Will Bed Bath & Beyond’s store brand overhaul elevate the chain’s fortunes?

Discussion
Photo: Getty Images/marekuliasz
Mar 09, 2021
George Anderson

Mark Tritton, CEO of  Bed Bath & Beyond (BBBY), is looking to remake the retailer with the same approach that has enabled his former employer, Target, to achieve record-setting results in recent years.

Mr. Tritton made his plans clear when he joined Bed Bath & Beyond in November 2019. His strategy was threefold: transitioning to a fully integrated “omni-always” operation, aligning its costs with revenues and differentiating with in-demand merchandise not reliant on coupons to drive turns.

It’s no surprise, considering his background as chief merchandising officer at Target, that Mr. Tritton believes that signature store brands are key to projecting the image he wants for Bed Bath & Beyond. His vision, on that front, appears to be moving closer to reality as the retailer announced last week that it will launch 10 new owned brands in the next two years. Eight lines will make their debut this fiscal year, including six in the first six months.

The company is hoping to take owned brands from around 10 percent of its revenues to about 30 percent within the first three years. Mr. Tritton is looking for these sales to help boost Bed Bath & Beyond’s gross margins as the chain brings products to market.

“We will deliver the most significant transformation of our product assortment in a generation, by providing our customers with inspirational owned brands across every room in their homes,” he said in a statement.

The new lines along with select national brands would, Mr. Tritton said, “create a platform for sustainable long-term growth and true authority in the home market.”

Bed Bath & Beyond is launching its new Nestwell bed and bath brand this month and is planning to relaunch Haven, its spa-inspired assortment of organic cotton products bath brand, in April.  Another new line, Simply Essential, is billed as more than 1,000 “hard-working household essentials” offered at an opening price point.

The retailer’s owned brand push is part of what it says is a data-driven effort to reset merchandising by categories and rooms. The retailer, which is also discontinuing underperforming brands across its business, is moving ahead with remodels at 450 of its stores as it seeks to transform into “a modern, 360-degree approach to marketing and customer engagement.”

DISCUSSION QUESTIONS: Are owned brands a key differentiating factor for retailers operating in the home and household essentials categories? What will it take for Mark Tritton to replicate the success of Target’s private brand program at Bed Bath & Beyond?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"I am a big supporter of driving private brand to help grow sales, but the brand has to be unique and relevant to their customer base."
"Who doesn’t love a leader with passion, focus, discipline, and a winning formula? This transformation is nothing short of phenomenal."
"Bed Bath & Beyond now has a dream team of big thinkers who are going to change the company’s value proposition with customers. It’s going to be fascinating to watch."

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15 Comments on "Will Bed Bath & Beyond’s store brand overhaul elevate the chain’s fortunes?"


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Neil Saunders
BrainTrust

Own brands are vital as they do two main things. First, they create differentiation from other players. Second, they prevent some price comparison which is helpful for maintaining margins. Of course, for these things to work, own brands need to be compelling and aligned with customer demand. That’s about much more than manufacturing a few products and sticking an own brand label on them. Target gets this as all of its own brands have very clear identities, are carefully targeted at particular consumer segments, are merchandised in a particular way, and ultimately have a distinct handwriting or personality.

Bed Bath & Beyond is right to copy Target’s playbook. However it has to copy all aspects including making stores more engaging and giving new own brands space to breathe. It also needs to understand that it is not a destination in the same way as Target is, so exposing and showcasing these new brands via marketing is particularly important if it wants to capture more shoppers.

David Weinand
BrainTrust

First and foremost, Mr. Tritton has assembled a phenomenal team around him. Rafeh Masood did great things at BJs and his other hires are true leaders. The team and the subsequent culture will be the drivers of the turnaround at Bed Bath & Beyond. Adding private label brands is part of that and if marketed properly, can really help margins. Finally, fixing the merchandising mess that used to define Bed Bath & Beyond stores will go a long way to redefine the brand.

Cathy Hotka
BrainTrust

I agree completely. Bed Bath & Beyond now has a dream team of big thinkers who are going to change the company’s value proposition with customers. It’s going to be fascinating to watch.

Rick Watson
BrainTrust

I am hopeful Cathy. I am not seeing it yet. The problem with a turnaround is that even if they get oriented in the right direction, like a runner they are still one or two laps behind the field.

What is the big new consumer idea? I am patiently waiting on that. I don’t think less store clutter, an ERP upgrade, and private label is a good enough answer yet.

Rick Watson
BrainTrust

The fact that it took Bed Bath & Beyond this long to work out that store brands are the way forward is almost criminal. However their recent ERP/IT investment announcements show they are still thinking in an old-school fashion. I am not convinced that Bed Bath & Beyond has yet found its reason to exist in an area where I can get anything for my home in a day. What is the store experience that will make me walk in?

Bob Phibbs
BrainTrust

Who doesn’t love a leader with passion, focus, discipline, and a winning formula? This transformation is nothing short of phenomenal.

Richard Hernandez
BrainTrust

I will say that the newly remodeled stores are very clean and do not have inventory piled high to the ceiling. I am a big supporter of driving private brand to help grow sales, but the brand has to be unique and relevant to their customer base to make them want to go to Bed Bath & Beyond to purchase something special. How that uniqueness and relevance is communicated via digital and other channels will determine its success.

Dick Seesel
BrainTrust

Private and exclusive brands have always been a key part of the Target merchandise mix in soft home, especially with the recent launch of new and reimagined labels. The same tactic should work well at Bed Bath & Beyond, as long as Mr. Tritton’s team continues to stay focused on the store experience. Decluttering the store was an essential first step for the new team, and private brands run the risk of overassortment if not curated thoughtfully.

Brandon Rael
BrainTrust

The most successful private label strategies are seamlessly blended within the assortments as a high-quality yet affordable option. This strategy, coupled with reimagining the Bed Bath & Beyond stores with wider aisles, curated assortments, and leveraging the latest digital micro-fulfillment technologies and capabilities, could help the company reap benefits.

However this is a major shift, and Bed Bath & Beyond has laid out their digital-first, “omni-always” strategies with their significant investments. It will be interesting to see how all these strategies resonate and play out.

Jeff Sward
BrainTrust

Store owned brands are probably the most powerful weapon that can be deployed in terms of enabling the retailer to differentiate themselves and ultimately maximize customer loyalty. That’s not to minimize the importance of national brands and the many facets of service, but well executed store owned brands are now foundational to successful retailing.

Dave Bruno
BrainTrust

Own brands allow you to own your destiny. Giving this talented team control over a large chunk of their assortments, pricing, and margins bodes extremely well for the future of Bed Bath & Beyond. I can’t wait to watch the next few years unfold.

DeAnn Campbell
Guest

With many name brands across retail shifting toward direct-to-consumer selling, private label is not just smart but necessary for Bed Bath and Beyond to stay relevant. If they invest in quality products that draw shopper interest and build loyalty, the advantage of their brick-and-mortar presence could make them the go-to starting point for home goods shoppers once again.

Cynthia Holcomb
BrainTrust

Private brands are a key differentiator, just ask Target, Nordstrom, and other retailers across the retail spectrum who have successfully differentiated themselves by executing their unique branded, aesthetic point of view in a cadre of wholly owned private brands. Bed Bath & Beyond under Tritton and team is very exciting and a much welcome expansion to the current blandly basic, home goods shopping experience outside of a very few retailers. Bed Bath & Beyond is about to be rediscovered by some and discovered by many!

Ryan Mathews
BrainTrust

I’m a huge fan of retailer-controlled (own) brands. That said, I’m not sure launching eight at once and two a little later is the right strategy. It took Target a long time to build its brands. I worry that introducing that many brands all at once may create exactly the opposite impression from what Bed Bath & Beyond is trying to achieve. Better to focus on one or two brands, making your case with the consumer that your offerings are differentiated and (hopefully) better. Once you have a couple of successes, then you’ll have permission to introduce other own brands as appropriate.

Doug Garnett
BrainTrust

Yes. Own brands are one possible way of differentiating. They offer Bed Bath & Beyond even more opportunity because they’ve carried a cacophony of manufacturer brands without establishing distinction for their stores. I expect that this approach will make their stores distinct — something they desperately need.

However they must communicate what they are doing far better than they’ve communicated in the past decade. All this hard work could deliver nothing if customers don’t know why they should value what Bed Bath & Beyond is doing.

wpDiscuz
Braintrust
"I am a big supporter of driving private brand to help grow sales, but the brand has to be unique and relevant to their customer base."
"Who doesn’t love a leader with passion, focus, discipline, and a winning formula? This transformation is nothing short of phenomenal."
"Bed Bath & Beyond now has a dream team of big thinkers who are going to change the company’s value proposition with customers. It’s going to be fascinating to watch."

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