Bed Bath and Beyond Inc have developed a brand-new strategy plan. According to history, it won’t make a difference.
Within the realm of retail, Best Buy (abbreviated as BBY) has a somewhat singular history. When it appeared as though the electronics chain was headed for insolvency, the company decided to recruit Hubert Joly, an executive with experience working in the hospitality industry, to take over the chain’s management.
Although at the time, it appeared like a mistake, that decision turned out to be one of the most successful hirings in the company’s history of retail operations. Joly intervened and essentially made all of the changes necessary for the retailer. He was forced to make difficult decisions to reduce pricing, invest in delivery services, and find a way to prevent customers from shopping at Best Buy and placing their orders with Amazon (AMZN).
The issue, at least if you are a retailer having trouble making ends meet, is that the tale of Best Buy virtually stands on its own. It has been demonstrated to be extremely difficult to right a sinking retail ship in most instances, including Sears, J.C. Penney, Toys R Us, Circuit City, Neiman Marcus, and Borders Books, to name just a few.
This is precisely what is happening at Bed Bath & Beyond (NASDAQ:BBBY) right now. The business has been having problems for several years. In the past, the appointment of a new CEO (which the retailer did in June) typically did not alter the situation’s outcome.
Bed Bath & Beyond Inc Requires an Explanation for Its Very Existence
Jill Soltau, who succeeded Marvin Ellison as CEO of J.C. Penney, possessed several insightful ideas, but she could not implement them due to a lack of resources. Ellison, who intended to sell goods and provide new services in locations where Sears had abandoned customers, was in a similar situation.
The issue is that it has traditionally been exceedingly challenging to win back a consumer base once it has moved on to other options. CEOs still get paid pretty well to serve in the role of CEO of a failing retailer is unlikely to deter their efforts in this direction. And being that you aren’t the root cause of its demise in the first place, your inability to save it isn’t even going to leave a significant blemish on your professional record.
Because there are simply not that many positions available for CEOs, vacant positions at failing retailers will still attract brilliant executives who make comments like this. This is because there are just not that many positions available for CEOs.
“We are embracing a straightforward, back-to-basics mindset that focuses on better serving our customers, generating growth, and delivering business returns,” said interim CEO Sue Grove. “We are embracing a back-to-basics methodology that focuses on better serving our customers.” “In a relatively short time, we have made substantial changes and implemented enablers across our entire company to restore our supremacy as a preferred shopping destination for our customers’ favorite brands and new products. We have a powerful presence in the Home and Baby markets and are committed to seizing the chance to become the leading retailer in each category.
These terms sound a lot like statements made by past CEOs (both permanent and temporary) who have stepped into a losing scenario and said similar things.
Comebacks in the retail industry seldom take place.
When a store loses its client base, it has two options: it must locate a new customer base or work to win back its previous customer base. Although Best Buy saw a decline in sales, shoppers continued to visit the retailer’s locations to browse its selection of goods, even though they ultimately decided to make their purchases online.
The most recent quarter for Bed Bath & Beyond Inc resulted in a decrease of 25% in total sales and 23% in comparable-store sales. The amount of cash on hand that the company had at the end of May was only $107 million, which is a significant decrease from the nearly $1.1 billion that it had in its possession the previous year at this time.
Featured Image: Megapixl © Beruldsen
Author Valerie Remorosa