Bed Bath & Beyond CEO Mark Tritton is turning to what he does best to give the retailer’s nascent turnaround some more energy: building a new roster of store brands in hope that they’ll quickly catch on with shoppers.
Tritton, who made his name in the industry for his knack for creating mammoth store brands at chains including Nordstrom and more recently Target, is overseeing the launch (or relaunch in one case) of 10 store brands over the next two years, the quickest such blitz in a generation at Bed Bath & Beyond. That will include six brands in the next six months alone.
First up, this month, Bed Bath & Beyond will launch a brand called Nestwell, focused on better bed and baths items with an overarching theme of good sleep. In April it will relaunch its Haven bath brand, which seeks to evoke a spa with offerings like organic cotton products. And soon after, the chain will launch a line of household essentials at low prices, addressing a big gap in its assortment that Tritton identified soon after becoming CEO in late 2019.
“It’s an opportunity to create true authority in the home space,” Tritton tells Fortune. “We went back to square one to invent the company we want to be.”
Private store brands give a retailer more control over production and presentation. And if done well, they represent something a company can offer shoppers that they can’t find elsewhere, spurring visits and loyalty. But when these brands go stale, or are not marketed well, they take up space and bore shoppers who have a million other choices. At Bed Bath & Beyond, store brands generate 10% of sales, but the company wants that to rise to 30% within a few years.
Tritton has been down this road before. As chief merchant at Target from 2016 to 2019, Tritton was tasked with reinventing a store-brand portfolio that had become dated. As he is doing now at Bed Bath & Beyond, he ditched a bunch of Target’s high-grossing but foundering brands, primarily in home goods and clothing, and ultimately replaced many of them with fresh new brands, most of which have been wildly successful. This week, as it announced another blistering set of financial results, Target said 10 store brands are now ringing up over $1 billion each in annual sales, and four of them are generating $2 billion a year, with Tritton having played a key role in developing many of them.
A big reason for that success was that Tritton and his team understood that store brands had to be treated as national brands, with appealing displays, clever marketing that can include online “look books” to convey a personality and internal cohesion for the group of products. Too often, retailers plunk their private-label products in their stores and don’t update the assortment or the look very often. Bed Bath & Beyond was long guilty of some of that, Tritton says, but that is changing.
“We’re not just a warehouse of products,” he says.
Since Tritton became CEO at Bed Bath & Beyond, put in place by a group of investors dissatisfied with the company’s years of foundering, he has been busy fixing the business. He overhauled his C-suite early on, sold off some businesses that brought about $2 billion a year in sales but hurt profit, and reduced the company’s heavy debt load.
What’s more, he and his team updated Bed Bath & Beyond’s antiquated e-commerce and announced they would close 200 stores, or about a quarter of the $7-billion-a-year chain’s fleet, while renovating 450 others. (The company also owns the billion-dollar Buy Buy Baby chain as well as Harmon Face Values, which focuses on cosmetics and health and beauty aids.)
There are clearly signs of progress under Tritton. Bed Bath & Beyond has now reported two straight quarters of comparable sales gains, however modest: In the most recent quarter, they rose 2% for whole company. But at the retailer’s namesake chain, they were up 5%. Some analysts had hoped for more at those stores, given the pandemic-fueled home goods boom that has lifted sales at some rivals by greater amounts.
Now, Tritton says, Bed Bath & Beyond has set the framework for reclaiming a bigger role in the home-products industry, with a strong roster of private brands leading the way. Customers are very aware of the retailer’s brand, he says, but the company has long failed to follow through with the products they want.
“We had their heart and mind but we just weren’t meeting their expectations,” Tritton says. And that, he hopes, is about to change.
