BED BATH RESEARCH PAPAER (1)

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Apr 3, 2024

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1 Bed Bath & Beyond Hope ENG240 Professor Nolana Whisnant Carmen Steward February 20, 2024 1

2 Introduction Bed Bath and Beyond is a retail chain that has specialized in the ministering of specialty products to its customers for over 50 years. It was founded in 1971 with a $50,000 investment by Leonard Feinstein and Warren Eisenberg, this partnership would bring the company to its popularity over the next 28 years and in 1999 they sold their stock; with this exit the chain’s gradual decline set in. Beginning in 2004, the chain began over time to spend $11.8 billion to buy back stock and this reduced the chain’s capital. By 2023 Bed Bath & Beyond had a total debt on their balance sheet of $3.25 billion. For years, the brick-and-mortar chain withstood the ever-evolving changes in the way we purchase goods. However, the chain would eventually have to revamp their style due to a new way of shopping. We will explore what it takes for a company of this tenure to remain in business, we will review what was the game plan, was it successful, and the failures that the chain sustained. I will attempt to bring forth the forementioned items and convey if there is hope. The research will reveal the struggles and failed strategies that the financial team endured as they fought to keep the chain in business and maintain its customer base. With the realization of plunging sales and an inability to pay suppliers, the company took to seeking out different strategies to revamp the company. Each attempt failed one after another and when there was a glimmer of strategic hope, projects changed hands, replaced executives, and plans were abandoned. Bed Bath & Beyond attempted several strategies to save their long- standing chain, however at every turn was an obstacle that debilitated these efforts. 2

3 At the end of this report a clear understanding of what is foreseen in the business world regarding trends should be recognized and market tested to prove its stability. Beyond Hope Bed Bath & Beyond had been a crown gem in an era known as “category killers.” In this era of superstores BBB was the dominator of the housewares market with its net sales peaking at $12.3 billion annually. It served as a place where loyal customers once flocked to the oversized store to peruse aisles filled with bedding, window coverings, dinnerware, and knick-knacks. The chain stood in the front line of houseware retail until the explosive growth of online shopping, with the entry of e- commerce and their presence on the debt market. “The growth in e-commerce and Amazon hurt the core concept of category killer. Category Killers were built on the idea of large assortments at fair prices, but e-commerce websites typically had larger assortments and better prices.” (Barbara Khan, 2023). When e-commerce arrived upon the scene BBB had begun to experience a decline in its profits due to misconceptions in navigating the trends of e-commerce. Though Covid-19 played a particular part in the crippling of the Bed Bath & Beyond chain by sinking profits of 32% total by 2021, due to disruptions in global supply. The executives of the company also were instrumental in the disabilities by undermining its own efforts to strategize. Each strategic effort that executives implemented as a plan would be quickly altered by the next executive coming as a replacement to fix the previous plan. Bed Bath & Beyond was known for the strategy of using the best-known 20% discount coupons that were sent to tens of millions of resolute customers. These blue and white coupons became a popular symbol of a culture that stashed them 3

4 away in purses, cars, and closets. These coupons unfortunately became part of the erosion of the chain’s profits. One executive Arthur Stark stated, “Like any form of promotion, it becomes a drug.” When the strategy that lured those customers was entered to pull back on the coupons acted, it backfired. “Once you’re addicted to it and your customer is addicted to it, it’s a very difficult thing to wean off of.” (Neumann and Ronalds-Hannon Bloomberg Businessweek, 2023). In an article written in Bloomberg Businessweek, Bed Bath & Beyond had been facing financial distress for years due to the instability of profit performance and soaring debt. BBBY began grasping at straws attempting to keep the retail chain from tanking. Previous business plans of Chief Executive Officer Steven Tavares, who kept the business at the front of the line, were no longer working. With a dire outlook and no vision as to how to rebound the BBB as were not “embracing industry change” (Neumann and Ronalds-Hannon, 2023). Tavares had found itself under scrutiny of three activist investment funds who sought and succeeded in ousting him. Next up, in 2019 CEO Mark Tritton, former Target executive implemented a strategy to follow up the marketing mistakes and miscalculations. Mark had the idea to discontinue the 20% coupon concept that failed its dedicated customer base, closure of underperforming stores, selling of stock, and employee layoffs. During his 3 years of tenure with BBBY, the company poured $250 million out to modernize technology platforms and another $250 million to upgrade their supply chain infrastructure. Even after these massive plans, his implanted strategy to do away with the coupons and input a plan of deleting national brand name products and replacing them with private label brands as he did with Target failed, as customers were already accustomed to those wonderful coupons. The national brands that were appearing on social media and no longer on the shelves of Bed 4

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