Inside The Wreck Of An Iconic Brand

This New Year’s brought nothing to celebrate for the once iconic big-box retailer Bed Bath & Beyond. With its stock price scraping bottom at about where it was trading 30 years ago, the company is now derisively referred to by retail industry insiders as Bed Bath & Be Gone. That’s because this New Year’s may well be the company’s last.

In an interview recently posted to Yahoo News, Loop Capital stock analyst Anthony Chukumba put it bluntly.

The brand “is simply not relevant anymore,” he said.

The company is fighting its version of Custer’s Last Stand and, “It’s going to pretty much end up the same that it did for Custer. We will not be having this same conversation a year from now. Bed Bath & Beyond will be gone.”

The astonishing decline and fall of what was once a darling of Wall Street and a category killer is an object lesson in how to drive a well-run company and a premier brand into a ditch, and then off a cliff.

Over about 20 years, beginning in the early 1990s, BBBY grew from a small linen store in New Jersey to become a national chain that peaked in 2019 with more than 1,500 stores. Along the way, the company obliterated most of its competition, including thousands of small. family-owned linen stores and some larger competitors.

The appeal was said to be its merchandising and aggressive pricing.

It was known for displaying a huge assortment of products with deep inventories of brand name products in a wide selection of colors and styles. Aisles were stuffed with merchandise, giving the stores a feeling of abundance.

As one headline writer put it, it was the genius of “calculated chaos.” Shoppers found it hard to pick up a new shower curtain without getting to checkout with their carts piled high with pillows, towels, and bath accessories.

BBBY’s peak turned out to be around 2011 when its market capitalization reached almost $14 billion. In the years that followed, revenue rose slower and slower, beginning to flatline in 2016 and peaking in 2017 at $12.5 billion.

Along the way, the company found itself caught between two new sources of competition. On the brick-and-mortar side, it included merchandisers like Walmart and Target, as well as specialty retailers like Home Goods and Kohl’s. On the digital side, it was Amazon and the e-commerce juggernaut.

While everybody was eating BBBY’s lunch, the company fumbled around trying to find a successful entry point for a robust e-commerce response and never did. Had it been able to catch up, the pandemic might have been the company’s salvation since we were all quarantining and spending our stimulus checks on, among other things, fresh sheets, towels and other comforts of home.

The decisive blow was struck in 2019 when the company’s sagging stock price inspired so-called “activist investors,” the fast-money wolves of Wall Street, to force out CEO Steven Temares, an operations manager who had been with the company for three decades. The investors replaced him with their pick, Mark Tritton, a marketing executive recruited from Target. Tritton demonstrated from day one why Wall Streeters should avoid trying to pick executives.

Tritton scrapped BBBY’s merchandising strategy by shifting the focus to private label goods and tidying up the selling floors. This sea-change was executed on an “IDEA”, “THOUGHT”, “BELIEF” or whatever you’d like to call it as many business decisions are yet untested.

By all accounts and in many cases, these ideas are acted on without the consumer research that has become standard practice in the industry. We have seen another one of these debacles occur in the retail industry’s recent past: Ron Johnson with JC Penney. At the end of that tenure with JC Penney, I recall meeting many retail executives who criticized and lamented and said this should never happen again.

Yet here we are again.

Successful leaders know better than to spend what it takes to launch new product lines and change strategies without first testing them with shoppers.

Bed, Bath and Beyond’s revenue began a steady decline from 2019—14 quarters of shrinking sales out of 15. In 2022, the company reported about half the revenue it took in five years earlier. Its market cap is now about 1.5% of its peak and BBBY is in the process of closing about 150 of its remaining 700 US locations.

This is likely the first of many such moves that seem destined to end with the company sharing space in the corporate graveyard beside so many “smart ideas” that went untested.