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Bed Bath & Beyond Looks To Expand Buy Buy Baby, Signaling a Potential Retail Property Growth Area

Retailer Sees Expansion Potential for Brand

Photo Courtesy of Kristina Blokhin.

Bed Bath & Beyond is closing its namesake stores as it expands the brick-and-mortar footprint for its Buy Buy Baby chain, where it sees untapped potential after its closely watched search for a new way to lure customers into retail buildings.

“We want Buy Buy Baby to be the destination of choice for all new parents and young families and to help guide them on their journey and grow with them,” said John Hartmann, Bed Bath & Beyond’s chief operating officer.

The Union, New Jersey-based home goods retailer, which has about 1,000 stores, discussed its plans during a conference call covering its fiscal fourth quarter on Wednesday. Company officials reported that their store-optimization plan to downsize Bed Bath & Beyond was on track, with 144 stores shuttered in fiscal 2020, including 118 during the fourth quarter. This year 200 stores are on the chopping block.

But the company, under the leadership of president and CEO Mark Tritton, is taking a multipronged approach to boost Buy Buy Baby, which sells clothing, strollers and other items for infants and young children. In fiscal 2021, Bed Bath & Beyond expects to open seven Baby stores, bringing its total store count to 139 by fiscal year-end, according to Chief Operating Officer John Hartmann. As of Feb. 27, there were 132 Buy Buy Baby locations.

“We are excited to begin the transformation of the Baby banner this year and unlock the value of this brand,” Hartmann said. “We previously outlined our six-point strategy to accelerate growth, which includes investments to scale our store footprint nationwide.”

The moves provide a look at one retailer's solution to the problem of finding a format that can draw customers into physical stores as retail property owners struggle. Like most retailers, Bed Bath & Beyond is trying to spring back from last year’s pandemic-related temporary closures, which happened in the midst of Tritton trying to mount a turnaround for the company. He has sold off five Bed Bath & Beyond noncore businesses, leaving it with Buy Buy Baby and also Harmon, Harmon Face Values and Face Values.

Refreshes Planned

During the fourth quarter, Bed Bath & Beyond opened three Buy Buy Baby stores, one Bed Bath & Beyond store and one Harmon Face Values store, while shuttering the 118 Bed Bath & Beyond stores.

“We continued to make substantial progress with the store-network optimization program and remain on pace to achieve our targeted closings of approximately 200 stores by end of fiscal 2021,” Hartmann said. “The program is tracking to plan and is now about 70% complete. The remaining store closings will occur in fiscal 2021 and be weighted toward the second half.”

He also offered an update on Bed Bath & Beyond’s efforts to update its brick-and-mortar locations, which kicked off in earnest in Texas.

“We recently completed our proof-of-concept store remodels in the Houston market, which consisted of four type A full-store remodels and three type B remodels, which involve the room reset and updates to about half the store,” Hartmann said. “This represents the first full designated-market area we have addressed across the country. ... We are now beginning the next wave of remodels by applying the learnings from the New Jersey test store and the Houston market to iterate and continuously improve.”

The store refreshes across the Bed Bath & Beyond chain include: resetting merchandise assortment by room, instead of category, to make it easier to shop and find products; more open aisle space and better site lines; and new store signage to clearly communicate value and price.

Bed Bath & Beyond plans to invest $250 million over the next three years to remodel about 450 stores, sites that represent 60% of its revenue. This year it plans to update from 130 to 150 stores in 30 states and Canada, including 26 stores in the first quarter.

Bed Bath & Beyond is also looking to make improvements to its supply chain by finding a third-party logistics partner.

“We plan to establish four regional distribution centers to more efficiently and cost-effectively manage the flow of merchandise to our stores,” Hartmann said.

Source: 2021 CoStar News.

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