New Jersey Move Could Come At A Cost To BB&B
Monday October 17th, 2011 - 10:16AM
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Word has it the long-rumored plan to move Bed Bath & Beyond’s Long Island buying operation to the retailer’s New Jersey corporate hub could become a reality in 2012.
Perhaps the decision was inevitable in this day of corporate cost streamlining. A big tax break from the State of New Jersey doesn’t hurt.
If you don’t know the reason for the longtime split operation: Co-founder Warren Eisenberg established the financial base near his New Jersey home; and co-founder Leonard Feinstein set up the buying office near his Long Island home. The split has worked well, but it has become harder from an operating stance for the retailer to justify a Bed Bath buying office only 60 miles from its expanding corporate HQ.
It might as well be 600 miles, however, to Bed Bath merchants contemplating their options as they factor the rush-hour crawl, clogged toll bridges and other rubbernecking slowdowns.
Bed Bath & Beyond consistently fields one of this business’ most experienced and talented merchandising teams. These are astute, decisive merchants whose zeal for trend spotting, early product adoption and category dominance has influenced the chain’s reign well beyond their notoriously rigorous demands on suppliers.
A big piece of the Bed Bath team’s productivity is its depth of merchandise managers, senior buyers and assistant buyers. A key issue is whether that depth is expendable to Bed Bath & Beyond corporate managers.
Do they believe support can be spread more efficiently across a combined merchandising operation in New Jersey, especially as Bed Bath store managers gain more order authority? Are they confident the chain’s merchandising playbook can be handed to new recruits without any hiccups in day-to-day execution?
Bed Bath’s long-term merchandising strategy seems secure. Most senior executives and merchandise managers based in Long Island are expected to relocate one way or another to the New Jersey complex.
Odds are several buyers won’t make the trip. Moving or commuting to New Jersey might be unbearable or unfeasible options for many, even in a flimsy job market.
It’s enough to put suppliers on edge. The possibility of even the slightest disruption is unnerving at a time when Bed Bath is one of their most reliable customers in a fragile marketplace.
Bookkeeping logic says there might be no better time for Bed Bath, which has widened its dominance, to make this move. Sales are up in the double digits. And just think of the bottom-line lift from moving into a New Jersey headquarters that already houses Harmon Stores, buybuy Baby and Christmas Tree Shops (which was relocated from Massachusetts last year).
It is better to impose such a major change from a position of increasing strength than out of cost-slashing desperation. But make no mistake: It is a cost-cutting move. And it could cost Bed Bath & Beyond a few strong merchants and promising prospects.
The home specialty market is ripe for inspired, fresh competition. Off-price operators are raising their games. Certain niche big-boxers are cranking up expansion activity. Select department stores are regaining their merchandising mojo. And well-heeled gourmet retailers are plotting for a bigger share.
Maybe it’s not the best time, after all, for Bed Bath & Beyond to shake up its buying organization by relocating it from Long Island to New Jersey.
As clear as things might look from the other side, crossing that bridge can be complicated.
Dissecting what Ron Johnson got wrong during his brief, calamitous term at the helm of J.C. Penney is sure to be the focal point of retail strategy and tactics lessons for years to come. But Penney’s future could still hinge to some extent on what he got right.