Bed Bath & Beyond goes belly up

Bed Bath & Beyond, the home goods retailer known for sky-high merch displays and really bright lighting, has finally thrown in the towel and filed for bankruptcy

  • The decision comes after months of desperate efforts by company management to save the furniture (literally, in this case), which included shutting down Canadian operations in February.

Why it’s happening: Don’t be surprised to see Bed Bath & Beyond’s decline show up as a case study in an MBA program someday—most analysts blame its collapse on avoidable management mistakes.

  • Rather than investing in its technology and e-commerce capabilities like some of their competitors, management spent the last decade making a string of costly acquisitions that ultimately flopped and dishing out billions on share buybacks.
  • As sales fell, they tried to replace name-brand products with higher margin, private-label alternatives, a strategy that wound up alienating customers who didn’t trust the new labels and irritating suppliers whose products were no longer on shelves.

Yes, but: Fierce competition from e-commerce giants like Amazon also played a role, and its founders admit that they “missed the boat on the internet.”

  • While Bed Bath & Beyond floundered, other brick-and-mortar retailers like Walmart and BestBuy managed to protect much of their market share from internet retailers (and eat away at Bed Bath & Beyond’s, too).

Why it matters: Bed Bath & Beyond went from three decades of constant profitability as a public company to bankruptcy in less than four years. It’s a remarkable and swift fall for one of the pioneers of the big box store model that now dominates retail in the US and Canada.