by Last week, I listened in to Bed Bath & Beyond’s second quarter earnings call. During the session, CEO Mark Tritton reported the company had experienced a rocky quarter, with a 1% comp decline and a significant slowdown of traffic in August.
While a 1% decline may not sound huge, the disparity came at a time when the company expected to continue to capitalize on the pandemic-induced demand for home goods. In fact, Tritton shared during the call that the company had adjusted its 2021 forecast based on the second quarter and a lackluster September. The next day, the company’s stock plummeted 22%.
So what happened? While Tritton explained the store had experienced issues many retailers are grappling with now—increased freight prices, shipping delays, and hits to traffic in major markets due to fears of the delta variant—internal missteps were to blame, as well.
One of the biggest was misunderstanding their customer’s shopping habits and needs. As part of their evolution as a company, Bed Bath & Beyond diverted marketing funds to digital efforts rather than mailed circulars, and most importantly, coupons.
We’ve all received those blue-and-white coupons in the mail, and for many of Bed Bath & Beyond’s customers, they’re a major incentive to shop the store. So when the retailer stopped sending those coupons, a segment of their customers stopped shopping at Bed Bath & Beyond stores.
“In an effort to diversify and shift our customer engagement towards online and social media channels, we overcorrected and became too far from the core fundamental, historical and current traffic drivers,” Tritton said.
Going forward, he said those funds would be reallocated toward mailed circulars and coupons, and the company was hopeful this would help boost foot traffic for the remainder of the year.
So, what’s the lesson here? To put it simply: Know your customer and listen to what they want.
It’s really tempting in this digitally focused era to put all your eggs in the technology basket. And while ignoring technology isn’t a good idea, either, it’s also important to understand what your customers like and expect from you.
If you send mailers that consistently bring shoppers to your store, the investment in this “old-fashioned” form of marketing makes sense. If radio ads are a huge driver for your store, keep them in your marketing mix. Do customers routinely say they saw you in the local newspaper? Then those ads are working.
While it remains to be seen how the rest of the year plays out for Bed Bath & Beyond, you can learn from their mistake to avoid such a costly misstep in your own business.
This story first appeared at sister publication Casual News Now.
