Bed, Bath & Beyond - investing in tech for a personalised retail experience

Stuart Lauchlan Profile picture for user slauchlan September 21, 2017
Tech investment at Bed, Bath & Beyond is seen as essential to shape the retailer an omni-channel future.

When it comes to furnishing itself with an omni-channel future, Bed, Bath & Beyond is putting its money where its mouth is, having spent around 40% of CapEx of $177 million over the past six months on technology-related projects to boost its digital capabilities.

It’s an investment that CEO Steven Temares clearly regards as money well-spent and part of a wider drive to rethink the home retailer’s approach to technology. This has included the hiring of late of a new CIO and the firn’s first Chief Technology Officer to oversee digital direction. He explains:

One significant undertaking has been the transformation of our information technology group, related business processes and our approach to developing, managing and delivering technology solutions in order to meet the needs of our business. We have adopted a new model that allows us to better identify, prioritize, resource, collaborate and deliver against our ever-increasing technology roadmap.

An important element of the overall strategy is the concept of Customer Service Transformation (CST), which Temares pitches as the driver to transform the store operating model to meet customer needs better in an omni-channel world:

By delivering operational efficiencies, CST allows us to more effectively utilize our resources and position our associates to deliver the services required to meet the changing needs and desires of our customers. In other words, freeing up our people to be more available to take care of our customers with things like fulfilling an order that was reserved online and picked up in a store, returning an online order, placing a Beyond store order, handling a scheduled customer appointment for buying a gift from a registry.

To support the CST drive, Accenture’s retail practice consultants have been brought in to implement new HCM and e-learning systems. In addition, their reatil stores team is working with the retailer’s in-house industrial engineering team to assess store operations and roll out best practices around the store services.

Behind the scenes, there’s a concerted effort to work with Bed Bath & Beyond’s supplier commuinty to streamline operational and technological processes with an eye to optimizing inventory management practices:

The objective of our inventory optimization is to deliver differentiated and curated assortments across all of our channels and concepts, while improving the returns of our working capital. Our teams are identifying and assessing opportunities across SKU rationalization, store space optimization, assisted store ordering, product allocation and our e-commerce inventory planning, warehouse and fulfillment processes.

The objective of the supply chain initiative is to drive continuous improvement in our supply chain across all channels and concepts. We’re evaluating our current infrastructure and operational capabilities, benchmarking them against industry best practice and developing a multi-year strategy to meet and exceed our customers expectations going forward.

In the short-term, we are assessing our e-commerce fulfillment warehouses to identify opportunities for operational efficiencies and improved speed to customer and enhancing our supply chain network to support the growth of our furniture and décor initiatives.


So that’s the payout. What’s the payback? The answer to that to date is a combo of (a) not enough and (b) not sure. Sales from customer-facing digital channels represents roughly 15% of net sales today, which Temares spins that as an opportunity for growth, talking in terms of more than quadrupling that online business “over the next few years”, stating:

So even with the strong growth of our customer-facing digital channels to-date, we continue to have the opportunity for and will drive significant growth in our digital channels.

But he also has to concede that there’s a lack of visibilty around digital at present, beyond a general sense of travel in the right direction:

We can’t tell where or through which channel a customer initiated a transaction, but we can provide information as to how a sale was consummated. So with that in mind, comparable sales consummated through our customer-facing digital channels have experienced steady sales growth in excess of 20% for the past 13 quarters, benefiting from enhancements to our digital and analytic capabilities across our web, mobile web and mobile apps.

What matters here is the potential for new retail models that digital affords, adds Temares, citing dynamic pricing as a case in point:

In the digital environment, we have endless aisles and our online assortment includes almost everything we carry in-store and then much, much more. We have an ongoing initiative to accelerate our SKU on-boarding process and we are currently on track to share to add more than 300,000 SKUs. As our online assortment expands, we have been applying dynamic pricing to currently more than half and growing of our online-only SKUs in order to manage our competitive pricing position.

This is a significant area of focus for us as we continuously monitor our competitive value proposition. We have many initiatives focused on improving the customer experience online, including enhancements to our search and navigation tools, our content and the services we offer.

A big play here is around personalization of the customer experience, says Temares, with initiatives such as My Offers and the Beyond Plus membership program:

Personalized product represents a nice subset of our differentiated product offering and represents a significant opportunity for us to further strengthen our competitive position. Since our acquisition of in November 2016, we have substantially grown our offering of personalizable product, and today we offer about 7,400 personalizable SKUs on the Bed Bath & Beyond website, including PMall SKUs and other third-party vendor SKUs. We’ll be adding another 5,000 SKUs over the next several months.

This Fall, we will begin to present our personalization capabilities in-store by creating small vignettes in a couple dozen Bed Bath & Beyond stores and a graphic presentation in about 70 other stores to show the type of merchandise that can be personalized and ordered online with the help of an in-store associates or at home. Our new andThat! stores are also beginning to introduce customers to, using an interactive display that allows exploration of the different options for personalizing merchandise.

With the option to place an order directly from PMall while in the store or the ability to complete the transaction at home, although we are still in the early stages of developing a more complete assortment of personalized products and services and we look forward to continued strong growth in this category.

My take

You have to speculate to accumlate and Bed, Bath & Beyond’s management does appear to understand that it’s going to take time and money to get its omni-channel house in order.

A grey colored placeholder image