It’s been years since I stepped into a Bed, Bath, and Beyond store. I remember walking through my local store, amazed at the amazing variety of products and how the shelves seemed to reach for the sky. I couldn’t see myself coming back here every week, but my Mom loved it. The customers around me loved hunting through the stores in search of deals or unique, new products. I didn’t fully understand this feeling until I started shopping at Costco, which has recreated many of these elements.
The company has had a few rough years. The pandemic should have been good for them, but they keep making mistakes in their strategy. BBBY—I’ll shorten their name for my sanity—is now a perfect case study of how strategy can go wrong.
Strategy is for Customers, Right?
BBBY didn’t just sit around waiting for things to change on their own. Like any good company, they undertook a new strategy. The work started before the pandemic; at that time, Amazon was on every retailer’s mind. Amazon was supposed to kill everyone, and BBBY wasn’t going to fade into obscurity.
They undertook a strategy of creating private label products to increase margins and control over their stores. It seemed the “right” thing to do, especially since competitors like Target were launching their own private label products. Whenever I hear a company cite competitors as justification for their actions, I know a mistake is around the corner.
The problem is that their customers didn’t care for these products. You didn’t need complex customer research to discover this. Every store manager knew why customers came to their stores. They wanted to discover new products. Every store had a different product makeup but BBBY decided to make them all the same. Unsurprisingly, customers didn’t respond well to these changes.
The new strategy made sense for management but not their own customers. The lesson is that it doesn’t matter what competitors are doing. Every company has to focus on their unique connection to their customers and that’s not what BBBY did.
FOMO Takes Over
I previously wrote on how FOMO (Fear of Missing Out) can be disastrous for company strategies. Companies can fall prey to distractions and fail to make progress on their strategic objectives. BBBY is caught in so much FOMO that I’m not sure if they will ever come out of it.
Their FOMO started when they undertook their new strategy. They were blinded by what competitors were doing and how they could be falling behind. The best retailers realized they can’t compete with Amazon. Instead, they need to carve out their own approach that makes sense for their customers. Last I heard, Amazon was also the boogeyman in the Walmart offices.
Today, BBBY is caught up with meme investors. These investors have decided that BBBY is undervalued and thus should be brought into astronomical stock heights. GameStop, AMC and Hertz all benefited from meme investors, and it seemed like BBBY might just be saved by them. However, that outcome isn’t guaranteed.
Besides, it fails to tackle the root cause of the issue: poor strategy. All the companies that rode the meme investor wave will still need to figure out viable business models for the future. You can’t just expect the stock to go up while revenue and profits go down. BBBY may have even less time than these other companies.
Someone Should Talk to Customers
The BBBY saga isn’t done. I’m sure there are other twists and turns that will occur, but BBBY would benefit from talking to the one group of people that matters: their customers. Their future depends on how well they can serve their current and future customers. And those customers aren’t meme investors despite what the stock price may say.
BBBY, go back to the drawing board and create a strategy for your customers.