A 2014 episode of the Comedy Central sitcom Broad City celebrated the wonder that was Bed Bath & Beyond: Vast selection, friendly staff and instant gratification among its merits, not to mention its iconic and copious clip-out coupons.
Nearly a decade later, however, the 52-year-old home goods retailer is the latest casualty in post-pandemic omnichannel retail. On April 23, Bed Bath & Beyond announced it was filing for bankruptcy.
The fate of its 360 stores — along with 120 Buybuy Baby locations — hangs in the balance.
"Millions of customers have trusted us through the most important milestones in their lives,” President and CEO Sue Gove said in a statement. “We will continue working diligently to maximize value for the benefit of all stakeholders."
Bed Bath & Beyond did not respond to a request for comment.
The news comes nearly two years after the home goods giant unveiled a plan to become what it called “a digital-first, omni-always retailer.”
This included reopening its 92,000 square-foot New York flagship store in July 2021. According to a press release, the location underwent “a complete transformation” to “modernize the in-store shopping experience” and help the retailer maintain relevance in the $180 billion home goods market.
New in-store features included: digital shopping tools, which offered amenities like store navigation and product details; experiential trials for products such as vacuums; QR codes, which helped customers find additional colors and sizes; and scan-and-pay functionality, which allowed shoppers to skip traditional checkout. Four hundred and fifty additional stores were supposed to follow with similar remodels.
That’s also around the time Bed Bath & Beyond started releasing private label brands in categories such as kitchenware, bedding, décor, bath and storage.
In 2022, it made further efforts to “improve merchandise assortment, streamline supply chain and optimize its store footprint,” according to a release.
But the digital-first store format and lower-cost private labels failed to shore up the brand. And, once again, the pandemic, e-commerce and fickle consumers are to blame.
Pressure to adapt
While Bed Bath & Beyond originally made a name for itself as a low-price destination for sheets and towels, it started to see a rapid drop in sales shortly before the pandemic. According to Brad Jashinsky, director analyst at research firm Gartner, this decline accelerated as a result of widespread supply chain issues and inventory challenges.
COVID-19 challenges, of course, followed pressure and competition from large specialty retailers like Amazon, Walmart and Target, which moved quickly to address supply chain issues — and adapt to changing consumer behavior.
These competitors were also ahead in releasing private-label brands and offered a wider selection overall, making Bed, Bath & Beyond less of a destination for shoppers.
“They're not necessarily winning on price,” said Zach Weinberg, vice president of e-commerce at performance marketing network Reprise Digital. “They're being undercut by the Amazons and the Walmarts.”
While Bed Bath & Beyond needed private labels to appeal to shoppers with lower costs, these brands likely launched too late. After all, Amazon started releasing its own brands in 2009 and reportedly had more than 100 labels of its own as of 2022.
While the plan to enhance the in-store shopping experience may have had legs, Weinberg noted the digital plan was where Bed Bath & Beyond fell short.
“They were working with a lot of name brands at a time where consumers were feeling a little bit more brand agnostic, particularly with Covid and just trying to get whatever they could get,” he added.
That includes unknown brands selling on Amazon.
“No one really knows the quality, but many consumers don’t care,” he added.
In addition, Bed Bath & Beyond stores typically carried thousands of SKUs as the retailer depended on in-store discovery to grow basket sizes. In a 2020 interview, analyst Brian Nagel told the New York Times the “secret sauce” of Bed Bath & Beyond was its ability to inspire spontaneous purchases.
“Discovery there was very much [centered on] the in-store experience, whereas on the digital front, it was not like that at all … or at least the seamlessness of that discovery couldn't be replicated online,” Weinberg said.
He likened the demise of Bed, Bath & Beyond to toy retailer Toys R Us, which saw in-store traffic plummet when consumers could discover new products elsewhere.
“[Consumers] weren't going to the store for the stuff they needed, so they weren't buying those extra things,” Weinberg added. “And so their reason for being kind of went away.”
Finally, the retailer was trying to refinance its debts in a high interest rate market where financing was not as readily available.
“This caused further inventory issues as vendors were not as willing to supply products to a retailer that may not be able to pay on time for goods,” Jashinsky said.
Is reinvention possible?
While Twitter users have joked about the potential for part-time holiday retailer Spirit Halloween to fill the void, Weinberg said he’s genuinely curious what will happen to the nearly 500 storefronts under the Bed Bath & Beyond umbrella. It’s unclear if the home goods retailer will close up shop entirely or restructure.
“Toys R Us has reinvented itself a little bit, so we'll see,” Reprise’s Weinberg said.
He also pointed to power in the omnipresent 20% off coupons, which allowed consumers to get high quality products at a discount. “I think consumers are going to miss that,” he said.
In order to succeed, Bed, Bath & Beyond would have to reinvent itself in a smaller format with fewer SKUs — but still allow for some surprise and delight discovery.
“Maybe in that way, they'd be able to salvage some of the locations or some of the business,” Weinberg added.
Meanwhile, another home goods retailer, the Container Store, has swooped in to feed on the carcass, tweeting it will accept Bed, Bath & Beyond coupons at all stores — including expired ones.