Here’s How Bed Bath & Beyond Is Looking To Increase Its Customer Base
Recently, Bed Bath & Beyond (NASDAQ:BBBY) signed a long term agreement with Alliance Data Systems to develop a co-branded credit card program. Under this agreement, Alliance Data will develop a tailored marketing strategy for Bed Bath & Beyond and each of its concepts, utilizing its data driven lifecycle marketing approach. Alliance Data will also identify potential new customers for Bed Bath & Beyond through its data assets and analytical marketing expertise. The program will focus on a multi-channel approach, leveraging some of Alliance Data’s proprietary in-store, online and mobile capabilities. Bed Bath and Beyond struggles to grow revenues and faces a decline in same store sales, due to intense competition from e commerce players such as Amazon. Given these challenges, a data driven analytical approach to identify new customers should work to its advantage.
See our complete analysis for Bed Bath & Beyond
Data Driven, Analytical Approach Essential To Grow Revenues
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Through a new credit card that could potentially be linked to a rewards program, Bed Bath & Beyond is looking to increase its customer engagement levels. As it loses market share to e-commerce players, discounts and attractive rewards are critical for the company to engage customers. The company is continuously seeking to provide innovative products, services and solutions that drive meaningful engagement with its customer. Managemet believes that the relationship with Alliance Data is an important step forward in this mission. Apart from better engaging existing customers through an attractive rewards program, the company can use data and analytics generated from the credit card program for customer behaviour and insights. The company’s goal for 2016 is to augment its technology team and leverage its analytical team for business intelligence and insights into customer behaviour. While the company appears to be a late entrant in the field of digital initiatives and has already bore the brunt of this delay, the deal with Alliance Data appears to be one of the several corrective steps Bed Bath and Beyond is taking to improve sales.
Identifying potential customers through Alliance Data’s data assets and analytical marketing expertise will be critical for revenue growth of the company. As per our estimates, average revenue per square foot of Bed Bath and Beyond stores will grow moderately from $ 258 in 2016 to $ 279 by the end of our forecast period.
Digital initiatives and analytics will be key drivers of this growth and the company’s valuation can be impacted negatively if it is unable to achieve this growth.
To be able to effectively compete with e commerce retailers, Bed Bath & Beyond needs to invest heavily in digital initiatives, including a data driven analytics approach, to engage and grow customers. The partnership with Alliance Data will provide the company with this ability and should drive revenues in the long term.
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