By Natalie Hughes
Like many other retailers today, Bed Bath and Beyond is initiating crucial changes to the company’s supply chain and operations in hopes of jumpstarting revenues after months of losses during the COVID-19 pandemic. Although the demand for plush bedding and fine cookware will likely never fall, many of the company’s sales have historically taken place within the walls of stores. The retailer has been struggling with decreasing sales in years past, so when the pandemic hit time ahead was not looking optimistic. In March, the corporation decided to temporarily close 90% of its stores. Although most of which have been reopened and digital sales have increased by 89%, revenue has still fallen drastically. Bed Bath & Beyond reported second quarter earnings of $2.69 billion compared to $2.72 billion this time last year. In an attempt to win back its once loyal customers and regenerate the industry influence it held, Bed Bath & Beyond has developed a set of key strategies that should improve its supply chain and promotional activities.
The company has announced that the primary aspect of its multi-pronged strategy is to reduce its number of stores in order to bring down its inventory and broaden the distribution channels. To appeal to the changing needs of consumers, it plans on fine-tuning the variety of products by offering lower-priced merchandise, and less merchandise at that. As of August, the firm’s working capital had increased by about 10% within the past year, yet it still has a ways to go. The company had been trying to increase its working capital for years prior so this statistic serves as both an accomplishment and a source of hope for the future. Bed, Bath & Beyond CEO Gustavo Arnal is in full support of the company’s initiative to accelerate its retail chain and free up some much needed cash. Further, he acknowledged publicly that the best way to get cash flowing is to optimize working capital.
Essentially, the company’s future success all rides on its ability to regenerate cash. After all, there’s no better way to preserve cash than to cut down on inventory. Bed, Bath & Beyond has been attempting to reduce its inventory levels for years following a peak in 2016. Last fall, the firm acknowledged that it aimed to cut $1 billion in inventory over the following year and half. Now, halfway to that goal, it aims to cut inventory by an additional $1 billion over the next two years on top of its existing target. With planned store closures and more deliveries directly to customers’ homes, this goal is highly achievable. Bed, Bath & Beyond will also launch a new store model this week that will require less inventory to fill shelves. Based on Arnel’s approval and the tactics that the firm has developed, Bed, Bath & Beyond is on its way to renewed success.