Bed Bath & Beyond Bankruptcy Blamed on Private Label Strategy

Bed Bath & Beyond has declared bankruptcy months after warning about its future.

The downfall of the 52-year-old home goods seller came about Sunday (April 23) after the company wasn’t able to secure funding that would have allowed it to stay afloat.

“Thank you to all of our loyal customers. We have made the difficult decision to begin winding down our operations,” a statement at the top of the company’s website said Sunday morning. It notes that the company’s stores — and its offshoot buybuy Baby — will remain open.

And as The Wall Street Journal reports, Bed Bath & Beyond’s (BBBY) fate was sealed in part by a failure to compete with online retailers and an ill-timed embrace of private label products.

On paper, the company’s pandemic era push to move to private labels made sense: It carries higher margins and helps stores stand out from rivals. However, analysts and former employees told the Journal the strategy fell apart for BBBY for a number of reasons.

First, the switch happened at a time when COVID-19 was choking the world’s supply chains, leading to delays in shipping and rising costs that made it hard to keep shelves stocked. And former employees argued BBBY debuted too many private brands too fast, without the infrastructure to support them.

And after pandemic-era demand for goods began to wane, sales began to fall.

“You know if you buy Cuisinart what you are getting,” Sheryl Bilus, a 68-year-old retired bank manager from Canton, Georgia, told the Journal. “But with their own brands, you don’t know what the quality is like.”

The report notes that BBBY reported its first sales decline as a public company in 2019, by which point online retailers like Amazon had begun to cut into its territory.

“We missed the boat on the internet,” said Warren Eisenberg, one of the chain’s founders.

PYMNTS wrote about BBBY’s struggles in January soon after the company said it had doubts about its future. We noted then that “the demise of the 52-year-old retailer has caught many by surprise as the chain had been a category stalwart since its founding in the early 1970s and subsequent expansion into its buybuy Baby and Harmon brands.”

But since its founding, Amazon has come to rule the eCommerce and home delivery category and now counts furniture and home furnishing as one of its top three product lines, according to research by PYMNTS.

Speaking with investors earlier this year, CEO Sue Gove stopped short of mentioning her company’s digital shortcomings, but “she did tell investors that the beleaguered brand recognized and embraced the fact that its customers shop differently today, saying they visit stores less frequently.”