Bed bath plans better boxes to boost business.
The retailer, which celebrated its 15th anniversary as a public company, has increased its spending on store remodels of late. "We spend a tremendous amount of time on renovating our stores," Steven Temares, Bed Bath's chief executive officer, told HFN. "As a percentage of our expenses, it's going up," he said, adding that "it's a significant part of our activities." He declined to provide specific figures for investment in renovations.
Renovation also entails the expansion of existing stores, Temares said during the meeting. The retailer has increased the number of employees involved in store renovations, he told HFN.
When asked if this renovation could potentially disrupt the shopping experience and hurt same-stores sales as it has for Wal-Mart, Temares told HFN that the company is mindful of this and that it only renovates portions of a given store at any time. "We think our customer likes the hustle and bustle of our stores, even if it comes from remodeling," he told HFN. "They know it will give them a much better shopping experience when it's done."
The list of Bed Bath locations scheduled for renovation or relocation is growing as a number of its stores approach the end of their 10-to-15-year initial lease terms, Ronald Curwin, senior vice president of investor relations at Bed Bath & Beyond, told HFN in an earlier report.
The big-box retailer also continues to invest in merchandising enhancements in its existing boxes to buoy its top line. Temares during the meeting pointed out initiatives such as the new fine china departments, "movement to more proprietary product" and Harmon store-within-a-store concepts, calling these "all opportunities to grow."
On the subject of the rollout of the fine china departments, Temares told HFN that this project is ongoing but wouldn't specify how many stores now have these departments. He said the number is increasing, whether it's a full department, an order desk or just access to online shopping.
The existing box improvements come in the face of a recent slowdown in Bed Bath's same-stores sales. For the recently completed first quarter, its comparable-store sales saw a 1.6 percent increase, the first below 3 percent in more than a decade. Analysts blamed slower sales on factors such as the weak housing market, maturation of Bed Bath's store base and increased promotional activity from the competition, namely Linens 'n Things.
Bed Bath's store expansion is indeed slowing, as it expects to open 70 new locations this year compared with 80 to 90 per year in the past five years. In discussing Bed Bath's promotional stance, Temares told HFN, "We try to take a long-term perspective," adding, "we are aware of the competition and we might make incremental adjustments, but our overall focus is on satisfying the customer."
As core store expansion slows, Bed Bath has looked to other concepts for growth, including Christmas Tree Shops and the newly acquired buy-buy Baby stores.
While Christmas Tree Shops--with 35 locations, including 12 new ones since Bed Bath acquired it in 2003--has seen slow growth, the construction or a second distribution center for the chain could "support growth," said co-Chairman Leonard Feinstein during the annual meeting.
Bed Bath recognizes the "tremendous" growth potential of the eight-store buybuy Baby chain, which serves "another portion of [Bed Bath's] customer's lifecycle."
Buybuy Baby meshes well with Bed Bath because it has a direct-to-store distribution model like that of the core Bed Bath stores, Temares said during the meeting. He told HFN that he sees more opportunities for synergies between Bed Bath and this new division than with Harmon or Christmas Tree Shops. He added that the company may do some cross--branding in the future.
Beyond the existing store and beyond new concepts are thoughts of international expansion for the company. The retailer during the first quarter announced its first international location in Toronto. Temares told HFN that there is "more to come" from Bed Bath in Canada.--Warren Shoulberg contributed to this report.
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|Publication:||HFN The Weekly Newspaper for the Home Furnishing Network|
|Date:||Jul 16, 2007|
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