When Bed Bath & Beyond hired Mark Tritton in 2019 to spearhead its turnaround after years of struggles, analysts expected private labels to be key to his approach.With Tritton as CEO, Bed Bath & Beyond got to work, announcing plans in October 2020 to launch more than 10 new store brands within 18 months as part of its comeback.
Instead, that backfired, and many analysts now see its private label effort as a contributor to its downfall. What went wrong?
Around the time of Tritton’s arrival, Bed Bath & Beyond was garnering just 10% of its sales from private labels, compared to Target’s one third. “[Tritton’s] plans, which were essentially a carbon copy of what he had done at his former employer, Target, quickly alienated existing customers and failed to attract new ones,” GlobalData Managing Director Neil Saunders said in emailed comments. “Tumbling sales resulted, exacerbated by a tightening economy.”
This exposed a longstanding problem at Bed Bath & Beyond, according to Liza Amlani, principal and co-founder of Retail Strategy Group. “What I’ve always said is that Bed Bath & Beyond does not know their customer and what their customer wants,” she said by phone. “What does your customer want to see from you? They don’t want to buy private label mixers, they want to buy a KitchenAid mixer. So don’t make a private label.”
Bed Bath & Beyond’s private label effort was both rushed and poorly timed, experts said. “I think Mark probably tried too much too fast,” Sanford Stein, founder of Retail Speak, said by email. “It’s also important to remember Mark and his plans nearly dovetailed with the onset of Covid and the supply chain debacle.”
The pandemic not only roiled supply chains, but also hampered shoppers’ ability to take in and embrace new labels popping up at Bed Bath & Beyond. The cheaper prices weren’t enough of an enticement, according to Ellis Verdi, president of advertising agency DeVito/Verdi.
If Bed Bath & Beyond recognized that Target was a major rival in the home goods space, it soon found, as many retailers do, that playing catch up is difficult and expensive — even if you poach the rival’s key player, Jeffrey Sward, founding partner and CEO at Merchandising Metrics said.
“Fresh from those many successes at Target, the Bed Bath & Beyond team thought they could severely compress the whole time/action calendar as they sought to replicate a private label strategy,” he said. “The big takeaway from Target is the benefit of a disciplined, ongoing investment in creating and managing evolution and staying ahead of the curve.”
Unlike Target, Bed Bath & Beyond did little to support its new labels, experts said. The home goods specialist found success for years without employing much marketing, but that couldn’t work once they began introducing unknown goods, according to Verdi.
Without the proper marketing, customers, especially those unable to find their preferred brands on the shelf, are easily thrown when they encounter unfamiliar ones, Sward said.
“Turns out private label is a lot harder than knocking off best sellers and banking the margin,” he said. “It’s brand development and brand management. It’s marketing and selling as if it were a national brand. Because in the eyes of the customer that’s the expectation. Customers were buying the old brand for a reason. What’s the reason to buy the new brand?”
Bed Bath & Beyond’s missteps in developing a new owned-brand portfolio might be more understandable if the retailer hadn’t tapped Tritton, viewed by many in the industry as a private-label master. But a savvy merchandising hire can only go so far at a retailer with multiple challenges.
“One person cannot make the change,” Amlani said. “Relying on just one piece of the puzzle to fix the entire puzzle is not ever going to be successful.”
The pandemic made running even a thriving retailer more arduous. But Bed Bath & Beyond was not thriving, and after Tritton’s departure things only got worse. Marketing experts and business school professors will be analyzing what went wrong there for decades, according to Stein.
“Unfortunately the seeds of its demise were deeply planted long before Mark Tritton got there,” Stein said. “Mark’s initial efforts in paring back inventory redundancy made sense, as did cleaning up and reimagining the stores. I think private label made sense. We can’t separate the fact that Tritton was suddenly in the position of having to please multiple masters. That included the board, Wall Street, shareholders and customers. All those shiny new brands made for great press back then. It was too much, too quick, too many masters, too little time.”
Source: Retail Dive