Can Bed Bath & Beyond turn around its fortunes?

The news: Bed Bath & Beyond rolled out a multipronged turnaround strategy that includes closing 150 stores (about 20% of its fleet), laying off about 20% of its corporate and supply chain workers (including the jobs of chief operating officer and chief stores officer), and pivoting away from the previous leadership team’s push into private labels.

• The retailer had been in a precarious financial situation as its sales slowed and inventory racked up after having spent heavily on store remodels, new private labels, and stock buybacks.
• However, Bed Bath & Beyond announced it secured more than $500 million in new financing, which should provide a temporary reprieve from questions about its financial viability.

But is it enough? Bed Bath & Beyond plans to bring back more familiar brands (some of which will offer exclusive products at the retailer), as well as add some new direct-to-consumer brands to its mix.

• That stands in stark contrast to former CEO Mark Tritton’s approach, which sought to boost margins and differentiate the retailer’s offerings by launching private label brands.
• Tritton also reduced Bed Bath & Beyond’s in-store SKU count, which posed a challenge when the pandemic disrupted the global supply chain and the retailer’s limited product selection left customers with fewer options when items went out of stock.
• Bed Bath & Beyond now plans to shutter three of its nine private label brands.
• With Bed Bath & Beyond leaning into national brands, the retailer needs to find ways to distinguish its brand from competitors.

Leaning into rewards: One way it aims to do so is via its revamped loyalty program, Welcome Rewards, which enables shoppers to earn points across all three of the retailer’s brands, which include buybuy Baby and Harmon.

• The program, which offers both a free and paid tier, also offers free shipping on select orders, as well as early access to sales and new products.
• But for any rewards program to be effective, it needs to clearly communicate the benefits of the program.
• Sixty-one percent of consumers would use loyalty programs more often if they automatically applied rewards and 44% would do so if they offered simpler terms and conditions, per Salesforce.
• Bed Bath & Beyond said the program, which does not automatically apply rewards, currently has 5 million members across both tiers.

The big takeaway: Bed Bath & Beyond now has the means to pay its bills and ensure that vendors will feel comfortable supplying it with the items it needs to stock its shelves and warehouses.

• But it faces an uphill climb as it seeks to convince consumers to return to its stores and website.

This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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