Will Digital Initiatives Drive Revenues For Bed, Bath & Beyond?

January 20th, 2016 by Trefis Team
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BBBY: Bed Bath & Beyond logo
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Bed Bath & Beyond

Bed Bath & Beyond (NASDAQ:BBBY) reported a 25% increase in comparable sales from customer facing digital channels in Q3 2015, while comparable store sales declined in the low single digit percentage range. [1] While overall sales in Q3 2015 were 0.3% higher compared to the same quarter in the previous year, it appears that the company is attracting more customers to its digital channels compared to its stores. As the company continues to make investments in technology and remains focused on providing a seamless customer experience across its retail channels, we believe an omni-channel platform will be key for the retailer to maintain and grow its revenues.

See our complete analysis for Bed Bath & Beyond

Several Digital Initiatives To Develop A Seamless Omni Channel Platform

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Bed Bath & Beyond is taking several initiatives to attract customers to its digital platform. THe company has added interesting features to its website that include:  1) a virtual coupon wallet called “My Offers” that organizes and stores print and digital coupons; 2) the ability to etch personalize products with a monogram or personal image; and, 3) the ability to upload their personal content on the website. It has also added a social shopping feature which allows registrants to invite their friends and families to recommend items for their gift registries, commonly used by mothers- and brides-to-be. [2] The company is investing heavily in building its omni-channel strategy by creating services and experiences that are seamless across its digital and physical channels.  While these investments are putting pressure on its margins, the company believes these initiatives would be key growth drivers in future.

Bed Bath and Beyond continues to face headwinds as it witnessed a declining sales growth rate in the first three quarters of 2015.

Bed Bath and Beyond image 191116

As comparable sales declined in Q3 2015, the minor increase in net sales can be attributed to opening of new stores. The company stated that it was on track to open 29 new stores and close 11 stores during fiscal 2015, leading to a net addition of 18 stores. [2].

While it appears that the company’s in-store sales volume is shifting to digital channels, given the 25% increase in digital sales, these online initiatives do not appear to be capturing a new market for the company given the overall declining trend in sales growth. While results of technology investments are visible in terms of growth in online sales, it appears that this is a shift of consumer preferences from in-store sales to digital platforms. The company is adapting to changing consumer preferences and, while the overall sales figures are not encouraging, it can leverage its digital platforms to drive revenues in the future.

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Notes:
  1. Bed Bath and Beyond SEC Filings [↩]
  2. Q3 2015 Earnings Call Transcript, Seeking Alpha, January 7, 2016 [↩] [↩]