Bed bath and beyond target market

I. Situation Analysis

Chief executive officer of Linens ‘N Things, Robert DiNicola, decided in 2006 that his company was in need of a turnaround plan. Their major competitors were Bed Bath & Beyond, Target, and Walmart. Linens ‘N Things realized that they had to improve their systems in order to beat their competitors and stay in business.

Houseware is a sector of the retail industry that in 2002, the five-year sales growth was 4.8 percent. Companies within the houseware sector all have their own niche to appeal to certain demographics. For example, Walmart dominates the low end of the market because they offer everything from groceries to furniture at a low price. Target has a similar niche but is known to be slightly better quality but still at a lower cost. Macy’s and Bloomingdale’s have a higher quality of product and service. Williams Sonoma companies sell high end house and homeware goods. Pier 1 describes themselves as sellers of native crafts and imported goods. Then we have stores such as IKEA, Bed Bath & Beyond, and Linens ‘N Things who have found niches that target customers who are willing to pay for quality but also recognize the value of a good deal.

Linens ‘N Things was founded by Eugene Kalkin in the year 1975. Ironically, Bed Bath & Beyond was founded just four years before and only 16 miles away. LNT had loyal customers because of their good value on an assortment of merchandise as well as exemplary customer service.

Bed Bath & Beyond is the #1 superstore in the United States. They have over 740

stores throughout the country as well as Puerto Rico. They sell private-labels as well as brand name merchandise that attracts customers looking for good quality merchandise at an affordable price. BBBY strives to use their customer service skills and be a “customer’s first choice”.

LNT and BBBY clearly offer similar merchandise at a similar price. BBBY was able to expand and have no debt and this company tends to promote within. Analyst Hunt stated, “They stress service, every retailer tries to do that, but they are better at it than most.”

DiNicola thought it would be a good idea for LNT to operate at a higher level and offer high-quality products. He found it difficult to work within the company's current structure. It was very hard to reach out to new customers because they did not have the advertising funds to do so. They had a reduction in employees which made it challenging to execute proficient customer services skills that would encourage customers to return to the store.

Cleary, LNT is not as established as its competitors. They do not have their own unique niche. They’re very similar to BBBY but BBBY has more funds for expansion, advertising, and they created the store before LNT did. DiNicola had trouble restructuring the company because they did not have the means to so but could have tried just redoing the current structure and improving on it.

II. SWOT Analysis

Strengths

· #2 home goods chain

· Commitment to everyday low prices

· Own private label

· Created loyal customers by offering an appealing array of merchandise and through bridal registry and online shopping services

· Centralized operations

· Invested heavily in infrastructure to support inventory management

· Web based sales and marketing

Weaknesses

· Limited advertising budget and product offerings

· Weakened customer service due to reductions in full time employees

· No international presence like BBBY

· Founded right after & nearby to the founding of BBBY

· The profitability decreased.

· Lower stock price.

Opportunities

· New concept of cheap, stylish home decor that would be replaced before it wore out

· The increasing number of new stores

· Growth of international market

· Changes in real estate purchases, remodeling trends & marriage/wedding trends

Threats

· New concept of cheap, stylish home decor that would be replaced before it wore out

· Changes in real estate purchases, remodeling trends & marriage/wedding trends

· Fragmented and intensely competitive housewares segment

· Maturity of U.S. market

· Price sensitive consumers

· Varying demand for housewares merchandise

· Reversal of financing trend

· Consumer demand for housewares was generally declining.

· Purchasing habits of consumers (small but frequent purchases)

III. Problem Statement

Linens ‘N Things was purchased by a private equity firm and needs to be restructured to work towards becoming an industry leader.