What happened to Bed Bath & Beyond? Once a household name in the home goods retail sector, Bed Bath & Beyond had a reputation for offering everything from kitchen gadgets to bedding.
At its peak in 2018, the company operated 1,552 stores across North America, generating over $12.4 billion in annual revenue and employing 62,000 people. However, in 2023, Bed Bath & Beyond filed for Chapter 11 bankruptcy, marking the end of an era for the brand.
The question is, how did a company that seemed to have it all — extensive network, brand recognition, and loyal customers — fall so hard and so fast? In the following section, we highlight the key reasons behind Bed Bath & Beyond’s failure.
Did you know?At its peak, Bed Bath & Beyond held approximately 9.2% of the online home furnishing sales market in the United States. However, its revenue fell drastically after 2019, plummeting from $11.36 billion in 2019 to just $5.34 billion in 2023. By 2023, it had total liabilities of nearly $5 billion against total assets of $5.1 billion. [1]
Table of Contents
Internal Failures
1. Outdated Business Model
Bed Bath & Beyond’s business model heavily relied on brick-and-mortar stores, which is why it failed to keep pace with the rapidly evolving retail landscape. While other giant retailers embraced omnichannel strategies and digital-first shopping experiences, Bed Bath & Beyond stuck to a traditional store-centric approach.
At its peak in 2018, Bed Bath & Beyond operated 1,552 stores across North America. However, the cost of maintaining such a large retail footprint became unsustainable. The store layouts, often cluttered and overwhelming, lacked clear segmentation, making it difficult to appeal to a younger audience. They spent over $1 billion annually on store operations, including rent, utilities, and staffing.
In 2022, U.S. retail foot traffic declined by 8% compared to pre-pandemic levels, yet Bed Bath & Beyond continued investing in physical store expansions rather than pivoting to digital strategies.
By 2023, Bed Bath & Beyond closed 896 stores, including 360 flagship stores and 120 Buybuy Baby locations due to declining foot traffic and rising operational costs. [2]
2. Poor Leadership
Another key reason behind Bed Bath & Beyond’s decline was its unstable leadership and frequent executive turnover. Since 2013, the company has gone through different CEOs, creating a sense of instability and inconsistency at the top.
Each new CEO brought a different vision and approach, resulting in disjointed strategic shifts. For instance, under Mark Tritton, the company tried reducing promotions, revamping its product offerings, and focusing on private-label goods, but sales continued to decline.
Tritton resigned in 2022, and Sue Gove was appointed interim CEO before taking on the role permanently in October 2022. This leadership instability contributed to a lack of cohesive strategy and hindered the company’s ability to execute long-term plans effectively. [3]
3. Excessive Stock Buybacks
Since 2004, Bed Bath & Beyond has spent about $11.8 billion on stock repurchases, at an average price exceeding $44 a share. This strategy drained cash reserves and increased debt, limiting the company’s ability to invest in crucial areas like technology and supply chain improvements. [4]
The company repurchased over 265 million of its own shares—nearly three times the 90.7 million shares it had outstanding. While the buybacks were intended to boost stock prices, the substantial financial commitment ultimately restricted the company’s operational flexibility.
4. Mismanagement of Finances
The company made poor investment decisions, failed to control increasing operating costs, and struggled with an inefficient allocation of resources. These missteps led to declining cash reserves, mounting debt, and an inability to reinvest in essential business transformations.
For instance, CEO Mark Tritton’s shift toward private-label brands required substantial upfront investments, but these brands failed to resonate with customers. By 2022, private-label items accounted for 20% of inventory but contributed disproportionately to unsold goods, exacerbating financial losses.
The company’s long-term debt ballooned as it tried to pay for buybacks and fund operations. By 2023, its total debt had soared to $3.25 billion—more than double the $1.48 billion reported in 2019. Meanwhile, its cash reserves dwindled to just $132.1 million, a sharp decline from $1.3 billion in 2021. The lack of liquidity made it difficult to compete with financially stronger rivals like Target, Wayfair, and Amazon. [5]
5. Failure to Innovate
Bed Bath & Beyond failed to embrace technological advancements, modernize its store formats, and create a seamless shopping experience for customers.
For example, the company was slow to develop a robust e-commerce platform. In 2019, only 15% of its sales came from online channels, and by 2022, this figure had risen to just 27% of the retailer’s total revenue—far behind industry leaders. [6]
Plus, the company did little to capitalize on key retail trends like sustainability and smart home technology. For instance, the smart home market grew at 17.8% CAGR from 2016 to 2022, but Bed Bath & Beyond offered a limited product selection in this category compared to competitors like Amazon and Best Buy.
6. Weak Online Presence
Bed Bath & Beyond failed to keep pace with digital-first competitors like Wayfair and Amazon, as well as traditional retailers who rapidly increased their online offerings. Poor website and app functionality, lack of personalization, and limited delivery options alienated tech-savvy consumers.
Customers frequently reported issues with the company’s app, citing slow loading times and navigation difficulties. Also, the lack of competitive shipping options hindered its appeal. In 2022, the company offered 5-7 day delivery times, compared to Amazon’s two-day or same-day delivery for Prime members.
7. Loss of Brand Identity
Bed Bath & Beyond’s relentless promotion cycles eroded its brand identity, repositioning it as a discount store rather than a premium home goods retailer. By 2022, the company had lost its premium customer base to high-end retailers like Crate & Barrel, which upheld price integrity.
Operational Missteps
8. Inventory Issues
Bed Bath & Beyond struggled with inefficient inventory management and operational strategies. Its inventory availability rate lagged behind that of competitors like Kohl’s and Lowe’s. By late 2022, many suppliers considered the company too risky to extend credit, resulting in inventory shortages that further alienated its customer base. [7]
9. Discounting Culture
Bed Bath & Beyond’s aggressive discounting strategy, once a competitive edge, eventually turned into a major weakness. The company became notorious for its ubiquitous 20%-off coupons, regularly filling mailboxes and inboxes across the US.
Unlike competitors who strategically timed discounts for holidays or clearance events, Bed Bath & Beyond’s constant promotions diminished the sense of urgency to purchase. Customers grew accustomed to waiting for coupons or sales, making it nearly impossible for the company to shift to a full-price model.
This heavy reliance on discounts took a toll on profit margins. In 2018, the company’s gross margin stood at 35%, but by 2022, it had plummeted to just 22.7%, largely due to unchecked discounting practices. [8]
10. Failed Acquisitions
The company’s acquisition strategy, intended to diversify its revenue streams and strengthen its competitive position, backfired. Several high-cost purchases of underperforming or unrelated businesses drained resources and diverted focus away from the core operations. The key missteps include:
- Purchasing Cost Plus World Market for $495 million in 2012
- Acquiring One Kings Lane in 2016
- Buying Decorist in 2017
Most of the acquired businesses didn’t contribute much to Bed Bath & Beyond’s total revenue. The company eventually sold off businesses like Cost Plus World Market and One Kings Lane at significant losses, further eroding its financial stability. Following the series of failed acquisitions, their market cap fell drastically from its peak of $17.1 billion in 2013.
External Challenges
11. Rise of E-commerce
As online shopping gained traction in the early 2000s, Bed Bath & Beyond was slow to adopt e-commerce. In 2010, just 4.6% of U.S. retail sales occurred online, a figure that more than tripled to 18% by 2020. However, by the time the company launched its online platform, it was nearly a decade behind industry leaders, leaving it struggling to compete effectively in the rapidly evolving digital marketplace. [9]
12. Increased Competition
The retail industry became fiercely competitive over the last two decades, with new entrants, category specialists, and omnichannel giants taking substantial market share from Bed Bath & Beyond. For example, Amazon emerged as a dominant player in the home goods market by offering vast product variety and unparalleled convenience.
Target’s Threshold and Opalhouse brands provided stylish, affordable options, appealing particularly to millennial and Gen Z shoppers. Niche players like HomeGoods and Wayfair gained traction by addressing specific consumer preferences.
Bed Bath & Beyond, however, failed to differentiate itself in the online space. For example, Amazon attracted shoppers with its Prime Membership benefits, while Wayfair’s curated product selection and free shipping options enhanced its appeal.
Target effectively blended physical and digital strategies, with services like “order online, pick up in-store,” driving a 150% surge in e-commerce sales in 2020 alone. Similarly, Walmart’s investments in digital logistics and partnerships with delivery services helped it capture both in-store and online shoppers, further outpacing Bed Bath & Beyond. [10]
By 2022, Bed Bath & Beyond held just 1.4% of the US home furnishings market, compared to Amazon’s 88.4%, Walmart’s 7.27%, and Target’s 4.27%. [11]
13. Changing Consumer Preferences
As shoppers moved toward convenience, online shopping, personalized experiences, and sustainable products, Bed Bath & Beyond struggled to adapt.
Modern consumers, especially millennials and Gen Z, prioritize eco-friendly products and sustainable brands. A 2021 survey by IBM revealed that 77% of consumers consider sustainability a key factor in purchasing decisions. Unlike Walmart and Target, which launched eco-friendly lines, Bed Bath & Beyond made minimal efforts to incorporate sustainable practices. [12]
Plus, their traditional, one-size-fits-all approach, exemplified by their ubiquitous 20% off coupons, failed to engage customers seeking more personalized interactions.
14. Impact of the COVID-19 Pandemic
In response to the pandemic, Bed Bath & Beyond temporarily closed nearly 1,500 stores across the US and Canada in March 2020, resulting in a net loss of $150.8 million for FY 2020. By July 2020, the company announced plans to close over 200 stores within two years as part of a broader restructuring effort. Plus, it revealed plans to cut 2,800 jobs as a cost-saving measure, further straining its ability to operate efficiently. [13]
Although the company reported a 77% year-over-year growth in online sales in 2020, this was not enough to offset the losses from store closures, as its digital infrastructure was underdeveloped compared to competitors like Amazon, Wayfair, and Target.
15. Supply Chain Challenges
Bed Bath & Beyond Chapter 11 filing
Global supply chain disruptions, particularly during and after the COVID-19 pandemic, exposed inefficiencies in Bed Bath & Beyond’s operations, leading to stock shortages, delivery delays, and lost sales. The company relied on an outdated supply chain model that struggled to handle the demands of modern retail, especially during the e-commerce boom.
In Q3 2021, the company estimated a loss of $100 million in revenue due to inventory shortages. At the time of its bankruptcy filing, Bed Bath & Beyond owed over $95 million to 14 key vendors in its supply chain, highlighting the extent of its financial obligations and strained supplier relationships. [14][15]
Closing Line: Could this story have ended differently?
Bed Bath & Beyond’s fall was not the result of a single misstep but a series of strategic errors, missed opportunities, and external challenges. However, history shows several companies have overcome similar obstacles and emerged stronger.
Could Bed Bath & Beyond have thrived if it had embraced innovation earlier or streamlined its product offerings to align with changing consumer preferences? What if leadership had been more agile in dealing with the COVID-19 pandemic? Could a strategic partnership or bold pivot have rewritten its fate?
Maybe, in another timeline, with different decisions and better foresight, Bed Bath & Beyond might still be bustling with loyal shoppers, standing as a fierce competitor to retail giants like Amazon and Walmart. For now, its journey stands as a lesson in how even the most recognizable brands can falter when they fail to evolve.
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- Furniture Retail, Bed Bath & Beyond’s troubled business years, Statista
- Dominick Reuter, List of stores closed in 2023, BusinessInsider
- Melissa Repko, Bed Bath & Beyond appoints interim CEO Sue Gove to the position permanently, CNBC
- Allan Sloan, How stock buybacks undermined the company, Yahoo Finance
- Company Financials, Bed Bath & Beyond’s balance sheet, StockAnalysis
- Janine Perri, Online customers outspend retail customers at Bed Bath & Beyond, Second Measure
- Business, Overstock is now Bed Bath & Beyond, The Washington Post
- Comopany Financials, Bed Bath & Beyond’s Profit Margin over the years, Macrotrends
- Key Figures, Retail e-commerce sales in the United States, Statista
- B2C E-Commerce, E-Commerce net sales of target.com, Statista
- Gretchen Salois, Which retailers will benefit from Bed Bath & Beyond’s demise?, Digital Commerce 360
- Global Consumer Study, Sustainability actions can speak louder than intent, IBM
- Dalvin Brown, Bed Bath & Beyond to cut 2,800 jobs, USA Today
- Warren Shoulberg, Bed Bath & Beyond left $100 million in revenue due to supply chain issues, Forbes
- Ben Unglesbee, Bed Bath & Beyond owes over $95M to these 14 vendors in its supply chain, Retail Dive
