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Bed Bath & Beyond is primarily a bricks and mortar company. Most of its products are...

Bed Bath & Beyond is primarily a bricks and mortar company. Most of its products are available online through Amazon. The company was late to e-commerce and has been playing catch up, investing in upgrading its online presence, introducing mobile apps and rolling out a new point-of-sale system. On the plus side, sales from digital channels have been increasing, but conversely, same-store sales at the brick and mortar stores have been flat. That’s a problem because online sales have lower margins and the shift of sales to the internet cuts into company’s ability to lever the fixed costs of running stores.

Is there still a place for brick and mortar stores whose products are readily available online?

Has Bed Bath & Beyond been successful in competing with companies such as Amazon?

Is Bed Bath & Beyond likely to be forced into filing for bankruptcy? Explain.

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Expert Solution

Yes, there is certainly a place for brick and mortar stores whose products are readily available online. This is because of the fact that there exists a set of customers who still like to shop in bricks and mortar stores. These customers will go to a bricks and mortar store rather than transacting online for a couple of reasons – they way want to buy the product immediately, they prefer the touch and feel that is not present in the online medium, they like the service being offered at the stores etc. So while there is a place for brick and mortar stores there growth will not be as magnified as the growth in case of online commerce stores.

No, Bed Bath & Beyond has not been successful in competing with companies such as Amazon. Bed Bath & Beyond could not match Amazon’s competitive strength and its ability to offer lower prices. As such Amazon was able to leverage the competitive advantage that it enjoys and Bed Bath & Beyond was never able to close this competitive gap.

No, Bed Bath & Beyond is not likely to be forced into filing for bankruptcy. Forced but voluntary bankruptcy does not seem to be occurring in the near future for the company as it is taking strategic steps to align its operations with the changing market. There has been no default as well under its loan documents. This also rules out the situation of a truly involuntary bankruptcy for the time being as well.

jeff jeffy answered 1 year ago
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