The parent company of Bed Bath & Beyond and the Container Store is opening the first retail site combining the two brands, with dozens more to follow, in an experiment aimed at linking home essentials with organizational and design services.
The strategy involves transforming an existing Container Store in Fort Worth, Texas, by removing about one-third of its Container Store products to make room for home goods from Bed Bath & Beyond. The removed items include duplicate products from multiple manufacturers and some merchandise that executives decided not to sell any more, such as a $200 luxury laundry hamper.
"If you had looked for these items before, we would have them in four brands. We picked the best two versions," Amy Sullivan, president of the parent company, called Bed Bath & Beyond Inc., told CoStar News during a preview of the store.
The Container Store + Bed Bath & Beyond store, as it's now known, in Fort Worth spans about 25,000 square feet at 4601 West Freeway, with a public opening set for the weekend. It's the first of the Container Store's 98 locations that will be converted into dual-named locations by year's end.
Bed Bath & Beyond Inc. expects to complete its $150 million acquisition of Coppell, Texas-based Container Store in July. Bed Bath & Beyond Inc.'s portfolio also includes Overstock.com, Kirkland's and Buy Buy Baby. The parent company has already begun moving executives into Container Store's headquarters in Coppell, about 35 miles from the Fort Worth store, Sullivan said.
Bed Bath & Beyond Inc. chose Fort Worth for the first co-branded store in part because of its proximity to what will be the parent's new corporate home, Sullivan said.
Simplifying what's for sale
In simplifying the product selection, Sullivan said the team made room for Bed Bath & Beyond products, including small appliances, gadgets, towels, bedding and home decor. The product mix initially includes about 60% tied to the Container Store, 35% items from Bed Bath & Beyond and the remaining 5% comprising seasonal decor from Kirkland's, Sullivan said.
Eventually, there will probably be more of a 50-50 mix between items that originated from the Container Store and Bed Bath & Beyond, executives said.
Bed Bath & Beyond, once a chain with hundreds of stores before filing for Chapter 11 and liquidating in 2023, has transformed into Bed Bath & Beyond Inc. and embarked on a reinvention by buying other brands with a focus on brick-and-mortar and expanding what it offers.
Last month, Bed Bath & Beyond Inc. said it bought Cabinets to Go and Lumber Liquidators in a $150 million deal as it transforms itself from a traditional home‑goods retailer into a home‑services company.
The return of Bed Bath & Beyond to retail stores comes at a time when the U.S. housing market is navigating significant challenges, including volatile mortgage rates and a lack of affordable inventory, all issues that are affecting the parent company's business, Sullivan told CoStar News.
"We're building this business in a downcycle because we want to get to a point where if we can show you that we can do this in a downcycle, then for our investors and our shareholders, the upside is pretty huge," Sullivan said.
"We want to work through the integration and [get] all the kinks out when the market's a little slower and come out really ready to represent the whole home as the market turns," she added. "We haven't seen that yet."
Expansion mode
That broader representation could help define that elusive "Beyond" in the Bed Bath & Beyond name, Sullivan said. Bed Bath & Beyond Inc. is looking to buy a residential real estate services firm and is laser-focused on some undisclosed companies, Sullivan said.
In addition, the company is exploring options to offer customers financial services for their home and launching a homeowner's credit union, Sullivan said.
"There's a lot of things in that middle stack that connects retail and home services, and we want to think of [Bed Bath & Beyond Inc.] as being the glue in between," she added.
Sullivan said she expects Cabinets to Go and Lumber Liquidators to have sections at the co-branded stores by this summer. And next year, Bed Bath & Beyond Inc. will offer items from Buy Buy Baby at "freestanding locations, so there's a whole portfolio of retail to lease," Sullivan said.
Over time, the company plans to operate more than 300 stores across multiple formats. In bringing all these businesses under one roof, Sullivan said, she expects there to be efficiencies with some shared services across brands. The real estate will also be shared, with Sullivan looking to optimize the supply chain and distribution network of each brand. That optimization could also have larger stores performing additional duties, she said, like being last-mile hubs.
"We don't necessarily know how many distribution centers we need," Sullivan said, adding the Coppell headquarters and distribution center in North Texas is expected to be the company's largest such hub.
"We're rebuilding teams right now, so I anticipate growth as we add to these brands," she said.