Bed Bath & Beyond is looking to make up for a late start in the private label game with a big leap forward. Though the retailer launched its first-ever private brand, Bee & Willow Home, just last year, ahead of its inaugural Investor Day, BB&B has outlined a plan to roll out 10 owned brands in the next 18 months — all with the goal of tripling its private brand penetration over 3 years.
The Oct. 28 Investor Day comes almost a year to the day after Mark Tritton — formerly Target's chief merchant — took the reigns of the Union, N.J.-based home goods retailer, and on the heels of a spree that brought to the C-suite retail vets from various channels, all of whom were well-acquainted with store brand strategies.
In March, Bed Bath & Beyond tapped Joe Hartsig — who helped lead store brands at drug giant Walgreens — as its chief merchant and president of its health and beauty care-focused Harmon Stores division. Then, in July, Neil Lick was named BB&B's new private brands leader, bringing with him 22 years of experience at Williams-Sonoma.
The owned brand strategy accompanies a clearer picture of who Bed Bath & Beyond's 37 million shoppers — 1.4 million of whom are new this year — are and what they want. It has identified five core customer segments: the nester, the minimizer, the juggler, the innovator and the creative. To reach them, the company is looking to reinvent its loyalty program while building out its owned brands.
Bed Bath & Beyond said the owned brands will create opportunities for market share growth by increasing the availability of opening price points and value-tier products, while also providing elevated, destination products both in stores and online. Playing alongside this strategy, the retailer said it is on track to deliver $200 million to $250 million in sourcing benefits over the next three years by reducing suppliers and negotiating with existing vendors.
"We have made tremendous progress this year to strengthen our financial position, focus our portfolio in core home, baby, beauty and wellness markets, rebuild our executive team, and launch a series of omnichannel services to win back customers,” Tritton said, adding that the strategy is focused on elevating the shopping experience, building sales growth and modernizing its operations. "Our transformation is rooted in an omni-always, customer-inspired approach that will make it easy to feel at home with Bed Bath & Beyond. In doing so, we will deepen our relevance and connection with customers by helping them unlock the magic in every room."
As part of its new approach, the retailer is adding a centralized ordering and replenishment system that is expected to ensure higher in-stock levels, increased sales and long-term productivity improvements. Additionally, executives outlined a focus on creating digital and in-store experiences while leveraging buy online, pick-up in-store; curbside pick up and same-day delivery. Approximately $250 million over the next three years will go toward remodeling 450 stores that represent 60% of revenue. Previously, the home store said it would be closing 200 stores to optimize its footprint, generating $100 million in annualized savings.
Other strategies mentioned include moderninzing its supply chain, leveraging innovative technology partners like Google Cloud, and allocating capital for growth. The retailer said it has launched a $225 million accelerated share repurchase, as part of an authorized share repurchase program totaling up to $675 million over the next three years.