In June of 2011, a retail sea change occurred. Storied brand, J.C. Penney, hired Ron Johnson, who led the success of Apple’s brick-and-mortar stores. Mr. Johnson decided that one of Penney’s problems was that the brand was damaged due to its consistent focus on deals and low prices. Without any Penney core customer insight, the pricing at Penney’s was changed. Using Apple as a model, the overhaul of Penney’s was something that turned off core customers. There were brand management lessons to be learned from the Ron Johnson tenure.
Fast forward to April of 2019. At another retail giant, Bed, Bath & Beyond hired Mark Tritton from Target. Mr. Tritton developed a turnaround plan for Bed, Bath & Beyond. Using Target as the model. Mr. Tritton’s alterations were not focused on core customers. So, the changes were startling for Bed, Bath & Beyond’s core base loyalists.
By February of 2022, it was clear that the strategies designed by the CEO of Bed, Bath & Beyond were not working. To complicate matters, Covid-19 had messed up supply chains and altered customer buying habits leaving stores like Bed, Bath & Beyond with limited merchandise or the wrong merchandise.
Now, we have just experienced Black Friday shopping day. Going into Black Friday, the business press indicated that of all the big box stores, Bed, Bath & Beyond was suffering from empty shelves.
According to analytics firm DataWeave, and as reported in The Wall Street Journal, Bed Bath & Beyond continues to struggle with keeping its shelves stocked ahead of the holidays. More than 40% of Bed Bath & Beyond’s inventory were unavailable in October 2022. This is nearly twice more than October 2021.
The report added that Bed Bath & Beyond had higher out-of-stock rates in October 2022 in comparable items than other retailers.
There is nothing more dismal and off-putting than empty shelves. If you need proof of that, step into one of the remaining Sears stores. Empty shelves are not just depressing but they are just dreadful for a brand’s customers’ perceptions and the brand’s value.
While many stores suffered from supply chain issues, at Bed, Bath & Beyond, these were severe due, in part, to the new Tritton strategies.
First, Mr. Tritton focused on limiting the number of price deals.
In 2021, Bed, Bath & Beyond decided to stop a lot of its print circulars that generated store traffic. Similar to the switch to everyday low prices instituted at J. C Penney during the tumultuous tenure of ex-Apple store maven, Ron Johnson, Bed, Bath & Beyond stopped coupon-generated and flyer-generated deals. The idea was to become less dependent on dollars-off shopping. Mr. Tritton also wanted price parity with its competitors.
Retracting circulars was a minor disaster. As with Penney, knowing the customer base could have avoided this kind of crisis. Bed, Bath & Beyond customers did not see the deals as brand degradation. They saw the deals as part and parcel of the brand. The deals were things they loved about the brand.
Print circulars and mailers were mainstays of the brand for decades. Customers missed the circulars; store traffic dropped. When Mr. Tritton’s team finally recognized that circulars needed to be reinstated, Covid-19 paper supply issues along with labor constraints meant the brand could not print the circulars fast enough.
Second, Mr. Tritton, following the Target playbook, began a program creating own brands.
Although an initial expense, private label brands are money-makers if handled properly. The Wall Street Journal has pointed out that private label brands, “… are no longer the cheap knock-offs you keep hidden in the back of the cupboard, but quite possibly the tastiest deals on the shelf.” Referring to Whole Foods’ reincarnation of the 365 brand and Target’s innovative private label creations, The Wall Street Journal stated private label brands are “… casting off their bland reputation and transforming themselves from dull to desirable.”
Mr. Tritton’s Target experience was that own brands are an essential, profitable revenue source. Adding more private label brands became a priority for the Bed, Bath & Beyond brand. In addition, Bed, Bath & Beyond created a partnership with Kroger Co. whereby Kroger will sell some of the Bed, Bath & Beyond private label offerings.
Mr. Tritton indicated that the own brand portfolios would consist of products in home décor, laundry, bathroom and kitchen, according to a Bloomberg BusinessWeek report.
Own brands require manufacturing and supply. Manufacturing and supply were hard hit by coronavirus. It became nearly impossible to have these private label brands on the shelves. At the same time, the national brands were gone.
Third, Mr. Tritton focused on updating Bed, Bath & Beyond’s technology.
New technologies are always a winning issue as these technologies can make life easier for shoppers.
At the time, retailtouchpoints.com reported that Bed, Bath & Beyond’s technology upgrade program was designed to “… support improvements in merchandising and inventory management, product lifecycle management, retail space planning and optimization, the launch of additional private-label brands and real-time tracking of merchandise fulfillment with the supply chain.” The technology changes were also designed to make shopping easier for customers.
One of the lessons of Covid-19’s supply chain problems is that real-time inventory practices create empty shelves and deficits in other critical items necessary for manufacturing. In an earnings call at the time, Bed, Bath & Beyond admitted that its poor quarterly performance was due to a “… compromised customer experience” when customers could not find what they wanted on its shelves. As Mr. Tritton said, there was demand but limited availability.
Bed, Bath & Beyond stated that the supply chain issues cost the brand $100 million at the November 2021 end of quarter. The December 2021 results were equally bad. Upgraded technology focused on pandemic-fueled customer needs such as e-commerce, curbside services, in-store pick-up and same-day shipping. Of course, if there is limited product availability, these services become moot.
Finally, Mr. Tritton made a classic marketing mistake by not focusing on the core customer base.
Keeping core customers happy and loyal is essential at all times, and, most especially, during troubled times. The changes that were instituted were not based on core customers’ problems and needs. These changes were made based on Target customers.
Further, the changes at Bed, Bath & Beyond did not match the changing behaviors of core shoppers.
One of bright spots in post-coronavirus marketing has been the Penney ads with core customers saying what they love about the brand.
Hopefully, this iconic retailer will have made it through the holidays with its brand intact. The problems at Bed, Bath & Beyond were self-inflicted. With Bed, Bath & Beyond’s Board of Directors recognizing the missteps, Mr. Tritton is now gone from Bed, Bath & Beyond. Of course, the supply chain was a disaster for many retailers, but from a brand standpoint, the brand mismanagement at Bed Bath & Beyond was extremely damaging. Brands can live forever, but only if properly managed.
Contributed to Branding Strategy Insider by: Larry Light, Author of The Paradox Planet: Creating Brand Experiences For The Age Of I
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