The 5 Things BBB Must Do To Get It Beyond Bed Bath & Beyond

With a financial lifeline that even those in the business are having a hard time trying to figure out, Bed Bath & Beyond has bought itself some time to try to fix itself and live to see another retail day.

That was the easy part.

With some vague proclamations of new strategies, different directions and all kinds of hints about what is to come that will change EVERYTHING, the soon-to-be significantly smaller Big Box retailer remains with a very long list of things it needs to fix before it can return to solvency…much less financial success.

Here’s how I see Five Big Things it needs to address before all this new-found money runs out:

1. Money Management

With some $225 million in new funding, plus an addition to its credit line and the potential for another three-quarters of a billion dollars being dangled out there, BBB has to spend it all wisely. Yes, it’s going to pay down a lot of debt and that’s where most of the money will go. But some will need to be spent on its downsizing. Getting out of potentially 400 leases and a massive reduction in headcount means significant severance pay and lease buyouts, even if some of its landlords will be happy to see them go so they can rent those prime locations to better paying tenants. Nobody has discussed all of this yet but someone will have to before it’s over.

2. Online Outlays

If you read between the lines about wanting to go where its customers shop, you know that means online and that means getting a better e-commerce operation. Its online business has been an albatross around its neck for going on two decades and if Bed Bath is serious about being a true omnichannel player it will need to put a long of money and resources into being a better digital seller. This takes time and that’s the one thing the company doesn’t have, no matter how much money it’s able to find buried in the cushions of Wall Street’s sofas.

3. Vendor Venmo

Right now, the retailer’s vendors are on the sidelines waiting to get more details – and more money that they are owed – before they are going to buy into any new plan. These suppliers want do business with BBB but they need assurances it’s going to be worth it. For most, it’s not a matter of just flipping a switch at a factory and ramping up more production. The vast majority of Bed Bath’s vendors use third party manufacturers, mostly in China and elsewhere in Asia, and to get orders into production they need to put up at least some of the money required for the goods. So, it’s not just a matter of BBB paying monies owned, they also need to pay for new merchandise. It’s a big requirement and without new products arriving in stores in the spring, summer and fall, all the rest of this re-engineering is moot.

4. Customer Very-Friendly

The most valuable asset BBB has always had is that its customers loved shopping at its stores, the result of decades spent catering to whatever they wanted. That is rapidly disappearing as consumers see empty shelves, notice their local neighborhood store going out of business and read the incessant headlines about the company being on the verge of bankruptcy. This is going to take a massive effort to undo and a silly “Welcome Home” campaign isn’t going to cut it. It takes generations to build up customer loyalty and trust…and just a few years to destroy it.

5. The Great Beyond

Lastly and probably most important is even if BBB can maneuver through those first four challenges and still have some money left over to stay in business, the big question remains what kind of a business will it be. Bed Bath was founded on a simple premise: we have more home stuff than anybody, at decent prices and we’re a convenient, easy place to shop. All of those are now off the table. Going back to national brands in a good assortment didn’t work before all this recent upheaval, it’s not going to be the answer now. Differentiated assortment isn’t the answer. With fewer stores the ubiquity that defined BBB is gone.

What will it be that will make a customer choose this store over all the other shopping options available, from Walmart and Target to Amazon and Wayfair and from Macy’s to Kohl’s to Costco to HomeGoods? It’s the fundamental question Sue Gove and everyone else at Bed Bath & Beyond have to answer while there’s still some cash in the bank account.

It can’t just be about the coupons.

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