For fiscal year 2019, Bed, Bath & Beyond reported cash balance and investments valued at $ 1.9 billion
It is not known exactly in which areas the retail chain plans to carry out these adjustments to its stores.
It also declined to provide on its future performance, also due to the uncertainty of the pandemic
There is no doubt that the situation of retail it’s bad. Many of the brands in the sector were already at a point of great tension since before the pandemic hit. But with the health crisis, the sector’s challenges became even more serious, driven by the lack of traffic to its physical locations. Thus, it is common to hear that several brands in the segment are reducing their operations. As Bed, Bath & Beyond does now.
In accordance with The CEO, the company has just released its earnings report for its first fiscal quarter of 2020. And in this report, Bed Bath & Beyond announced that it will close around 200 of its stores over the next two years. In the document, the brand notes that this decision is made directly as a consequence of the COVID-19 pandemic. Also, the measure should help consolidate your optimization strategy.
Throughout the first quarter, Bed, Bath & Beyond did its best to adjust its business to deal with the consequences of the pandemic. Its measures include a plan for the sanitation of its facilities that would allow consumers to return to the premises safely. However, he accepted that the pressure of falling sales and the switch to digital channels from the public put too much pressure on his business model.
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Along with this giant, many other companies retail They have announced the closing of stores due to the pandemic. For example, AT&T recently announced that it would close even more stores than Bed, Bath & Beyond worldwide. Although it is not permanently, Apple it was forced to put the padlock to a quarter of its premises in the United States (USA). And in H&M, the red numbers will force the fashion giant to close around 170 points.
With this precedent, it is worth asking if there is any solution for large companies in retail in addition to closing their stores. Unfortunately, it is a difficult problem. As Bed, Bath & Beyond points out, the physical traffic to the points of sale brick&mortar decreased significantly. And not everything can be attributed to healthy distance measures. The convenience of digital channels has also been, for years, one of the threats to these brands.
It is true that, with the reopening, a good part of the people will return to the streets and will want to continue consuming at physical points of sale. But it is also expected to be a low number of people, compared to what was registered in 2019, both due to the fear of the pandemic and the attractiveness of digital channels. And in this sense, it is not efficient to have so many physical points of sale. Thus, the best bet of Bed, Bath & Beyond is to close establishments.
The consequences of store closings
Sure, there are other ways that retailers like Bed, Bath & Beyond are suffering, beyond the forced closure of their stores. New proposalsAligned to the needs of post-pandemic consumers, they threaten to steal part of the business. With fewer stores, a reduction in the workforce of agents such as Macy’s. Not to mention that many old industry practices are not even sustainable in the long run.
Beyond that, what kind of economic or social consequences could there be in the face of this massive closure of stores that Bed, Bath & Beyond and their rivals are implementing? CNBC He notes that, of course, this will mean that there will be fewer department stores and shopping malls. But New York Times it fears this will also cause a slow recovery in the economy. However, Smart Company He believes this is a process that was inevitable.