It turns out those ubiquitous 20%-off coupons for Bed, Bath, and Beyond are actually hurting the retailer’s sales. Recently, the company reported that its revenue rose 1.7 percent to $3 billion, but that profits fell 10%, and it looks like those handy little coupons are to blame.
Because BB&B has been so free with their coupons, customers have come to expect them for every item—and now they feel like a given rather than a treat, the Washington Post suggests. Additionally, the store’s stock has fallen 25% this year. But if the store suddenly stops handing out the coupons, that could hurt their business even more because irritated customers used to better deals may take their wallets elsewhere.
And because shipping costs for large items can be high, there’s even less incentive for people to buy online without a coupon. But BB&B is working to improve its online presence and presentation. It has acquired Of a Kind, an e-commerce site that sells boutique goods from a nicely curated selection of establishing home designers.
Because of the acquisition, digital sales have grown by about a quarter, even as sales at physical locations are falling. But the retailer plans to be a part of an enormous, 100,000 square foot space opening next year that will also house other huge home retailers like Cost Plus World Market. BB&B isn’t giving up the ghost just yet.
The lesson here is to be careful with discounts—they should come with restrictions and limits on purchases as well as with an expiration date. As we’re seeing with BB&B, it’s possible to have too much of a good thing. If customers feel like they’re owed coupons, they’ll be angry if the coupons are taken away after extended use. Other companies have stumbled into similar problems, usually by opening too many outlet stores or offering discounts too deep.
So if you’re a committed coupon-hunter, use those Bed, Bath, and Beyond ones quick—they may not be valid for much longer.
