Are Bed Bath and Beyond’s coupons just gimmicks?
Certain household items are indispensable to the urban habitat: the bag of other bags in the closet, the tangled mess of unknown electronics chargers in the junk drawer, and the pile of expired Bed Bath and Beyond coupons on the dresser. Watching this Broad City clip made wonder if those 20% off coupons are just a gimmick or do they legitimately make BBBY a competitively priced retailer that can rival Amazon and other megashops.
Bed Bath and Beyond stores are uniquely mesmerizing in how nearly impossible it is go in for just a fan and not leave with a cart full of other convenient and irresistible items. The store has an excellent, varied product selection that spans beyond the bedroom, bathroom, and kitchen. Walking through the well-stocked aisles with colorful, diverse, and attractive displays is a Herculean test of willpower. The shelves provoke at every turn with the alluring temptation of impulse buys.
The stores are also known to have helpful and friendly employees on hand to provide assistance to shoppers. The staff, coupled with a lax return policy, make for a pleasantly positive consumer experience. It makes sense then that Bed, Bath, and Beyond would provide the sales coupons (in-store only) just to get people in the door. Once inside, you’ll surely spend more than you expect to. But is it still a worthwhile place to shop? Are the coupons loss leaders or does the company mark up their merchandise to compensate for the discount?
Early reports showed that Bed Bath and Beyond did not competitively price products, marking up prices an average of 81% compared to Amazon’s 15%. Even with taking sales tax and shipping into consideration, Amazon holds a huge pricing advantage over brick and mortar retailers due to its reduced overhead from online only sales. That creates the scenario where a consumer browses the aisles at a nearby store, but then orders products online for cheaper. Basically making Bed, Bath, and Beyond a glorified showcase. According to this line of reasoning, BBBY was under serious pressure to reduce its margins.
Newer analysis shows the situation to be a lot more favorable to Bed, Bath, and Beyond. Its discounted prices are now not only competing with Amazon, but even beating it outright. A recent report quoting Oppenheimer analyst Brian Nagel studies the price comparison, explaining that “the use of a 20 percent off coupon Bed Bath & Beyond in-store prices average nearly 15 percent less than prices found on Amazon and 20 percent less than the lowest third-party seller, excluding sales tax.”
So Bed, Bath, and Beyond not only provides an enjoyable shopping experience, but also good value. This combination is a customer’s sweet spot. Unfortunately, investors may be less optimistic as the company recently released weak sales growth figures and is facing strong competition from other physical retailers such as Walmart and Target. Some of the drop in sales could be attributed to the overall slow economy and slumping housing market, but part of it may also be related to the shift in more holiday shopping to online retailers. The internet is still a major growth area for Bed, Bath, and Beyond since its online sales account for only 3% of its overall revenues. The power of the coupon has yet to extend to cyberspace.
The Bed, Bath, and Beyond 20% off coupons can also be viewed as a source of advertising in it of itself. Much of Bed, Bath, and Beyond’s marketing relies on the “primary vehicles of paid advertising used by the Company include full-color circulars and other advertising pieces distributed via direct mail or inserts.“ This seems like an outdated mode of advertising as online impressions, social media, and television ads typically dominate marketing budgets. But the mail coupons are working by tapping into the psychological desire for people to find a great deal. The coupons may be gimmicky but they are also the real deal.
