Months after Bed Bath & Beyond first publicly warned that bankruptcy was a possible option, the struggling retailer famous for its ubiquitous 20% off coupons has now exercised that option.
Early this morning, Bed Bath & Beyond announced it had filed for Chapter 11 bankruptcy protection as it “has commenced a liquidation sale” in order “to implement an orderly wind down of its businesses.” It plans to seek a potential buyer as the process plays out, but if no buyer emerges, Bed Bath & Beyond is no more.
The retailer’s financial situation became more dire several months ago when it announced it could no longer pay its debts, reiterating that “all strategic alternatives,” including bankruptcy, were on the table. With creditors beginning to demand immediate payments, bankruptcy appeared to be the company’s only realistic option.
The move is a clear sign that the turnaround plan Bed Bath & Beyond introduced last summer didn’t work. That plan involved cutting costs, reducing its workforce by 20% and closing 150 of the chain’s roughly 1,000 stores – later upped to 237 store closings, and still later, to more than 400.
But a home goods seller is only as good as the home goods it has for sale. Nervous suppliers began holding back new inventory last year, which meant shoppers during the all-important holiday season couldn’t always find what they wanted. That resulted in fewer shoppers and weaker sales, which only accelerated the downward spiral.
Through it all, Bed Bath & Beyond insisted its famous coupons weren’t going anywhere.
As recently as last August, Executive Vice President Mara Sirhal was pledging to use “our well-known coupon opportunistically, in all forms, to improve customer traffic.” And back in June, when Bed Bath & Beyond launched its new “Welcome Rewards” loyalty program, it prominently reassured shoppers that “No, The Coupon Isn’t Going Away.” Combining Welcome Rewards with “our popular coupon… will further amplify the value of shopping at Bed Bath & Beyond,” Sirhal said.
Bed Bath & Beyond was long ago eclipsed by the likes of Amazon and big-box stores like Target and Walmart that carry similar products. But Bed Bath & Beyond’s ever-present coupons were what really set it apart in the minds of many shoppers. They became part of pop culture, celebrities talked about them, and the New York Times even published a deep, deep dive into their history.
“An Oral History of the World’s Biggest Coupon” featured reminiscences from the company’s co-founder and other former executives, about how the coupon became the company’s biggest blessing – and possibly its biggest curse. “The big, blue coupon was our brand,” one said. “It was a lot less expensive to send a coupon than to produce an entire catalog,” another remembered. But in time, “the perception shifted to (Bed Bath & Beyond) being overpriced unless you had a coupon,” another former executive said. And now, or at least at the time of the article’s 2020 publication, the company “can’t seem to get rid of it,” a former employee said of the ever-present coupon. “They can’t break free of it.”
Arthur Stark, Bed Bath & Beyond’s longtime president who stepped down in 2018, told Bloomberg about the coupon that, “like any form of promotion, it becomes a drug… Once you’re addicted to it and your customer is addicted to it, it’s a very difficult thing to wean them off of.”
The retailer had tried cutting back on coupons before, pleasing investors who had come to resent them, but displeasing customers who wouldn’t shop without one. You might say Bed Bath & Beyond became a victim of its own couponing success.
But even a coupon hadn’t proven to be enough to get shoppers excited lately about what Bed Bath & Beyond has to offer. That cycle of low inventory leading to low sales leading to even lower inventory and lower sales, was ultimately one from which the company couldn’t escape.
For the time being, Bed Bath & Beyond promises its stores will “remain open and continue serving customers.” But, it adds, “we anticipate that we will stop accepting coupons on April 26, 2023, when we will start our store closing sales, where customers will be able to shop for your favorite products at deep discounts.”
Shoppers have worried and rumors have swirled for years that the retailer might do away with its famous 20% off coupons altogether. Now, those coupons buried in your junk drawer or glove compartment will most likely outlive the very company that issued them.
Image source: Bed Bath & Beyond
