Ben Tobin
- Bed Bath & Beyond plans to slim down to just 360 housewares stores nationwide.
- The reduced footprint has several implications for shoppers who have known and loved the brand.
- Store closings are "not the resolution of a problem," retail strategist Neil Saunders said.
Buried in this week's announcement of a fresh round of equity funding, embattled housewares giant Bed Bath & Beyond said Tuesday that it has set an "ultimate operating goal" of having just 360 locations across the US, plus about 120 BuyBuy Baby stores.
If the company is successful in that strategy, its retail footprint would be a mere shadow of the peak of just five years ago when the company boasted 1,552 locations in North America, including more than 1,000 of its iconic housewares stores.
"We continue to put our customers at the center of every decision, positioning Bed Bath & Beyond to meet and exceed their expectations," CEO Sue Gove said in a statement. The company said its target store base will include its "most profitable locations and best geographic presence for customers that can enable an optimal omni-experience."
But a dramatically reduced brick-and-mortar presence in a country as big as the US has a host of implications for the shopper experience, and few of them are good, GlobalData analyst Neil Saunders told Insider.
According to its annual report, the company owned 953 locations in February of 2022. Since then, more than 400 stores have been identified as set to close. If the company is to reach its new target of 480 remaining housewares and baby stores that leaves as many as 57 additional locations still awaiting the ax. Bed Bath & Beyond did not immediately respond to Insider's request for comment.
"Store closings, especially of this magnitude, are a symptom of a problem," Saunders said. "They're not the resolution of a problem."
For starters, he said the brand will simply have less visibility in shoppers' daily lives, with vacated stores standing in strip malls and retail parks that will continue to include big box brands like Target and Walmart who will be all too happy to pick up the foot traffic.
That has an effect on e-commerce as well, since there would be that many fewer locations to pick up an online order. Even digital-native brands like Warby Parker, Allbirds, Casper, and more have recognized the irreplaceability of the physical store.
Out-of-stock items are also a customer satisfaction problem the company will continue grappling with, even if a particular store is staying open.
"Suppliers are very nervous about Bed Bath & Beyond," Saunders said. "What they've said is, 'you need to pay for things in cash, you need to pay up front.'"
"That is really damaging to the cash flow of any business, for a business that doesn't have a lot of cash, that's absolutely disastrous," he added.
That reduction in physical footprint is also likely to spell the end of discounts and savings as the company's sales volumes dwindle against its competitors.
"How do you then compete with the likes of Amazon and Walmart and Target on those brands that they're also selling when they've got much better buying arrangements with companies because of the economies of scale?" Saunders said.
Less pricing power with suppliers will leave the company less room to offer markdowns and still turn a profit. In other words, say goodbye to the famous piles of big blue 20% off coupons.
Whatever happens next, fans of the brand will be in for a distinctly different shopping experience from what they knew and loved about the company just a few years ago.
All that said, Saunders says BB&B's options are extremely limited by the decisions that led up to this point: "In practical terms, I'm not sure that the management has a lot of choice other than to follow this route."