Should Bed Bath & Beyond ditch its coupons?
What comes to mind when you make the decision to go shopping at Bed Bath & Beyond? For many consumers, it’s “don’t forget to bring the coupons.”
As those within mailing distance of any Bed Bath & Beyond store no doubt understand, the retailer is known for sending out percentage-off coupons intended to drive traffic to stores. While this tactic has worked well in the past, remarks made by CEO Steven Temares on the company’s recent earnings call suggest he believes Bed Bath & Beyond needs to come up with something new to drive profitable growth going forward. The retailer saw increased redemption levels of its coupons during its second quarter with a slight decrease in the value of those redeemed.
Mr. Temares, via Seeking Alpha, said coupons have “been an important part of our value proposition, but at the same time we’re committed as an organization to smarter, more intelligent marketing, personalized, targeted, being more meaningful and being more efficient and optimizing that over time as well.”
One possible solution for weaning the company and its consumers off coupons is an annual membership program known as Beyond+ that is being tested by the chain. For an annual fee of $29, members receive 20 percent off all purchases made in the chain’s stores and on its website. They also receive free ground shipping on all online purchases, regardless of order size.
According to a Wedbush Securities analysis, via The Wall Street Journal, prices on bedbbathandbeyond.com would be 13 percent cheaper on average than the same items on Amazon.com with the Beyond+ member discount. The same article, citing UBS, said customers who spend at least $145 annually with Bed Bath & Beyond would benefit from joining the program.
- Bed Bath & Beyond’s (BBBY) CEO Steven Temares on Q2 2016 Results (Earnings Call Transcript) – Seeking Alpha
- Bed Bath & Beyond (BBBY): Testing A New Membership Program Beyond+ – StreetInsider.com
- Bed Bath Tries to Move Beyond the Coupon – The Wall Street Journal (sub. required)
- Beyond+ – Bed Bath & Beyond
DISCUSSION QUESTIONS: Do you think the Beyond+ membership program is an improvement over Bed Bath & Beyond’s current coupon-dependent marketing approach? Is the Beyond+ offer compelling enough to attract new customers to the chain or do you see it as more of a retention tool for existing shoppers?