Scoring mega-deals on everything from bedding to kitchen utensils and just about everything in between is about to get a whole lot harder. To boost profits and be more competitive on pricing, big-box retailer Bed Bath & Beyond will begin scaling back coupons, with a company official admitting there's an "overreliance" on the perk that has allowed shoppers to score as much as 20% off items in their carts.
According to CNBC, the plan to beginning limiting the number of discounts that arrive in the mail and via email was announced during a Wednesday virtual meeting with investors, during which Chief Merchandising Officer Joe Hartsig said, "today, we have an overreliance on the coupon." The company told investors that it came to this conclusion after studying 405 million customers' baskets and 285,000 items and discovered that 40% of promotions were "ineffective." The company also found that it has attracted 1.4million new customers throughout the coronavirus pandemic, with these new customers, on average, six years younger and 20% less likely to use coupons.
The company announced it laid out its three-year financial roadmap, in which they said they expect same-store sales to be "stable" in fiscal 2021 and rise in the low-to-mid single digits by 2023. Bed Bath & Beyond also plans to “make $1 billion to $1.5 billion in capital investments over the next three years, to remodel stores and upgrade its e-commerce operations, among other initiatives.”
As the retailer looks to reach these goals, it will not entirely do away with coupons. Chief Executive Officer Mark Tritton explained that these discounts will instead be viewed as "a strategic advantage" moving forward and that the company will "leverage [them] as a true strength." Meanwhile, in a press release, the company said that it "will use data and insights to build discipline into the use of promotions, to increase return on investment and remove ineffective promotional activity."
At this time, it is unclear how fewer coupons will affect customers' shopping habits, though Bed Bath & Beyond's stock price on Thursday morning was down 12%, according to the Daily Mail. Addressing the announcement, Neil Saunders, managing director of GlobalData Retail, told CNBC that the decision to scale back coupons was "very much like ending an addition: It's sensible and brings benefits in the longer term, but it may hurt in the short term." Although he acknowledged that the decision was a "necessary move," he noted that "many Bed Bath & Beyond customers love coupons, so scaling them back may have an impact on shopper numbers and sales."