Soon, you might not be seeing as many Bed Bath & Beyond coupons showing up in your mailbox.
For better or for worse, the big-box retailer is known for its frequent coupons, sent in the mail and via email, to lure customers into stores by promising 15% or 20% discounts off bedding and other home accessories.
But in a bid to boost profits and be more competitive on pricing with competitors, the company is planning to scale that back.
“Today, we have an overreliance on the coupon,” Chief Merchandising Officer Joe Hartsig said Wednesday during a virtual meeting with investors.
Bed Bath & Beyond said it has studied 405 million shoppers’ baskets and 285,000 items, and found that 40% of its promotions were deemed “ineffective” and unnecessary.
It said it has seen 1.4 million new customers this year — in large part due to the coronavirus pandemic and people looking to stock up on cleaning supplies or to spruce up their homes. It said those new customers are six years younger, on average, and are 20% less likely to use a coupon, giving the company even more reason to scale its promotions back.
One analyst, though, cautioned that the retailer needs to be careful not to upset those people who are the most dependent on the coupons.
“Financially, this is a necessary move as coupons erode margins,” said Neil Saunders, managing director of GlobalData Retail. “However, many Bed Bath & Beyond customers love coupons, so scaling them back may have an impact on shopper numbers and sales.”
“This is very much like ending an addition: It’s sensible and brings benefits in the longer term, but it may hurt in the short term,” Saunders added.
The shift is part of Bed Bath & Beyond’s broader turnaround strategy, to boost sales and profits in the coming years. In laying out a three-year road map Wednesday, the company offered fresh financial targets. It expects same-store sales — which track revenue online and at stores open for at least 12 months — to be “stable” in fiscal 2021, and rise in the low-to-mid single digits by 2023.
It plans to make $1 billion to $1.5 billion in capital investments over the next three years, to remodel stores and upgrade its e-commerce operations, among other initiatives.
Bed Bath & Beyond shares were falling more than 11% Wednesday, amid a broader market selloff. Its stock has run up more than 38% this year. It has a market cap of $2.7 billion.