business news in context, analysis with attitude

by Kevin Coupe

Bed Bath & Beyond, a company that largely has depended on aggressive couponing to get customers into its stores, apparently has identified an alternative strategy that it hopes will allow it to better compete with Amazon's Prime program and drive badly needed higher margins.

The Wall Street Journal reports that the home goods retailer "is testing a membership model that for $29 a year offers a 20% discount on all purchases and free shipping."

Beyond +, as the program is called, is just in a testing phase, and the retailer is not commenting on how many customers are involved. And the Journal writes that there appears to be some resistance among Bed Bath & Beyond consumers to a program that is designed to move the company away from the familiar blue and white coupons on which they have come to rely.

The story notes that "the invitation-only program was launched less than two weeks after Bed Bath & Beyond reported a 17% drop in profit and slowing sales growth in its most recent quarter. In the quarter ended in August, the company reported yet another increase in coupon usage with a slight decrease in average coupon amount. Coupon redemptions have squeezed the retailer’s margins for the past 15 quarters, according to UBS analysts."

It was exactly a year ago - October 8, 2015, to be precise - that MNB took note of a Washington Post story about how, other than bills and credit card offers, the thing we are most likely to see at least once a month in our mailboxes is a Bed, Bath & Beyond coupon promising 20 percent off any single item, and that an expanding number of customers were timing their trips to the retailer around the coupon's arrival. This was putting pressure on margins ... and now, a year later, the retailer seems to be taking somewhat tentative steps toward resolving the issue.

I think Bed Bath & Beyond is smart to try and cope with the problem, though I tend to believe that maybe it is not moving as quickly to find solutions as one might expect. But it least is a recognition that Amazon's entire business model i designed to make it less necessary and desirable to actually go to the store.

What Bed Bath & Beyond is doing is an Eye-Opener. What remains to be seen is whether it will be enough, and in time.
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