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Bed Bath & Beyond Growth Plan: Fewer Coupons, More Private Label, Upgraded Stores

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Seeking to strengthen its competitive position, Bed Bath & Beyond will introduce 10 new private label brands as it scales back its reliance on coupons. The retailer also plans to invest $250 million to improve the 450 stores that deliver 60% of the retailer’s revenue, and another $250 million for revamping its supply chain over the next three years.

Bed Bath & Beyond plans to introduce the 10 new owned brands over the next 18 months, with the goal of tripling the penetration of private label brands within its product assortment over the next three years. The company is seeking to find new price points and stock “value-tier” products to attract new customers.

Additionally, the retailer will reduce its number of suppliers and enter new negotiations with existing vendors, as well as centralize ordering and replenishment to ensure higher in-stock levels and long-term productivity improvements. These efforts are expected to generate approximately $200 million to $250 million in sourcing benefits over the next three years.

Promotional and Technological Revamps Planned

Bed Bath & Beyond found that 40% of its promotions were deemed “ineffective” and unnecessary in a study of 405 million shoppers’ baskets and 285,000 items, according to CNBC. As a result, the retailer will reduce its use of coupons, and also plans to improve its base price competitiveness and use data to build discipline in its use of promotions.

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The store remodel plan will follow a test-and-learn approach that is expected to drive a 4% sales increase through the adoption of the most successful initiatives. Bed Bath & Beyond also plans to expand its physical footprint with additional stores in new markets, and aims to increase sales by 50%, to approximately $1.5 billion, by fiscal 2023.

The supply chain revamp will include a pivot from a consolidation-based model to a modernized distribution network that is designed to be faster and more responsive to the market. Bed Bath & Beyond also will make an additional $250 million investment over three years, to drive modernization and innovation in its technology platforms through strategic partnerships with Google Cloud and other technology providers.

“We have made tremendous progress this year to strengthen our financial position, focus our portfolio in core Home, Baby, Beauty and Wellness markets, rebuild our executive team, and launch a series of omnichannel services to win back customers,” said Mark Tritton, President and CEO of Bed Bath & Beyond in a statement. “We will build on these strong foundations with a three-year growth strategy that further elevates the shopping experience, modernizes our operations, and unlocks sales growth, margin expansion, increased cash flow and strong and sustainable total shareholder return. Our transformation is rooted in an omni-always, customer-inspired approach that will make it easy to feel at home with Bed Bath & Beyond.”

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