Two years ago, Bed Bath & Beyond was behind the times. Prior to the pandemic, the company focused almost exclusively on in-store sales.
“The pandemic taught all of us hard lessons,” COO John Hartmann said during his opening keynote address on Wednesday at the Home Delivery World 2021 conference in Philadelphia. “For Bed Bath & Beyond, that was [we were] behind the curve.”
Executive leadership at the company has turned over, including Hartmann himself, and a new focus on technology, innovation and getting items to customers in the ways they preferred became the focus.
“The company itself is going through a massive transformation, and it’s not just the supply chain,” Hartmann said, pointing to quarter-billion-dollar investments each in supply chain, technology and the in-store experience.
Bed Bath & Beyond (NASDAQ: BBBY) sold $3 billion worth of product through digital channels last year, and “we’re fulfilling about 30% of that from stores,” Hartmann said.
That didn’t happen without a rethinking of the supply chain.
“We assessed our own capabilities and assessed third parties,” he said. “We have an immense and hearty respect for the past, but we recognize the need [to focus on the present and future]. For us, it’s a balance of stores and digital.”
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The transformation of the Bed Bath & Beyond supply chain is taking the next step with an agreement with Ryder System (NYSE: R) announced in July.
Ryder will develop and operate two regional distribution centers designed to reduce store replenishment times from the current 35 days to less than 10. The first facility, in Frackville, Pennsylvania, is taking in merchandise and expected to open this fall. The 1 million-square-foot facility already includes some automation but Hartmann teased the addition of more coming in January.
The second facility will open next year in Southern California. Both facilities will supply stores and aid in filing both in-store inventory as well as that for online shopping, including buy online, pickup in store, curbside pickup, same-day delivery, and ship from store.
The shift to distribution centers is a major change to the company’s supply chain, which has traditionally relied on cross-dock facilities. That system, Hartmann said, resulted in both overstock and understock conditions in stores.
“That was disappointing to our customers,” he said.
The supply chain transformation is going beyond moving to distribution centers and is incorporating a revamping of the technological capabilities of the company.
Bed Bath & Beyond has modernized its technology by partnering with Oracle on that firm’s enterprise resource planning platform and adding a Google Cloud partnership. It is modernizing core merchandising capabilities and inventory management.
“Transformation is rolling up your sleeves; it’s hard work, you bump your elbows and scrape your knees,” Hartmann said. “It’s managing the fires when you need to but keeping your focus [on the goals].”
In May, Bed Bath & Beyond announced an agreement with DoorDash (NYSE: DASH) to provide same-day delivery. The company also has agreements with Shipt and Instacart as part of its “omni-always” fulfillment strategy and in July added Roadie. Combined, these networks now offer delivery to almost 18,000 ZIP codes in the U.S., Hartmann said.
“The heart and lungs of the future of this business relies on a great supply chain and modern technology,” he said.
The company has also expanded its buy-curbside and in-store pickup services as an extension of that supply chain to include the ability to pick up purchases ordered the night before curbside — before a store has even opened the next day. Pickup begins as early as 8 a.m. in many locations. Also, all buy-online, pickup-in-store and curbside pickups will now be available within one hour of the time of purchase. That pickup window previously had been two hours.
“Our customer expectations have changed and forced us to meet them,” Hartmann said.
Click for more Modern Shipper articles by Brian Straight.
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