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When Jon Sterling was just starting out as an agent in Chicago two decades ago, he used to meet clients at an unusual venue: The cafe at his local Bed Bath & Beyond.
Sterling got the idea of congregating at the retailer from a seasoned agent in his area, and he told Inman meetings would take place in the venue once or twice a week. Part of the appeal was the free parking — a rarity for the neighborhood — but walking through an entire store of home goods to get to the cafe also seemed to get clients in the mood for moving.
“I do remember it was a regular meeting spot,” Sterling said.
Sterling’s experiences capture Bed Bath & Beyond at its finest. It was not only a store that had everything a person might want for a home, but it was also aspirational in its abundance. Wandering the isles imbued a consumer with the power to buy anything, or at least to imagine a life in a home stocked with the finest sheets, the softest towels and the most modern coffee makers.
Which is to say, wandering the isles was an exercise in what might be. Rows of Ninja blenders offered a window into a healthier life of post workout smoothies. Piles and piles of dining sets weren’t just tools to eat with; they promised a social life filled with dinner parties and late night gatherings with friends. Towers of gauzy curtains foreshadowed the day when you might have a home with soaring ceilings — at least a place where you, rather than the landlord, got to choose the window dressing.
For some, Bed Bath & Beyond was also a gateway into adulthood. College kids stopped there en route to the dorms. Couples registered there before their weddings, picking out the blindingly white towels and Belgian waffle makers and bamboo bathroom mats that would, finally, make their house into a real home.
All of which is to say, it was a big store for a big country filled with people who had big dreams.
Bed Bath & Beyond is still those things. It still operates hundreds of stores. But recent years have seen the company fall on harder and harder times, which ultimately culminated days ago with the announcement that it plans to close 150 stores and cut its workforce by about 20 percent.
That doesn’t mean the company is going away. Far from it. But the struggles Bed Bath & Beyond faces seem to hint that the company is entering a new, scrappier era. And together with the slumping stock market, the slowing housing landscape and record-setting inflation, it appears that a period of abundant prosperity is winding down.
How Bed Bath & Beyond became an icon
For many years, Bed Bath & Beyond was a reliable player in the world of big box retail — not as big and popular as Target or Walmart, but still nearly omnipresent in suburban strip malls of the 1990s and 2000s. However, the company’s origins actually date all the way back to the early 1970s, when a pair of workers from discount retailer Arlan’s broke off to start their own specialty store.
Initially, they called the project Bed n’ Bath, but in the mid-1980s changed the name to Bed Bath & Beyond when they debuted a bigger, superstore concept.
The company grew rapidly over the ensuing years until, a decade into the twenty-first century, it was operating more than 1,000 stores. Along the way, in 1992, it also went public. From the early 1990s until about 2005, Bed Bath & Beyond consistently saw its share price grow. The price dipped during the Great Recession, but then grew even more between 2009 and 2014, after which it spent several years in decline. That trend ended at the beginning of the coronavirus pandemic.
Though Bed Bath & Beyond was always a specialty store — rather than a generalist like Target — observers have recognized the company as a significant pioneer in the rise of big-box retail. And, significantly, it managed for many years to weather upheaval in the retail space that ultimately knocked out other big boxes such as Toys R’ Us, Borders, Circuit City, Mervyn’s and many others.
The end of an era
Though Bed Bath & Beyond survived the initial carnage that bested other big-box retailers, the company’s flagging stock performance in recent years hints that the rise of online shopping — which has significantly less overhead compared to brick-and-mortar retailers — has nevertheless proven challenging.
The trouble ultimately came to a head in 2019, when then-CEO Steven Temares stepped down amid intense pressure from activist investors. However, the carnage continued long after Temares’ departure, and in its most recent earnings report Bed Bath & Beyond revealed that sales dipped 25 percent during the second quarter of this year. The company also lost $358 million during that same period, a huge jump from the $51 million it lost in the second quarter of 2021.
Against the backdrop of ongoing decline, billionaire investor Ryan Cohen bought a 10 percent stake in the company in March. Cohen’s move helped turn Bed Bath & Beyond into a high-profile “meme stock,” which is a term applied to companies that draw attention of high-risk investors who use Reddit to discuss trades. The most famous meme stock is Game Stop, which has seen wild fluctuations in its share price. Cohen is the director of Game Stop’s board.
Cohen’s investment helped pump up the price of shares in Bed Bath & Beyond and in August they shot up 350 percent. But they soon crashed again when Cohen sold his stake in the company.
The turmoil has prompted a class action lawsuit over claims of insider trading. And last week, the situation turned deadly when Chief Financial Officer Gustavo Arnal — who along with Cohen was named as a defendant in the suit — leapt to his death from his New York City apartment.
That’s a lot of news to take in. But the gist here is that Bed Bath & Beyond has had an exceedingly rough time for years, and the situation has worsened considerably in the last few months and weeks. The company doesn’t appear to be on the verge of shuttering completely. But there’s little question that it exists in a diminished state and has a lot of work ahead if it wants to stem the bleeding.
So far Bed Bath & Beyond’s strategy for staying alive is to cut costs and shrink its footprint, though it remains to be seen if that’ll be enough to stay alive in what more and more looks like a post-big-box era.
At the same time, consumers are struggling on multiple fronts. Inflation, for instance, reached its highest level in more than 40 years in 2022, eroding consumers’ buying power along the way. The last two years have also seen record home price appreciation, which has been a boon for existing homeowners but a challenge for people just starting to climb the real estate ladder. Moreover, rents have climbed to all-time highs, and mortgage and interest rates have retreated from all-time lows.
The point is that consumers looking at the real estate market are being hit on multiple fronts right now. And that makes it harder for some folks to wander the isles of a home retailer imagining a future of nearly endless abundance.
A real estate go-to
Whatever happens to Bed Bath & Beyond, it has played an important role in the real estate industry. Besides Sterling’s meetings at the store years ago, Nicole Beauchamp — a New York City-based agent with Engel & Völkers — told Inman recently she routinely uses the retailer both personally and professionally.
“I’ve gone to Bed Bath & Beyond for years and years and years,” she said. “It’s been a great place to always check periodically to see if I could get deals on candles and linens. Things that I could use in staging apartments.”
The store can be especially helpful when she discovers a client has an outdated bedspread or shower curtain, Beauchamp explained. Rather than spend time pouring over infinite options online, she can pop into a brick-and-mortar location and immediately find what she needs. And she doesn’t have to worry about shipping issues.
“I could buy it on Amazon or online for less,” she said. “But what if it doesn’t arrive in time? Or it arrives, but is the wrong size? If I set foot in the store, I can save myself some aggravation.”
As a result, Beauchamp was disappointed that Bed Bath & Beyond is struggling. And she added that when retail shops close, neighborhoods can suffer.
“You want businesses, you want things to be available to you in the neighborhood where you live and work,” Beauchamp said. “And when that’s not the case, it definitely shifts.”