How Bed Bath & Beyond collapse teaches you to stay in your lane

After 52 years in business, Bed Bath & Beyond is filing bankruptcy. Is it officially going out of business forever? It’s too soon to know, but the options don’t look promising. I personally am bummed. I frequent BBB, and have always valued that I could go look at my options before buying home items even after Amazon became a shopping staple.

Bed Bath & Beyond was founded in 1971, and went public in 1992. The retailer attracted a broad range of customers by selling name brands at cut-rate prices. Brands coveted a spot on Bed Bath & Beyond shelves, knowing it would lead to big sales. Plus, the open-store layout encouraged impulse buying: Shoppers would come in to buy new dishes and walk out with pillows, towels and other items. Their famous blue & white coupons were something of a pop culture symbol, and millions of Americans wound up stashing them away in their cars, closets and basements, myself included.  

The first assumption when a large box retailer starts to fail is that it couldn’t keep up with the changing landscape that is aka Amazon. And, while that is partially true, the data in this case actually points to multiple poor decisions.    

Bed Bath & Beyond was privately held and run by its founders Warren Eisenberg and Leonard Feinstein until they took the company public in 1992. At that time it was earning about $200M in sales. They saw the shakeout of big department stores and knew they needed to pivot. They saw a real opportunity to niche with the increased popularity in designer linens and housewares. By 2000, sales were up to $1.1B and in 2009 $7.8B.  Wow! 

Main takeaways from the massive growth of Bed Bath & Beyond: 

When you find a strategy that’s converting to sales… push on the gas. Bed Bath & Beyond chose very little media marketing, but rather mass mailings of their famous coupons. They were also known for giving store managers autonomy, deciding which products served their local clients best (sounds similar to the Dillard’s success!). This also saved costs on central warehousing as items were ordered and sent directly to individual stores.  

“Why not just tell the customer that we’ll give you a discount on the item you want — and not the one that we want to put on sale? We’ll mail a coupon, and it will be a lot cheaper,” Eisenberg said in a 2020 New York Times interview.  

So what happened?

Sales stalled between 2012 and 2019. It was actually the combination of two industry changes. Bed Bath & Beyond was slow to transition to online shopping and lost customers to Amazon and Wayfair. But, they also lost customers due to the growth of Walmart, Target and Costco with lower prices and more product options... which used to be Bed Bath & Beyond strength. 

Then the pandemic hit, and without a solid online presence, Bed Bath & Beyond was vulnerable. Bed Bath & Beyond had gone through a rotation of executives during these years looking for a new strategy, all without success. Former Target exec Mark Tritton took over in 2019 from solid investor backing and a bold strategy… one that had worked for Target. 

Bed Bath & Beyond immediately scaled back on name brand variety and began offering more private label brands - just as Target had done with insane success (think Good & Gather, Archer Farms, Cat & Jack, etc.).  Bed Bath & Beyond also scaled back on their famous coupons. What Mr. Tritton didn’t expect or understand was that Bed Bath & Beyond customers were BRAND loyal, not store loyal. Its customers came to the store to find their favorite home brands, and when they were no longer in the store they went elsewhere. The stores no longer had enough merchandise as they transitioned and also were struggling with cash flow. Tritton stepped down as CEO in 2022.  

For the last year Bed Bath & Beyond has been in scramble mode. Trying to stave off bankruptcy with various attempts of funding, stock offerings, layoffs, etc. All these moves were not enough, and we are losing yet another iconic business that was once thriving. Bed Bath & Beyond filed for bankruptcy on April 23, 2023. 

Main takeaways from the collapse of Bed Bath & Beyond: .  

First, even in periods of growth and successful strategy, as business founders we need to keep our eyes up to what’s going on in the world and our industry. Bed Bath & Beyond could have had a different trajectory if they had built up online shopping during its expansion years, even though at that time they didn’t need another revenue source.

Second, stay in your lane. Bringing in Target exec Tritton and copying what was extremely successful for Target was the pivotal decision that sealed Bed Bath & Beyond fate. Bed Bath & Beyond customers were loyal for a very different reason than Target customers. The strategy of private labels failed at Bed Bath & Beyond.

I realize these two takeaways might sound contradictory, but they are not. Keep your eyes up doesn’t mean copy your competitor. It means be aware of what’s going on in the world. Pay attention, but stay in your lane. Know your client/customer and why there is unique loyalty to your business. This information should be your lighthouse as you pivot, because we will all need to make periodic pivots.