One of diginomica’s most closely-tracked omni-channel transformation programs in the retail sector centers on Bed, Bath & Beyond (BBB). It’s fair to say it’s been a bumpy ride, going from seemingly Bed, Bath & beyond hope a year ago, through benefitting from a COVID acceleration mid-2020 as locked down customers engaged in home upgrades, to entering 2021 on a digital high, even as offline business continued to slump.
As the Vaccine Economy emerges, the challenge now for CEO Mark Tritton’s turnaround team is to consolidate the digital wins, make the physical outlets more appealing in the event of footfall returning in-store - the nature of BBB’s business is such that the ‘touch and feel’ the goods aspect of the real world is important - and essentially pull both strands into a coherent and enduring omni-channel whole.
A large part of this is going to involve the retailer’s ongoing $250 million tech upgrade. Back in October, the firm signed a 5 year commitment with Google Cloud to use its BigQuery service for machine learning and analytics, along with Spanner, Google Compute Engine and Google Kubernetes Engine to create a single view of customer data, as well as using Google Cloud to optimize fulfillment.
Adding to its multi-cloud mix, the firm has now signed up Oracle as its ERP provider. According to the formal announcement:
Oracle Cloud will provide real-time financial, supply chain and merchandising solutions, replacing the company's legacy suite of technology systems and delivering new data, insights and planning capabilities….Oracle Cloud ERP will also provide real-time financial and operational insight to support strategic planning decisions.
John Hartmann, Bed Bath & Beyond's Chief Operating Officer, is cited as stating:
We are building authority in Home, Baby, Beauty and Wellness with a digital-first, omni-always and customer-inspired approach. Oracle's proven leadership and state-of-the-art technologies will allow us to better serve customers and improve the efficiency and effectiveness of our business. Additionally, the agile partnership will enable continual innovation and improvement as our enterprise evolves.”
Another major element of the BBB transformation program is understanding who the customer is and what his or her needs are and how he or she wants to engage with and be serviced by the company. Cindy Davis, the first Chief Brand Officer the firm has had in place, identifies five key customer demographics at play, based on internal analytics. These are:
- The Nester - the older customer focusing on their homes.
- The Minimizer - the young adult male who wants to get exactly what they want as fast as he can.
- The Juggler - coming from busy families.
- The Innovator - always looking for the latest thing.
- The Creative - younger than the other demographics, but spends the most to “bring her personality to life”.
According to Davis:
The Nester and Minimizer segments represent nearly 40% of all home goods customers, so they're super-important. The Jugglers and the Innovators, they're important to us and to the categories because they are most likely to be omni-channel shoppers and we know those shoppers spend more and visit more often, so we really need to grow our digital business with those customer
Last month, Hartmann expanded on BBB’s overall plans for what he calls “complete modernization and a redo of our technology infrastructure” in the coming months:
A complete modernization and a redo of our technology infrastructure. Most of our business applications and a new ERP are all migrating to the cloud, with key partners...focused on really modernizing the systems and the processes to enable this business for the next decade. A quarter of a billion dollars across these three critical areas - our store network and the store experience, our supply chain and our technology.
Hartmann description of this work suggests a change in how BBB regards its transformation program, with the focus on what was previously classed as e-commerce evolving into being “fully omni-channel focused”. That’s an important change of lexicon. As noted on many occasions across diginomica, retailers who’ve responded to disruption in the sector by throwing money into a ‘digital, digital, digital‘ frenzy in a bid to somehow ‘become’ Amazon, have all too often neglected the physical assets in the omni-channel mix to their cost. BBB isn’t going to make that mistake, according to Hartmann:
The impact of digital for us is a key one. We also have this great store network. We know that the stores are an asset for us, but connecting the digital capability with that store base is something that we need to do to provide our customers with that seamless shopping approach.
The decision to sign up with Google Cloud follows earlier work between the vendor and retailer on the latter’s e-commerce operations, but is now being scaled up significantly:
Currently we're in the process of migrating our data centers and our Enterprise Data Warehouse to the Google Cloud. So we're building on what has been a decade-long relationship and now we're really ramping it up, most recently with the new leadership team and the new needs and desires of all of us to modernize everything across our business. We know that we are building on this authority that we have in our core markets, but we need partners like Google, who have expertise and capabilities that we don't have, to help us make these next big important strategic steps.
Key to all this is a desire to be both data-driven and customer-centric when making strategic decisions moving forwards, explained Hartmann, as well as being able to nurture the retailer’s own abilities around AI and machine learning:
These are big steps forward for the organization, steps that we haven't really previously taken before. They're critical because we want that data to project our future sales. We want to be able to make quick customer-focused decisions based on all the research and understanding that we now have of our customers. How do we pivot to best serve them with real time data? These are really key, important areas for us.
There’s also an encouraging recognition of the importance of back-end fulfillment in the omni-channel mix and the need to:
harness the data, ensure that we have visibility to where our products are in the supply chain, enhancing our model around fulfillment and cost efficiency, with a focus on ensuring that we can forecast demand appropriately to have products where our customer wants it. That's what we need to focus on to ensure that we have a seamless and fantastic customer experience.
This is an important year for Bed, Bath & Beyond. After the previous management team was denounced as “unfit for purpose” by key investors, Tritton has had over a year as the incoming CEO to assess the damage he’s inherited, assemble his own people to tackle it, and put in place the foundations for an omni-channel turnaround.
On the face of it, there’s a lot more meat on the bones of this plan than the handwaving at digital makeovers that has plagued the firm for years. In Oracle and Google, the company is tapping into solid and tested technology and appears to have done the spadework in terms of understanding its customer needs and where such investment is best targeted.
COVID and lockdowns have had the twin effect of boosting online activity and crippling in-store business. A digital-first mindset is going to remain important in the Vaccine Economy - people may return to the stores, but not in the same way as before. Aimless browsing to see if anything catches the eye will be replaced by a more purposeful customer journey, beginning online and followed up by a store visit to check out specific products. That journey needs to be seamless, as Hartmann noted. As we said last month, one to keep watching in 2021.