STR 581 Comp 2 Assessment Strategic Analysis

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Strategic Analysis: Bed Bath & Beyond Jennifer Weber University of Phoenix STR 581 Mark Vitale 24 January 2024

Strategic Analysis: Bed Bath & Beyond For many years, Bed Bath & Beyond (BBB) was a dominant specialty retailer of home goods in the United States. However, in recent years, their stock price peaked, growth had slowed, and margins shrank. The increase of online and discount retailers shook up the market and challenged BBB’s advantage. In response to this, Mark Tritton, BBB’s new CEO unveiled a comprehensive turnaround plan. The following strategic analysis evaluates BBB’s current financial plan, outlines strategies for sustainable competitive advantage, and proposes an implementation plan. Current Financial Plan Evaluation Like many companies, Bed Bath & Beyond was negatively impacted by COVID shutting down, pretty much, the world. Many companies had shutdown, there were heavy supply chain constraints (still are some constraints), and this caused the sales and profits for Bed Bath & Beyond to experience a hefty decline. 1. Sales decline – Bed Bath & Beyond’s net sales have significantly declined in the past few years. For 2022, the net sales declined $1.259 billion (33%), down from $1.88 billion in the same period the year prior (PR Newswire, 2023). 2. Cash flow decline - Bed Bath & Beyond decline in cash flow was significant in 2022. Cash flow decreased over $300k from November 2021 to November 2022 (PR Newswire, 2023). Below is a snippet of Bed Bath & Beyond consolidated statement of cashflow.

3. Cost challenges – High costs, to include impairments and restructuring expenses heavily contributed to operating losses (PR Newswire, 2023) 4. Inventory constraints – With the shutdown experienced during COVID, it greatly hindered supply chains. Product was not being produced; people were not working to push product out decreasing inventory for most businesses. Inventory constraints hindered Bed Bath & Beyond from achieving their set goals, despite the strategic changes they made (PR Newswire, 2021). 5. SG&A Optimization – Bed Bath & Beyond aims to achieve $250 million in selling, general, and administrative optimization by the end of 2022 (PR Newswire, 2023). Bed Bath & Beyond will need to come up with very innovative ideas that are strategically planned and implemented in order to make a comeback from their decline. Strategies for Competitive Advantage As previously stated, Bed Bath & Beyond has a lot of work to do to climb back up from their downfall. Below are a couple of strategies they could implement so they can make the climb a little easier. Adjust Value Perception Customers of Bed Bath & Beyond have voiced their concerns, or opinions, on the product provided at the store being overpriced. Their stores sell the same things you can find in every other store, such as Walmart, Target, Marshalls, etc. With this information Bed Bath & Beyond is addressing the customer perceptions of their products being overpriced. So How can Bed Bath & Beyond implement this strategy? This can be accomplished with price adjustments and possibly a private-label rollout, and it is something the company is already working on. Bed Bath & Beyond has started to reduce prices on national brands (Levine-Weinberg, 2020). They also

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planned to create ten new private label brands. The private brands, or store brands, would compete in the lower price tiers (Levine-Weinberg, 2020). What is the best way to implement this strategy? For this, we are not going to focus on lowering the prices of national brand products. There is not any “wow” factor with that, but we will focus on the private label items. The private labeled items will be the “store brand” for the company much like Great Value is for Walmart or 365 is for Whole Foods. With creating their own brand Bed Bath & Beyond, maybe even focus on a new target market. Here we will only use one new target market: Young Inspiring Chefs (or just a kid who loves to cook) and the marketing mix for the new target market: 1. Products: BBB can create their own brand of kid friendly cooking utensils. a. Knives that will not cut the children but will be strong enough to cut through foods. b. Spatulas, cooking spoons, etc. that ergonomically fit into little hands. c. Measuring cups that do not break upon dropping but are also chemical free. d. Baking dishes that are easy for young hands to grab and pick up. e. Oven mitts that fit the children of all ages so they can really feel like they are helping when the food is done. 2. Price: BBB should price these products competitively but not too close to the prices of national brands; because if you can get a name brand for just a few dollars more, you will choose the name brand over a private labeled brand. 3. Distribution: BBB can d istribute its products through online platforms, such as its own website or Amazon, as well as physical channels such as their own stores (if they have any left open).

4. Promoting the products: BBB can promote their new products both the traditional way (i.e., print ads, radio, TV, magazines etc.) or they could online promote (i.e., social media platforms, their website, advertisements online, etc.) Loyalty Program and E-commerce Loyalty programs and E-commerce kind of go hand in hand. Bed Bath & Beyond has, or had, a good marketing strategy. We have all received the 20% off coupon in the mail if you lived within a certain radius of the store, which would usually pique a consumer’s interest because maybe “they really do need that new knife set”. The company could also offer points, discounts, free shipping, vouchers, or access to exclusive products with their loyalty program (LinkedIn, 2023). Loyalty programs are important for E-commerce reputations, as it sets the perception your potential and existing customers have of the online part of your store (LinkedIn, 2023). Loyalty programs reward customers, therefore, you would show that you value the customer business they provide to you, this in turn could increase trust, loyalty, positive reviews, etc. (LinkedIn, 2023). So how do we implement this strategy? The best way is with customer relationship management (CRM). The following chart will reflect established customer touchpoints and developed CRM events for customer acquisition and customer retention (Weber, 2023).

Unfortunately, for Bed Bath & Beyond they have gone bankrupt and are losing money, as you can see from their 2021 to 2022 cash flows statement. Their private labeled products failed, and you cannot find any of their financial reports unless you pay for them, even on Yahoo Finance. But I do not think that all hope is lost for them. Going bankrupt does not necessarily mean complete and utter failure. All physical stores have closed, but they do still have their E- commerce site up. Maybe they just need to start at the bottom again and climb their way out of this dark hole.

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References Levine-Weinberg, A. (2020, November 04). Bed Bath & Beyond Unveils its Turnaround Strategy. The Motley Fool. https://www.fool.com/investing/2020/11/04/bed-bath-beyond- unveils-its-turnaround-strategy/ LinkedIn. (2023, October 27). How can customer loyalty programs improve your E-commerce reputation? https://www.linkedin.com/advice/1/how-can-customer-loyalty-programs- improve-your-e-commerce PR Newswire. (2023, January 10). Bed Bath & Beyond INC. Reports Fiscal 2022 Third Quarter Results. https://www.prnewswire.com/news-releases/bed-bath--beyond-inc-reports-fiscal- 2022-third-quarter-results-301717464.html PR Newswire. (2021, March 03). Bed Bath & Beyond Reveals Nest Step in 3 Year Transformation with Launch of at Least Eight Customer Inspired Owned Brands in 2021. https://www.prnewswire.com/news-releases/bed-bath--beyond-reveals-next-step-in-3- year-transformation-with-launch-of-at-least-eight-customer-inspired-owned-brands-in- 2021-301239819.html Weber, J. (2023). MKTCB 574 Competency 3 Assessment Part C. University of Phoenix.

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