On Monday, the once-iconic American retailer, Bed Bath & Beyond, revealed its intention to file for bankruptcy, following an earlier announcement to shutter 400 of its 760 stores this year. The chain, known for its extensive assortment of household items such as air fryers, pots, pans, and towels, has long been a fixture on the American streetscape.
The firm’s downfall has been looming for some time, as it grappled with persistent struggles and a series of fruitless shifts in strategy. The workforce has already dwindled from 32,000 last summer to a mere 14,000 today, a significant contraction from its 2019 peak of 62,000 employees and 1,500 stores. The final stores are slated for closure by the end of June.
Bed Bath & Beyond has recently become a target for speculative investors, first by large-scale investors betting on the chain’s demise and later by individual “meme investors” who orchestrated a price surge reminiscent of the GameStop saga, using Reddit as their platform.
CNN characterizes Bed Bath & Beyond as a “category killer” of its time, a large specialty store that once dominated a retail niche alongside other now-bankrupt chains such as Toys R Us, Circuit City, and Sports Authority. Founded in 1971 as Bed ‘n Bath, the company initially offered primarily discounted brand-name household items, with its co-founders, Warren Eisenberg and Leonard Feinstein, working without pay for the first three years. The firm capitalized on the popularity of colorful, specially designed sheets, a departure from the predominantly white sheets that preceded them.
Eschewing advertising, Bed ‘n Bath instead opted for newspaper discount coupons that would become iconic over time. The name change to Bed Bath & Beyond in 1987 reflected the company’s diversifying product range. The retail chain empowered store managers with considerable autonomy in tailoring product offerings to local preferences, and it bypassed warehouses in favor of direct-to-store shipments.
In rather unceremonious terms, Bed Bath & Beyond stores were often considered cluttered. Founder Warren Eisenberg admitted to The Wall Street Journal that the accusation held some merit. Nevertheless, the strategy seemingly worked, as customers often left with more than their intended purchases.
However, stagnation took hold in 2012, with Eisenberg later conceding to The Wall Street Journal that the company “missed the boat with the Internet.” He initially dismissed the notion that online shopping would significantly impact retail, believing that in-person shopping was a social experience. Yet, as e-commerce giants like Amazon and brick-and-mortar competitors like Walmart gained traction, the iconic discount coupons lost their allure.
In 2003, the founders stepped down from leadership positions but remained involved with the company. A tumultuous period ensued, as shareholders in 2019 accused them of nepotism for acquiring the Buybuy Baby and Chef Central chains, both founded by their sons. Bed Bath & Beyond’s strategy oscillated between selling in-house brands and returning to a focus on A-brands in August last year.
The chain caught the eye of large institutional investors who sought to profit from its decline by taking short positions. Inspired by activist investor Ryan Cohen’s prior involvement in GameStop, these investors anticipated a similar outcome with Bed Bath & Beyond. However, Cohen’s brief foray into the company’s strategy culminated in his disposal of shares at a significant profit, leaving retail investors feeling deceived as the stock price plummeted.
Alas, unlike GameStop, Bed Bath & Beyond was beyond saving. Sue Gove, the current head of the company, encapsulated its impact in a poignant statement, acknowledging that “millions of customers have entrusted us with the important milestones of their lives – from going to college, to getting married, to setting up a new house together and having a baby.”
