Dear Bed Bath & Beyond: ‘Don’t Mess With’ Your Coupons

AP Photo/Mark Lennihan: ASSOCIATED PRESS

Earlier this month, Bed Bath & Beyond said that it will take a number of steps to reduce its reliance on coupons as a traffic driver.

The home goods retailer will add coupon exclusions, adjust the value of its offers and impose limits on coupon availability.

On the retailer’s fourth quarter conference call with analysts, Steven Temares, CEO, said, “Of course, actions like these do have a near term impact on sales, but they benefit our overall profitability. While early, these actions are beginning to take hold, contributing some moderation in our coupon expense rate in the fourth quarter of fiscal 2018 and our plan to continue as the year progresses.”

Bed Bath & Beyond beloved by consumers for its signature 20 percent-off coupons and dollar-denominated coupons, such as $10-off on purchases over $30.

Some on the RetailWire BrainTrust in an online discussion last week felt that walking away from coupons could hurry the chain’s downward spiral rather than turn it around.

“The coupons are iconic, I think, and as such we have all learned over time that you don’t mess with things iconic,” wrote Stephen Needel, managing partner at Advanced Simulations.

“Looks like Bed Bath & Beyond is seeking to join Sears and all the other retailers lost in the woods, never to be found,” wrote Cynthia Holcomb, CEO of Prefeye.

Bed Bath & Beyond expects its comps to decrease in the low- to mid-single-digit percentage range in 2019 due to continued declines in traffic as well as moves such as de-emphasizing coupons to improve margins.

Longer term, the retailer sees its revenues recovering to single-digit growth due to enhancements to assortment, including new proprietary brands and continued growth in personalized products such as teddy bears. In-store innovations and building on its baby business are also expected to help.

From a marketing standpoint, Bed Bath & Beyond is enhancing its branding and putting a greater focus on personalized messaging. The retailer is hoping to leverage investments in pricing tools to modify algorithms across initial, dynamic and local pricing and markdown strategies. The company will apply analytics to coupon distribution as well.

For some on RetailWire’s BrainTrust, the implementation of analytics offered hope of successfully retooling, rather than completely killing, the iconic coupons.

“Coupons are not just a traffic driver to its stores and websites, but also an essential part of the brand identity,” wrote Dick Seesel, principal at Retailing in Focus. “The growth of data analytics offers the company a chance to be more targeted in its coupons and other promotional offers, without scaling back a key marketing tool too drastically.”

“The presumption here is that it will be a data-driven decision, moderated and potentially in phases, with ample market testing to determine the right approach,” wrote Brent Biddulph, general manager, retail and consumer good at Cloudera. “And in some cases (or entire markets), they may find that it is best to keep the 20 percent coupons in place. If that is the approach, it makes total sense.”

Cate Trotter, head of trends at Insider Trends, noted that care would be key in implementing a new, data-driven coupon strategy.

“I think Bed Bath & Beyond is going to have to go about this in a careful fashion so that customers don’t feel like they’re suddenly being overcharged or ripped off,” wrote Ms. Trotter. “If the company can make good use of its data to careful target coupons, that might help soften the blow. After all, if there are going to be less coupons overall, then shoppers are going to want them to be relevant to them.”


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