Bed Bath and Beyond Dealing with Poor Outlook

It’s been a rough few years for major American retail stores. From Sears and Kmart, to JC Penney, Toys R Us, and many others, the changing consumer marketplace has led to downsizing, store closings and bankruptcy. The latest retailer that seems to be floundering is Bed, Bath & Beyond. The home goods retailer saw a drop in same-store sales that led to shares dropping 20 percent recently. This amounts to a ten-year low for the company, and a failure to live up to Wall Street forecasts.

Part of the reason for the slow sales is directly related to the changing retail environment. People are buying less. Those who are shopping are being caught up in the ongoing war between Walmart, Target and Amazon for the larger home goods consumer market. They chase deals now more than ever, and most of those chases begin online. Then there’s tighter competition in the market segment, mostly from Lowes, Home Depot and Crate & Barrel, all of which are doing well, even as BB&B continues to struggle.

Some analysts believe that one of the store’s biggest perks is also one of the reasons the company is struggling. All those coupons shoppers love so much. Many BB&B shoppers horde them, because they get them in their email almost daily. So, when they shop, the store is hoping for a lot of impulse buys to counter the cash they lose on coupon purchases. As much as customers love the coupons, analysts say they’re bad news for the bottom line, arguing that customers have come to depend on them, and won’t shop at BB&B without them. Then there’s the recent trend of some cashiers actually suggesting to customers to download even more coupons while they’re standing in line. This practice may not be sanctioned by the stores, or it may be, but it is happening, and that’s cutting into sales as well.

Speaking to some of those critical analysts, BB&B CEO Steven Temares said the coupons were a “necessary” way to connect with new customers and keep others engaged: “We have spent the last few years driving the digital experience in terms of getting customers to understand us as a digital choice for them, and in the world we compete (in), that’s necessary to introduce customers to us as a digital choice. We’ve been doing that to some degree at the expense of profitability…”

But has the brand been doing it so much, customers have become numb to the coupon experience. Many say they only go to BB&B when they have a coupon. Otherwise, they go elsewhere… This leads some consumers to perceive BB&B as ‘more expensive’ than competitors, even when it may be very competitive on price. That’s the catch-22 in which the company now finds itself… how to get customers to keep coming in, while seeing the brand as a first choice, rather than a convenient option ‘if they have a coupon.’

Ronn Torossian is the founder of 5W Public Relations