Now there will be a big rush to bring in branded goods from outside suppliers to replace much of the disappointing merchandise. BBB just didn’t have the infrastructure to do either properly. The problem was the execution of those owned brands, in both the design and the logistics of getting them manufactured and into stores.
Having proprietary house brands was not necessarily a bad strategy-every retailer looks to have a differentiated merchandising mix. It may not be pretty, but it will be effective. Look for narrower aisles, more dump bins and all kinds of retail stunts. In connection with the staying-in-business sale about to begin, the stores are going to get much more crowded. They aren’t alone in this-Target has a similar plan-but it’s going to be a deep housecleaning.Ī signature of now-deposed CEO Mark Tritton’s turnaround plan was a huge reduction in the amount of merchandise on the selling floor, perhaps by as much as a third. Bed Bath & Beyond has been incredibly promotional the past 60 days, but expect to see a lot more as the summer heats up. There’s a lot of merchandise clogging up the pipeline-much of it the vaunted “owned” brands that were supposed to save the day-and it has to be cleared out to make room for what’s next. Raising working capital and clearing out the junk is going to be the biggest priority short-term. So, what can we expect from the beleaguered retailer? Here’s some informed speculation on what is likely to happen over the next three to six months: With cash starting to drain out of its bank account, investors increasingly impatient with a long-promised and now-indefinitely postponed turnaround and, most importantly, its shoppers dreading yet another merchandising redo, BBB’s window is small and closing quickly. The worst part is that the big box retailer-still one of the top five sellers of home products in the country-has a very tight time frame to fix all of these problems and get itself back on its feet. Its CEO and chief merchant ousted, its top-line revenue in free-fall and its stock price losing a quarter of its value in one day, Bed Bath & Beyond is staring into the abyss of a retail black hole.