Shifting Consumer Preferences May Impact Bed Bath & Beyond

by Trefis Team
Bed Bath & Beyond
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The world’s largest home furnishings specialty retailer, Bed Bath & Beyond (NASDAQ:BBBY), is vulnerable to economic conditions and particularly home ownership levels, disposable income and the prevailing employment rates. However, it faces a greater risk of changing customer tastes and preferences, especially with the rapid growth in technological advancements. Bed Bath & Beyond competes with other specialty stores along certain product lines, such as Williams-Sonoma (kitchen ware) and Pier 1 Imports (Home Furnishings and Home Textiles), other department stores such as Wal-Mart (NYSE:WMT), Target (NYSE:TGT) as well as online retailers such as Amazon (NASDAQ:AMZN).

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Possible Shits in Consumer Preferences

Housing Preferences

More affordable housing may shift consumer preference toward home ownership vs. renting. The Trulia Rent vs. Buy Index shows home ownership to be more economical than renting in 4 out of 5 major U.S. cities. As the economy recovers further and stabilizes, this could lead to greater home ownership levels. Bed Bath & Beyond is expected to benefit since new home owners are likely to spend more on furnishing their house than rental customers.

Traditional Home Furnishing vs. Electronic Gadgets

In this digital age, many consumers may prefer furnishing their home with a new HDTV or other electronics instead of linens and other home décor items. According to a survey by IBM, electronics is the product category most often chosen by multi-channel retail shoppers. Home décor items ranked the lowest out of the discretionary spending items surveyed.

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