The Washington Post has the story of Bed Bath & Beyond, which “has built a business on coupons. The housewares chain began mailing out 20 percent off ‘Big Blue’ coupons nearly 30 years ago, at a time when sweeping discounts were a novelty. The idea was that the coupons would draw shoppers into the store, where they would then buy other items at full price. And for many years, it worked.
“But now, after years of stalled sales and declining profits, the New Jersey-based retailer is pulling back on coupons in a broad effort to turn around its business. The company is mailing out fewer promotions and is choosier about how those offers can be used. (It is common knowledge, frequent shoppers say, that coupons can be used after they’ve expired, and that multiple coupons can be applied to each transaction.)”
According to the story, “Executives say weaning customers off discounts will ultimately lead to higher profits. But analysts say the retailer faces an even bigger challenge: Getting customers into its stores, even without coupons.”
And, the Post goes on: “Bed Bath & Beyond says it is addressing those concerns by creating new private-label brands, reorganizing stores and closing 40 under-performing locations. The company has also opened a number of ‘lab stores’ that focus on home decor, food and drinks, and health and beauty care.”
However, this may not be enough for a trio of activist investment groups that seem to believe that Bed Bath & Beyond isn’t doing enough to address the reality that “same-store sales, a closely watched industry metric, have declined for eight straight quarters, and shares of the company’s stock are down 80 percent since 2013.”
“But now, after years of stalled sales and declining profits, the New Jersey-based retailer is pulling back on coupons in a broad effort to turn around its business. The company is mailing out fewer promotions and is choosier about how those offers can be used. (It is common knowledge, frequent shoppers say, that coupons can be used after they’ve expired, and that multiple coupons can be applied to each transaction.)”
According to the story, “Executives say weaning customers off discounts will ultimately lead to higher profits. But analysts say the retailer faces an even bigger challenge: Getting customers into its stores, even without coupons.”
And, the Post goes on: “Bed Bath & Beyond says it is addressing those concerns by creating new private-label brands, reorganizing stores and closing 40 under-performing locations. The company has also opened a number of ‘lab stores’ that focus on home decor, food and drinks, and health and beauty care.”
However, this may not be enough for a trio of activist investment groups that seem to believe that Bed Bath & Beyond isn’t doing enough to address the reality that “same-store sales, a closely watched industry metric, have declined for eight straight quarters, and shares of the company’s stock are down 80 percent since 2013.”
- KC's View:
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We’ve made note of the Bed Bath & Beyond conundrum here before - the fact that it has worked so hard to addict its shoppers to coupons that it undermined any value proposition beyond those blue cards. I don’t think that private label is the answer … and they’ve got to figure out a way to make their lab stores attractive and competitive with venues that already exist.
Now, it only gets worse … because the activist investors are in a position to do something about it. That said, this may not be a bad thing, since current management isn’t getting it done.
