Buffalo, N.Y. (WBEN) - It was announced on Sunday that Bed Bath & Beyond has filed for bankruptcy protection, signaling the end of the American big box retailer specializing in home accessories and specialty items.
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The home goods chain made the filing Sunday in U.S. District Court in New Jersey, and said it will start an orderly wind down of its operations, while seeking a buyer for all or some of its businesses. In the bankruptcy filing, the retailer said it anticipates closing all of its stores by June 30.
The company will keep its Bed Bath & Beyond stores and its Buy Buy Baby sites open, as well as its websites operational to serve customers.
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Bloomberg Bankruptcy Reporter Jeremy Hills feels this move from Bed Bath & Beyond was one that many have been expecting for several years.
"The company is a mainstay for American shoppers, but in about 2017, the company started losing money, losing business to the likes of Amazon, of course, but also Target and Walmart. You could get things that you used to really have to go to Bed Bath for at these other stores, or on the Internet. All that was really compounded by the COVID-19 pandemic," said Hill regarding the cause of the company's downfall. "It was really hard for retailers in general, because it was just hard to keep shelves stocked. It was really hard for Bed Bath, because, as anyone who's been to one of these stores knows, there's a lot of stuff in there. Things were getting stuck in ports, it's difficult to keep shelves stocked. That drives away shoppers, who are stuck at home anyway, so things got really, really dire in the last year or so, and ultimately it landed in Chapter 11."
Burt Flickinger, Managing Director at Strategic Resource Group, also views Bed Bath & Beyond's impending end as a result of a poor search for executives who didn't catch on with what consumers wanted.
"What's particularly telling is they had a fantastic division, Buy Buy Baby, with less than 100 stores which perfectly filled the vacuum left by the bankruptcy and liquidation of Toys R Us. They did not expand Buy Buy Baby, they had even more Christmas Tree Shops - did not catch on with the consumer - CostLess discount stores that didn't catch on, and they had close to 1,000 Bed Bath & Beyond stores," said Flickinger. "Too many stores selling products that consumers did not want, and with Baby, not enough stores selling products consumers did want."
As this filing for bankruptcy protection was seen coming for quite some time, Flickinger says one of the biggest warning signs from Bed Bath & Beyond was when private equity and Wall Street investment funds revealed the company took out too much capital and do not invest capital expenditures in key areas for profitable market and share growth.
"That's where the company really went off the rails, and not monetizing the Buy Buy Baby franchise in America, and potentially internationally. That was the key," Flickinger said. "They had excellent family ownership operating the company for many decades, it was founded in Union, New Jersey right down the street from work Toys R Us was founded, and then they evolved to a good combination of family management and professional management. Then they went to newer management, which while well-intentioned, made erroneous assumptions leading to erroneous consumer and competitive conclusions."
Hill believes this bankruptcy protection filing from Bed Bath & Beyond is a sign in this current economy that retailers, in general, are struggling, especially the companies that rely on foot traffic to drive sales.
"We've seen something of a respite from retailers filing for bankruptcy over the last couple of years, because really, a lot of the super unprofitable ones got washed out in the last decade or so. But just in the last week, we had Bed Bath, and then last week we also had David's Bridal, the wedding dress and other wedding accoutrement retailer file for bankruptcy, and they're also probably going to liquidate," Hill points out. "It seems like the pressure is kind of ramping up on retailers, as there are questions about the strength of the consumer and whether or not we're heading into a recession."
While we've seen factors such as the COVID-19 pandemic, inflation and a number of other economic issues create challenges for a number of retail businesses over the past few years, Hill believes that in order to survive in 2023, it will take a good online presence to keep up the pace with everyone else.
"Shoppers increasingly don't want to go to stores, and when they do want to go to stores, they want the experience to be seamless, they want it to be great," he said. "Why would you get in your car and drive to a store when you could click a button and buy it? You have to have that value add."
As for Flickinger, he feels for some of these retail businesses to succeed, it's going to take better value, better quality, and especially better private label.
"Co-publishing a book on the explosive growth of private label brands in North America with Phil Fitzell, private label quality - Target is one of the best at, as is all the BJs, Costcos and others - is helping to raise shoppers' standard of living by being able to sell the same amount of units, ounces or pounds, but for a lower price for private label, which in many cases is better than the leading national brands," Flickinger said.
Flickinger also feels that a large reason why many consumers are electing not to shop in-person is concerns over safety with some of these big box retail facilities.
"Target and Kroger and Costco and BJs has some of the best security in the country. Consumers feel safe, and they can one-stop shop at a Target or Super Target store for virtually everything that was sold at a Bed Bath & Beyond store. So advantage Target, disadvantage Bed Bath & Beyond on bankruptcy and liquidation," he said.
"With Target having several people and off-duty, former law enforcement or military, or people with criminal justice degrees, saving combined with safety is now the No. 1 concern in America. That's why Target Kroger, Costco and BJs are doing so well, and others are doing less well."
Bed Bath & Beyond says it expects to process returns and exchanges in accordance with its usual policies until May 24 for items purchased prior to Sunday. It also anticipates gift cards, gift certificates and loyalty certificates will be accepted through May 8. The company will stop accepting coupons as of Wednesday.