The scoreboard for Big Box Category Killers is filled with both killers and killed. Mostly, in recent retail history national chains like Toys’R’Us (the original category killer that invented the model), Circuit City and Linens’n Things have all succumbed in one form or another to bad management, failure to evolve or too much debt taken on in ill-fated financial maneuvers. Sometimes it’s been all three. In some cases their names may live on but their original category killer models have long since perished.
Then you have operations like Dick’s Sporting Goods, Tractor Supply and, most impressively, Home Depot and Lowe’s, that have remained very successful for decades, constantly reinventing themselves while staying true to their original market positions. These are remarkable achievements.
But there’s a third category for Big Boxers who focus on a single merchandising classification. And they are the ones who were on the edge of disaster, often left for dead by investors and customers, but who somehow picked themselves up and turned around their businesses to live to see another day. Two such retailing operations stand out in this category: Best Buy and Barnes & Noble.
And now as we enter the new year, there is one more giant in the category killer channel that will face its fork in the retail road: turn itself around and become successful again…or succumb to its problems and fade away, probably not so slowly. And that is Bed Bath & Beyond.
The home furnishings chain, once considered one of the best retailers not just in home or even in specialty retailing but in all of retailing itself, has been dealing with monumental struggles the past few years. Its balance sheet is in shambles, it has had four CEOs in the past five years, its merchandising is a mess and it is teetering on retail irrelevance as its once-strong customer base increasingly moves on to other options.
It will report its most recent financial results the first week of January and they are not expected to reverse its recent trend of big losses, severe drops in same store sales and a cash burn rate that is unsustainable. It also risks losing the confidence of its suppliers to continue to ship it goods for delivery in the spring of 2023, which in itself can be the kiss of death.
But in facing this precipice one needs to be reminded that it is not necessarily a done deal for Bed Bath & Beyond. Best Buy faced a similar doomsday scenario several years ago but through smart management, a major rethink of its merchandising model and strategic investments in those areas of its business where it saw the best opportunities it did what few thought possible and has resumed its rightful role in the consumer electronics retailing field.
Barnes & Noble was in a position very much the same, its stores considered high-cost dinosaurs and its top-down merchandising unsuited for the realities of localized retailing. But under new ownership and management it is in the midst of a remarkable transformation, so dramatic that in fact it will be opening as many as 30 new stores next year…at least several ironically in locations that previously were book stores run by Amazon, the e-commerce giant that almost took B&N down completely.
Both Best Buy and Barnes & Noble are still works in progress and nobody is suggesting that what worked for them will necessarily be the solution for Bed Bath. But as case studies that prove one can sometimes expect the unexpected they might serve as signs of hope for the home furnishings chain.
Retail is a funny business and just when you think you’ve got it all figured out and can sort out the winners from the losers along come some surprises that prove otherwise. A lot of people – including both those in the home products business and consumers who remain loyal to BBB – are hoping this is one more surprise yet to come.
The odds remain long and there are an awful lot of things that will need to happen for Bed Bath & Beyond to bounce back but it’s happened before…and it could happen again.