What Retailers Can Learn From Bed Bath & Beyond’s Cautionary Tale

Bed Bath & Beyond was doing roughly 15 percent of its sales online in 2019 before the pandemic initiated an online shopping boom. As of last summer, 25 percent to 30 percent of the retailer’s revenue came from e-commerce. And yet, Bed Bath & Beyond just declared bankruptcy. As with many retail stories, the proverbial devil is in the details — Bed Bath & Beyond was ill-equipped operationally to handle the major sales shift from offline to online.

And Bed Bath & Beyond is far from alone: JCPenney, Neiman Marcus, and J.Crew have each filed for bankruptcy since 2020. The New Jersey-based chain’s decline is a cautionary tale for other brands to ensure they're holistically transforming their business at a fast enough pace to best serve their customers and protect their bottom line. Retailers need to rightsize core operations and address breakdowns from a people, process and technology perspective.

Let’s examine the lessons that can be learned from Bed Bath & Beyond:

1. Splash hires do not cure process ills.

The 52-year-old retailer’s first misstep was falling behind competitors, such as Target, that adapted to the digital era years before the pandemic. Bed Bath & Beyond waited until 2019 to signal its commitment to digital transformation when it hired Target’s chief merchandising officer, Mark Tritton, as its CEO. But a splash hire didn’t make for a quick fix.

Moreover, changing a retail brand with a pile-it-high-and-let-if-fly strategy to a data-driven, omnichannel model is a difficult pivot. Due to the pandemic, brick-and-mortar merchants had to adapt quickly to compete with online retailers and persuade consumers to shop in their physical stores. This was particularly challenging for retailers with strong online competition, such as Bed Bath & Beyond.

Instead, Bed Bath & Beyond likely had insufficient visibility into costly process inefficiencies that come with a pivot toward omnichannel and how to improve them with real-time data. Focusing on process optimization could have strengthened everything from its online checkout and point-of-sale systems to its supply chain and warehouse management systems.

2. Operational processes shouldn't be siloed.

One of Bed Bath & Beyond’s obstacles seems simple but comes with complexities. Operational processes for in-store and e-commerce sales are different and often addressed as separate entities, which no longer works as a business model for retail growth and profitability.

For example, traditional supply chain processes for retail were created to deliver products to warehouses for in-store sales and are unsuitable for delivering products to customers' homes for e-commerce. Additionally, today’s inventory management tools must accommodate in-store pickups for e-commerce purchases and precisely track in-store stock. Furthermore, online and in-store shoppers have different purchasing patterns, so retailers must optimize their strategies across both channels rather than treat them as siloed.

Bed Bath & Beyond tried to break out of the siloed mindset but was too far behind schedule in creating a CX where processes were improved with omnichannel customers in mind. It was playing catch-up 16 months into the pandemic with features like buy online, pick up in-store (BOPIS) that other retailers such as Kohl's, Best Buy, and Lowe's were offering years before.

3. Real-time visibility powers real change.

Another major challenge Bed Bath & Beyond faced in making its pivot to omnichannel was the need to turn separate systems and processes into a cohesive, agile framework. Retail tech stacks cannot simply be stitched together; companies need to run diagnostics on their business processes to optimize them and ensure consistency across systems. These disciplines allow retailers to visualize problems in systems and identify areas that require change, and then they can quickly implement tweaks to improve how omnichannel systems sync.

Even though Bed Bath & Beyond’s e-commerce sales rose after the pandemic, it was hampered by its decentralized logistics system, which made it more difficult to attain scarce products in a strained supply chain. Lack of stock hurt the CX for a brand that’s e-commerce processes were already less advanced than competitors. Implementing technologies such as process mining years ago would have uncovered hidden inefficiencies ahead of the company’s peak financial challenges.

In the end, Bed Bath & Beyond needed end-to-end visibility into its processes, from customer ordering and inventory management to delivery and support for BOPIS and many other facets of its business. Retailers today should invest in auditing and optimizing their processes before a crisis hits.

Justin Grochoski is solution engineering manager for retail and CPG at Celonis, a process mining and execution management software provider.