It was part of a play to boost the e-commerce cred of the former at a time when the firm is coming under pressure from the likes of Amazon, which carries an estimated four out of every five items that Bed, Bath & Beyond does, but at lower cost.
Whether buying out One Kings Lane is necessarily the answer remains to be seen, given that the online retailer was scarcely a major success story in its own right. As Brad Thomas, a retail analyst at Keybanc Capital Markets, snarked:
This is not like Bed Bath is buying Facebook; it’s more like they just bought MySpace!
But getting the online proposition right is increasingly essential. According to a study from research firm Technavio - Global Online Home Décor Market 2016-2020 - the global online market for home furnishings will experience a compound annual growth rate of 19.45% over the next four years, with competition coming not just from Amazon, but also the likes of Costco Wholesale, J.C. Penney, Sears Holdings, Target, Tesco, Walmar and the inevitable Ikea.
Bed, Bath & Beyind CEO Steve Tamares is clearly all too aware of the issues facing his firm:
As retail continues to evolve, there's been a democratization of shopping, enabled by technology and the Internet, which has resulted in an ongoing shift in the way the customer shops. We now have more choices, more transparency and more convenience than ever, all resulting in significant investments in technology and dramatic shifts in the retail landscape, highlighted by both new shopping options on one end, and retailer consolidation and closing the website and stores on the other.
Bed, Bath and Beyond wants to provide what Tamares calls “a more inspirational and personal shopping experience” in order to "earn the reputation with our customers as the experts for the home and their accompanying life stages and life interests”.
Personalization of product offering is going to play a large role here, he predicts, citing the example of the firm now offering more than 3000 items that consumers can purhcase and customize via the Bed, Bath & Beyond and buybuy BABY websites. He states:
We view personalization as a significant opportunity for us to create additional product differentiation and enable us to do more forward with our customers.
Tamares is also looking to what he defines as “curated experiences” as being an essential element of the firm’s online strategy:
Differentiation and constant improvement are paramount for us, and this also applies for the services and solutions we provide. We have added more curated experiences to the Bed Bath & Beyond website such as a new category called, Designer Picks, which offers an inspirational collection of favorite finds from throughout our websites put together by professional designers.
Meanwhile customer engagement and the overall customer experience online is being addressed via a new product expert chat option for a number of key categories on the website. Tamares explains:
For example, if you were browsing through items in the car seat category, you will be prompted to chat live with one of our expert associates for further assistance.
Our customer service representatives engaging in live chat undergo additional training to be able to respond to product specific questions. We have plans to roll additional categories going forward. These new offerings give us an opportunity to elevate our customer service, and as a result create more stickiness with our customers. We know our customers benefit from our expert associates when they shop with us in store. Now we are beginning to translate a differentiated level of service and expertise to the digital experience.
All of this needs to be done in a methodical and planned fashion, adds Tamares, so as not to ‘scare the horses’ in the process:
The categories that we are bringing in and how we show them, we do them in a way that it’s not to the detriment of our core categories so it doesn't confuse the customer or doesn’t clutter the site in a way they can't find what they're looking for.
We're not just adding a bunch of nonsense to customers or noise to a customer. So everything we do is with an eye towards being better in the eyes of the customer and with an eye towards not betting the house on anything but doing things systematically, deductively, logically, testing them out, proving them out and then rolling them forward.
The firm has another round of digital upgrades scheduled over the next couple of months. These will include extending chat and in-store appointment schedule onto a mobile website; adding the ability for customers to browse the entire site, including product list and search result pages, for a particular item and then further refine their search by what's available in their local store; adding interactive tools to guide customers to building a registry as well as assisting them in shopping for specific occasions or events; and improving the search experience through enhanced algorithm and data integration.
That latter element will also assist in better targeting and messaging to customers, predicts Tamares:
We need to serve up our offerings in such a way that resonates with our customers. To that end, our marketing capabilities continue to evolve as we further leverage our robust customer database and third party data to tailor our targeting techniques and enhance our personalization capabilities.
For example, our target of lifestyle campaigns for college, new mover, baby and wedding enable us to engage with our customers and present timely and relevant information to them about a specific life stage. These campaigns enhance our ability to be viewed as the expert by communicating the products, services and solutions we offer at a relevant time for the customer.
As part of the omni-channel push, the firm is also exploiting its offline stores and introducing new offerings there, supported by digital tech. Tamares says:
We want the highlight the service components that reflect how customers are utilizing our stores as well as providing more experiential shopping environment through events such as product demonstrations, how to sessions, food samplings and cooking classes.
Our growing list of services include being able to reserve an item online and pick it up in store, being able to return online orders to a store, to have product shipped to your home from a store or to schedule an appointment for wedding and baby registry and to shop with an expert for college.
In addition, we have introduced new technology in some stores such as a scan-for-more digital tool, which enables a customer to view product images, get product pricing information as well as customer reviews; our interactive catalogs, which enables customers to view a curated assortment of products such as seasonal furniture and bed and bath items; and our digital product advisory tools, which enables customers to find what they're looking for based on responses to questions that will filter the assortment of products that best fit their needs.
It’s important to remember the offline assets, he asserts, as it’s the combination of online and offline that will deliver competitive advantage, concluding:
It's all integrated for us.
An interesting sub-sector of the wider omni-channel retail market. The home furnishings business is becoming increasingly competitive and likely to see some significant casualties in the coming years, as well as consolidation.