Will Bed Bath & Beyond find gold in a treasure hunt strategy?
Beginning in March, Bed Bath & Beyond’s newer stores will be emphasizing “deep value” and more of a treasure hunt experience in order to drive traffic.
“We know that deep value product and the treasure hunt experience are driving foot traffic in-store, encouraging browsing and increased purchases and promoting frequent visits,” said Steven Temares, CEO, on the company’s third-quarter conference call on December 20. “We know this from our own performance across several of our categories within our concepts as well as from seeing the traffic and results of other retailers.”
“Deep value” may be offered in consumables categories such as health and beauty care and food and beverage as well as within its core offerings, said Mr. Temares. A treasure hunt item might be one with “new, fresh and/or … limited availability” within furnishings, decor and seasonal areas.
To make room for these items, Kohl’s will employ a “Show More, Carry Less” initiative that will reduce the amount of core Bed Bath & Beyond merchandise but train store associates to use tablets to show customers ample assortments online.
Writing for Retail Leader, Gina Acosta noted that the “treasure hunt model has so far proven resilient for retailers such as Costco, TJX Companies and others as competition from both online and brick-and-mortar peers intensifies.”
Some analysts appeared concerned about the impact on margins amid an overly promotional climate.
But Mr. Temares sees margin opportunities in both the value-oriented and treasure hunt items which will be “differentiated.” The overall goal is also not to reduce sales of core Bed Bath & Beyond’s merchandise but increase sales overall.
Said the CEO, “The idea is to be able to shrink the core assortment in terms of back stock, show more, carry less, interact with the customer more often and take advantage of the additional foot traffic we’ll be seeing from the deep value that we’ll be presenting and the treasure hunt product.”
- Bed Bath & Beyond Inc. Reports Results For Fiscal 2017 Third Quarter – Bed Bath & Beyond
- Bed Bath & Beyond’s Q3 2017 Earnings Call Transcript – Seeking Alpha
- Bed Bath Beyond bets on treasure hunt strategy – Retail Leader
- Rating Action: Moody’s downgrades Bed Bath & Beyond to Baa2 – Moody’s
DISCUSSION QUESTIONS: Does adding more deep values and a treasure hunt experience make sense for Bed, Bath & Beyond? How do you feel about using these tactics along with shrinking the chain’s core inventory assortment?