive the business forward.”
On the company’s earnings call with analysts yesterday, Mr. Tritton outlined a preliminary plan to create “a modern, durable model” for the business.
The good news, he said, is that consumer research shows that 79 percent of customers have a favorable view of BBBY. The chain faces challenges, however, connecting with Gen-Z and Millennial consumers.
“We know in our industry that 80 percent of traffic is influenced by digital touchpoint, reinforcing that our digital business is a gateway to our customer and that we need to drastically improve our digital platform,” said Mr. Tritton.
Consumers, he said, have higher expectations “across store, digital and delivery experiences and the reality that the next generation of customers are not just digitally savvy, but shop digital first.”
Mr. Tritton outlined “five pillars” – product, price, promise, place and people – he plans to build BBBY’s business upon.
Product assortments, he said, will focus on “creating energy through differentiation and curation.”
As for price, BBBY will “invest in and clarify compelling value through more choices in opening price points, relevant owned brands and clear price communications,” said Mr. Tritton.
BBBY’s “promise” was less well defined. The goal, Mr. Tritton said, was to connect, engage and motivate customers “to strengthen loyalty and lifetime value.”
Place for BBBY’s CEO means focusing on omnichannel retailing to serve the “preferred shopping needs” of all its customers.
People will be a difference-maker with a focus on creating a “culture that attracts, retains and develops high-performance teams who consistently deliver operational excellence and business results.”
Earlier this week, BBBY announced that it has agreed to a sale-leaseback deal with Oak Street Real Estate Capital that will net the retailer $250 million. The deal represents roughly 2.1 million square feet of commercial real estate including stores, a distribution center and office space.
- Bed Bath & Beyond Inc. Q3 2019 Results (Earnings Call Transcript) – Seeking Alpha
- Bed Bath & Beyond shares plunge after earnings miss, company withdraws fiscal 2019 outlook – CNBC
- Can Target’s chief merchandising officer turn Bed Bath & Beyond around? – RetailWire
- Bed Bath & Beyond shares jump on real estate deal that gives the retailer $250 million – CNBC
- Bed Bath & Beyond’s CEO cleans house – RetailWire
DISCUSSION QUESTIONS: Are Mark Tritton’s “five pillars” the foundation for a revival at Bed Bath & Beyond? Is there one of the pillars that you think is absolutely critical for the retailer to achieve success?
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25 Comments on "Will ‘five pillars’ provide the foundation Bed Bath & Beyond needs to succeed?"
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Managing Director, GlobalData
The five pillars are the five fundamentals of retailing. They are what every retailer needs to focus on in order to succeed. As such, while they are not radical it is conforting that Mr. Tritton has called them out. At heart, he is a retailer with retail skills – and that is exactly what Bed Bath & Beyond requires in order to survive.
If I had to pick one it would be “product.” At present, Bed Bath & Beyond’s assortment is not compelling enough, far too fragmented and does little to stimulate shoppers. Having great merchandise is the key that unlocks higher sales. Mr. Tritton no doubt knows this well from his time at Target!
Founder, CEO & Author, HeadCount Corporation
The five pillars described by Tritton are fundamentals which will hardly seem revolutionary. However I believe it’s right for Tritton to start with these core, foundational elements first. All five pillars are critical, but I think Tritton’s focus on “place” (i.e. omni and BOPIS), will be among the most important in the short term as he works to drive positive same-store sales. The ability to deliver a seamless and effective omni experience has been a hallmark of Target’s success, and I expect Tritton will bring this Bed Bath & Beyond.
Principal, Retailing In Focus LLC
While the “five pillars” echo the “four Ps” from my 1970s-era marketing class, Mr. Tritton makes a valid argument about the number of areas where Bed Bath & Beyond needs repair. As a former merchant, I would always start with “product,” because that’s the main reason why anybody shops any retailer — the relevance and execution of the assortments. There will be some short-term pain involved in cleaning up Bed Bath & Beyond’s overstuffed and overassorted stores, but opportunity awaits.
Director, Retail Market Insights, Aptos
I will reserve judgment until we learn more about what lies behind “promise.” Bed Bath & Beyond has an opportunity to look beyond the iconic coupon to redefine its brand promise to younger generations. But “curating assortments” and “omnichannel experiences” must be aligned to a brand promise that is relevant and meaningful to their core segments. Until that promise is carefully defined, revival strategies will be difficult to hone…
Founder, CEO & Author, HeadCount Corporation
On the Q3 earnings call, Tritton defined “promise” as “clarifying and deepening relationships with our clients by connecting, engaging, and motivating them to strengthen loyalty and lifetime value.”
Director, Retail Market Insights, Aptos
Thanks, Mark! I guess that still leaves me wondering what the real brand promise is that will help strengthen loyalty and lifetime value. “Connecting, engaging and motivating,” tells me their aspirations, but doesn’t really tell me the brand promise. I will wait and see, I guess!
VP, Digital Technology (Foot Locker)
Chief Executive Officer, The TSi Company
Founder, President, Bakertown Consulting
Mark Tritton does not need to reinvent the wheel here – the fundamentals have been broken at Bed Bath & Beyond for a while, so while the five Ps may be familiar to everyone, they have not been the focus of the organization. Product is king and there is a lot of opportunity for editing and offering a more compelling assortment. But people are going to be crucial to the success of this as well – the customer experience must be improved for better results.
Director, Main Street Markets
I will join the chorus on this – the pillars are nothing new in retail 101. As I mentioned before, the biggest question is how does Bed Bath & Beyond curate its assortment to relevant to customers? There is way too much product crammed to the ceiling and trying to find what I want (what is displayed) is sometimes a chore and it is hard to find an associate to help.
Founding Partner, Merchandising Metrics
Sure they provide a strong foundation. But lots of retailers had a strong foundation and they failed to build (or evolve) the right structure on top of the foundation. Sears, J.C. Penney, Macy’s — they all had great foundations and blew it in varying degrees. Mark’s track record suggests that he knows what to build on the strong foundation. I actually think it’s great that he is not over promising. He rattled the cage pretty dramatically on day one and is now steadying the ship. Sounds healthy to me.
Consulting Partner, TCS
If this means going back to fundamentals, that should hopefully turn out well. But the main challenge for Bed Bath & Beyond is uninspiring product assortment. One cannot escape the feeling of a mishmash of product categories. Once they get assortment right, they have to use some part of the store to showcase the ideal bedroom, ideal kitchen, ideal bath, etc. taking a page out of IKEA’s playbook. There is no showroom aspect in the store layout, which is missing the fundamental concept. They cannot win competing in categories like vacuum cleaners and other branded electrics that can be bought elsewhere.
Founder | CEO, Female Brain Ai & Prefeye - Preference Science Technologies Inc.
Bed Bath & Beyond has a unique differentiator buried in the blur of poor merchandising practices and a hodgepodge of product. Product is number one. Bed Bath & Beyond product ranges from tired clearance goods which have spent lots of time with jobbers in warehouses to the latest TV miracle product. Bed Bath & Beyond has the opportunity to be the Target of household goods. Two generations are ripe for the discovery of Bed Bath & Beyond, still actively furnishing kitchens, bedrooms and the details of a home.
Bed Bath & Beyond: clean up the product assortments, clear out the jobber goods, merchandise what is left in a coherent manner and build a big, beautiful digital presence displaying the wonder of furnishing and loving a home. The key to success? Digitally evoke the human emotions that drive people to spend their money to bring warmth and happiness to their individual home environment. Simple as that!
Independent Board Member, Investor and Startup Advisor
Mr. Tritton’s retail credentials are stellar and is what Bed Bath & Beyond needs to transform. While Mr. Tritton made a bold move by sweeping out his C-suite and is absolutely correct about the foundational pillars, Bed Bath & Beyond is in a race to avoid extinction. As such, there must be an immediate focus that galvanizes the entire organization and that has to be greatly improving the in-store experience and rationalizing their assortment. Although Mr. Tritton is directionally correct about digital’s impact and the absolute need to invest, it will not be sufficient to counter the existential threat of declining same-store comps and poor in-store experience.
Chief Amazement Officer, Shepard Presentations, LLC
I want to know what that “promise” is. And do all employees know it? The key to the people (one of the pillars) delivering is to know the promise, understand the promise and be trained to deliver on the promise. While Bed Bath & Beyond has digital sales, when a customer walks through those doors of the physical store there is an opportunity to win them over, bring them back and create the loyalty that Mr. Tritton is looking for.
Retail Strategy - UST Global
I’d consider a sixth pillar — private Label. Clearly cleaning up on the other fronts is necessary, in particular curated product assortments. In the long run that still leaves price as a major factor to compete with, which is a difficult competitive factor to sustain.
President, Spieckerman Retail
I agree with this and have to believe private brand initiatives are very much on the menu given Mr. Tritton’s former areas of focus and accomplishments.
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
Principal, LSG Marketing Solutions
All of the pillars are important and I’m glad that they are being addressed. The one that I think will be key is “promise.” Who will they be and how will they “strengthen loyalty and lifetime value?” They need to be strategic and define a core target audience and not try to be everything to everyone. That will help them create a compelling assortment and pricing structure. Hopefully we’ll see less of “As Seen on TV” junk and blue coupons and more of a reason to shop there.
President, SBRnet, Inc
Founder, CEO, Black Monk Consulting
General Manager, Retail & Consumer Goods, Cloudera
President & Founder, retailu.ca
Even though the 5 Ps are fundamental and getting back to basics is a must for any retailer, my thoughts here are how are they going to drive traffic to the stores?
Product is king, however, new ways of engaging in stores are key to these big-box retailers. The new generations do not want to walk around endless isles. I will be interested to see what getting back to the basics means to the in-store experience as this has been a tough one for big chains like this with higher wage costs and large locations. Convenience and ease are essential in today’s store experience. Will be watching the “Place and People” pillars for sure.
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
Yes, Mr. Tritton needs to get BBY buckled down on all five pillars, but I think it needs to really stand out on a couple. My bets are on “Product” and “Promise.”
The former because it’s hella hard to be a category killer in the digital era. Breadth of assortment is not enough. Curation is crucial. Create discovery.
The latter because it’s about making the stores meaningful to shoppers as individuals (not by papering the landscape with coupons). Listen carefully to what their behaviors tell you and personalize their experiences with deals, assortment, and meaningful services.
Director of Industry Strategy - CPG & Retail, Stibo Systems