Retail goes digitally beyond at Bed, Bath and Beyond
- Summary:
- Increased investment in technology, digital and analytics is paying off at retail chain Bed, Bath and Beyond, says CEO Steven Temares.
We are committed to becoming even more relevant to our existing customers, and attracting new customers as they choose where, when and how to shop.
That’s the mission statement for US retailer Bed, Bath and Beyond, where CEO Steven Temares cites technology and digital investment as a key driver for the future. As a case in point, the chain’s Liberty View project in Brooklyn, opening later in the summer, will be a fully-omni-channel experience where:
customers will be able to experience product demonstrations and how-to sessions, food sampling, and cooking classes. In addition, customers will be able to use our scan-for-more digital tool to view product images, their product pricing information, as well as customer reviews.
Our interactive catalogs will enable customers to view a curated assortment of products such as seasonal furniture and bed and bath items, and our digital product advisor tool will help customer respond what they are looking for based on responses to questions that will fill to the assortment and products that best get their needs. We believe that this venue, including the revised layout of our stores along with the enhanced services we offer will become a shopping destination where our customers can have fun and productive shopping experience.
Liberty View is just one example of the wider digital drive, says Temares:
We have made tremendous progress in the transformation of our company to better serve our customers in an ever-evolving digital world. At the same time our strategy remains rooted in our customer-centric culture and commitment to customer service to do more with our customers wherever, whenever, and however they wish to interact with us. To provide our customers a seamless experience whether they interact with us in a store, through one of our contact centers on a desktop, tablet, smartphone or through social media, and to be viewed as the expert to the home, including the accompanying life stages that make us has a home such as getting married, having a baby, transitioning to college.
All of this has required increased investment in and evolution of the firm’s IT function. Temares says:
Several years ago our dedicated IT resources were much smaller and operated under a budget about a quarter of the size it is now. Since then, these IT resources have increased by nearly 500 people, including the addition of key members to our IT leadership team. Many of the additions have taken place within our digital technology group as we make further enhancements to and grow our digital footprint.
Over the past several years, the IT group has upgraded or replaced a majority of our customer-facing and back-end systems and introduced new systems to enable us to utilize new technology but also enhancing the security and redundancy of our systems. Today members of our IT group are immersed in all aspects of the business, as technology has become the backbone of so many of our initiatives to do more for and with our customers.
Moving beyond legacy IT has been a challenge, adds Temares:
The opportunities presented by new technologies surpassed our older systems capabilities making additional improvements to search navigation and functionality more difficult. We also did not have mobile websites, applications for any of our concepts. But the past several years, we have relaunched our customer-facing websites to both Bed Bath & Beyond and buybuy BABY, and created a new selling website for Christmas Tree Shops. We now have mobile websites for all the concepts and have created apps for Bed Bath & Beyond and buybuy BABY.
We have continued to make improvements to the functionality, general search, and navigation features across our customer-facing digital channels so that customers can find what they are looking for more quickly and efficiently.
Future developments
This year will seeing multiple software releases to provide additional enhancements to the digital offerings, as well as a new series of curated merchandise collections for customers.
The firm will also add more opportunities for customers to upload their own personal content, such as images of how they have used our products so that other customers may use them as inspiration. Other plans includes the relaunch of mobiles apps for Bed Bath & Beyond's and buybuy BABY as well as more streamlined mobile websites with a better user experience.
Another thing that has changed in recent years is the introduction of analytics capabilities. Temares says:
We did not have a centralized analytics group and our data was housed in disparate systems across the company as well as the third-party providers. Since the data was disconnected, we were limited in our ability to tie various interactions together or comprehensively slice and dice information in order to efficiently reach the desired insights.
Today we have a structured analytics department with robust quantitative capabilities, we have made significant investments to hire talented people, re-engineer key business processes, sell new systems, and migrate, connect and consolidate all of our data into one central platform that we manage internally. We also augment our behavioral data, the third-party demographic data, to create an enhanced view of our customers.
The analytics group now operates across the multiple business areas, including merchandising, pricing, marketing, logistics, store operations and finance with meaningful advanced analytics, business intelligence and reporting. But this is only the beginning, says Temares:
In the future we will grow and extend the teams reach within the organization to provide valuable insights based on analysis and information from both external and internal systems. For example, further utilization of predictive modelling tools will enable us to achieve improved optimization to markdowns, pricing and direct mail campaigns.
With our data initiatives, we will continue mapping customer interactions, both in store and through our varied digital channels. This in turn allows us to get smarter about discerning and anticipating our customers' needs and providing inspiration and solutions, and thus reinforcing that we know our customers and are the experts in the home. By leveraging our ever expanding 360 degree view of the customer, we will further optimize targeting, entailing techniques in marketing and enhance personalization both digitally and through traditional marketing media.
Digital has also changed the nature of Bed, Bath and Beyond’s outreach to consumers, says Temares:
Today we use a full range of online and offline vehicles and our marketing efforts including email, text, page search, SEO, social media display and affiliate programs, as well as traditional print media such as postcards and circulars. Through enhanced analytics capabilities we are just beginning to utilize sophisticated, predictive modeling based on hundreds of data points, including both observed and inferred shopping behaviors to drive a more customer-centric marketing strategy.
Recently we have begun to implement a new marketing campaign management system to better target our customers and drive personalization. For example, in buybuy BABY, we've been evolving our direct mail and email contact strategies to include a more personalized approach based on customers pre-natal or post-natal life stage.
Going forward, our team will continue to leverage analytics in order to optimize our marketing strategies as we learn more about our customers and how they prefer to interact with us. This will enable us to tailor our marketing communications and provide our customers with more personalized, timely and relevant information thereby furthering their efforts to establish our brand as the experts of the home and the destination for our customers' needs and wants.
But for all the focus on digital, Temares points to the firm’s physical presence of 1500 stores nation-wide as an enduring asset:
As many retailers have announced their closures, we've been asked why we are not being more aggressive in closing stores. Our answer is [that] we do close stores. However, in almost all cases we have made the right judgment, done the right transactions in the first place, so that the stores are profitable and provide enormous benefit to our customers and our company.
Our stores still give us incredible opportunities to satisfy our customers and provide a noticeably better shopping experience as to us provide active merchandize for immediate purchase or in-store pick up, as well as active in-house store associates to answer product-specific questions, to provide product recommendations, to assist with the return that's been created or update our registry or executed the on-store order.
Having a strong physical presence in local markets creates a broad level of consumer awareness of our brand. Our physical presence in local markets keeps us top of mind as customers decide when and where they want to shop online.
My take
The digital investment is paying off for Bed, Bath and Beyond with sales from customer-facing digital channels growing in excess of 25%. In contrast, sales from stores in the most recent quarter were essentially flat. A good use case for omni-channel retail.