Bed Bath & Beyond executive vice president and chief merchandising officer and Harmon Stores president Joe Hartsig spoke to MMR editor-in-chief Jeffrey Woldt about the company’s three-year revitalization plan. This is an excerpt of an interview that can be watched at massmarketretailers.com/category/videos.
WOLDT: It’s Bed Bath & Beyond’s 50th anniversary at the same time that you’re in the midst of a transformation program to revitalize the company. How is your approach to merchandising supporting that broader mission?
HARTSIG: First of all, we’re excited about our 50th year. We just introduced a new campaign called Home Happier, which really encapsulates how we view ourselves as an authority in the home space and really the need for customers living at home to make their homes as happy as can be. It makes them feel good. It makes them more productive as we’re working from home. So we’re really excited about that. And, you know, for me, Jeff, I’ve been here now for 14 months at the company. I started last March right before the pandemic — what a crazy time to be joining a company — but it’s been an exciting transformation that we’ll talk more about.
Working with Mark Tritton and his new leadership team. And for me being able to bring in some of the experiences that I’ve had in other mass retailers to modernize the way we look at category management, the way we look at product and assortment in terms of both national brands that are very important to us, owned brands, and the development of that, which we’ll talk about as well.
And also, how do we bring this to market with the right price, the right promotional strategy, the right placement, right? Both in stores physically but also through our digital and omnichannel lens. It’s an exciting time for Bed Bath, and I’m really happy to be part of this.
WOLDT: You mentioned a couple of things that I definitely want to hit on. One is owned brands. You just launched Simply Essentials, which is one of a series of major owned brands that you guys are rolling out this year. Maybe you can tell us about that particular brand but then also the broader program.
HARTSIG: This week we just, as you mentioned, announced our third brand launch of the year. It’s the third of eight new owned brands that we’ve committed to launching as part of our investment in yesterday’s strategy discussion we had back in October of last year. We’re really walking the talk of what we said we would do.
This is the third one, and it’s our biggest one, frankly. It’s a really big broad line of everyday essentials that go across many different rooms in our store. Bedroom, bath area, dining, storage and organization, home decor, kitchen; these are really big powerful categories where we’ve got a lot of market share and a lot of authority with our consumers.
We’re excited to bring this into the marketplace because this really helps us in a few ways and helps our customers.
One is we were not really catering to an opening price point. I’d say past management was looking more as a benchmark to specialty stores and department stores. And as such we probably missed a big part of the marketplace where consumers, both existing and new, were looking for more value-based options.
For us this is a way to really satisfy that demand, complete our priced architecture that’s important to us from opening price point all the way up to premium, and really fill that broad base of the pyramid where we didn’t have those types of affordable items every day, is high quality basics that allow people to have a functional home.
WOLDT: Can you tell us a little bit about the two previous lines that you introduced? You said this was the third.
HARTSIG: Back in March the first one was called Nestwell, and this is a bedding and bath line of assortment, more in the good and better price point.
We had a brand called Wamsutta that we are going to keep part of for a while, but there is a big part of that where it just needed to be modernized and moved on.
We’ve introduced this new broad line of affordable but really great quality product lines in the bedroom and the bath area, from sheets and towels of different materials and types and styles, and really getting in these neutral colors that appeal to a lot of the more modern design aesthetics. So very neutral colors and softs so that you can design around them for your home.
The receptivity to that for Nestwell has been really, really powerful, and it’s all about cozy and making sure you’re comfortable in your house, because people are sheltering in place, right? And they’re investing in their house.
The other one we launched in April is a brand called Haven, and this is more of a spa-inspired bathroom set of accessories.
It could be towels. It could be wash cloths. It could be bath rugs. It could be hardware in terms of bathroom accessories, the hard piece. It could be furniture in terms of acacia wood. Different types of teak furniture for your shower or outside your shower.
It’s real exciting. Got a lot of excitement around that Haven launch. It’s great, as we’ve just passed Mom’s Day, great gifts for moms, and it really fits purposely with our bed and bath.
We started with bed and bath. That’s kind of how we approach our own brand’s synergy, make sure we take care of these biggest categories first. We call those destination categories — bedding, bath, kitchen, storage and org.
We are now on our third owned brand launch, as I mentioned, with Simply Essentials, which really goes into bedding and bath but it also starts to fan into the other spaces.
WOLDT: And you do have a few more in the works. You have some more on the way up?
HARTSIG: More. We’ve got five more to launch, and we will have six out before back-to-college starts because some of these, as you might imagine, are very appealing to those categories or rooms that we would call them, which is actually something that you should probably know about going back to your very first question, how do we really elevate the merchandising approach with Bed Bath.
A big part of this — and you would appreciate this, Jeff — is the use of category line reviews, and this is where we use internal data, we use external data through MPD or IRI, our supplier information, and really put a more formulated process to combine not just the art of merchandising an assortment to customer segments, but also the science, right? Using data-driven processes that are repeatable to come out with, OK, where are we, where do we have gaps and choice sets? Where do we have gaps in customer segments that we want to appeal to?
And so the owned brand piece and the national brand assortment of work, as well as the pricing and the promotional strategies, are really aligned around those category line review processes which are governed by a set of category roles around, OK, what’s destination, what are everyday needs, what do we specialize and delight, and what are those things that are basket builders that we might call simple solutions.
We’ve done a lot of work as a team to really step back and have a more thoughtful approach of what needs to stay and what needs to come into the portfolio. Owned brands clearly is an opportunity for us as we look at benchmarks across the nation.
WOLDT: I suppose that work also would inform what products you choose to make and how you choose to design them and all that, yes?
HARTSIG: Absolutely, great. There’s a lot of white spaces. You know, we think about our competitive set. The role of owned brands is very, very important. You know, it can provide great value to customers, as Simply Essentials would demonstrate. But a great value for shareholders. But really it’s great value for customers in the sense that it can, you know, taking out the middle man and offering of passing along the savings so we can get a really great price on something like a $5 pillow of high quality, or a $7 eight-inch frying pan, or a $35 10-piece cookware set that’s nonstick. Or even a dollar kitchen ladle, right? I think we have that they’re just basket builders that we didn’t have really the right assortment around.
So for us it’s really important to drive owned brands. But I’d also say it’s equally important to make sure that we have the right national brands. You know, still the majority of our product line will be with national brands. It’s important for our supplier partners to know we value brands.
But I would say some of the softer sides of our business are more amenable to owned brand strategies where maybe the brand recognition and appreciation just isn’t as deep. That we have the capabilities that we’re building through our owned brand organization, our sourcing capability, and a go-to-market capability to supply chain to bring these goods in at a much lower cost structure, and again pass those savings along to customers.
WOLDT: As you look at the merchandise mix, are you looking to expand the range of national brands or international brands that you sell?
HARTSIG: Yes. I think, from a national brand standpoint, what we found again through the category review process, we had a lot of brands that were bunched up together in certain price points.
And it really made it one, it didn’t allow us to cater to different shopper segments, you know, maybe more of a younger Millennial that we would call a creator or a minimizer.
We serve really well what we would say is a segment of what we call the nesters, which are older you know, maybe living at fixed income or maybe their kids are away from home now. Or the juggler, which is that quintessential mom who has got two or three kids in the family and they’re trying to provide on a budget for their needs at home.
We serve those segments pretty well, but we’ve also realized we have real big gaps in terms of catering to those first apartment dwellers or those that are looking for living on more of a budget or value.
The category line review has been very helpful to pick apart what national brands are going to be with us because they still have a lot of resonance with our customers.
Then introduce the owned brands but then come back and say, OK, where do we see gaps in our national brand assortment that we want to have new? We think there are really a lot of exciting and interesting brands out there, not just in the bed and bath area, but areas like health and beauty where there are a lot of direct-to-customer brands that really have a desire to be with us.
We’re having some great conversations with some other new brands again to really pin our assortment and our total offer with different types of customers. It’s a real exciting time for us. A real exciting time that people see that Bed Bath is on a growth trajectory.
They want to be part of the new Bed Bath & Beyond and what we’re doing with stores to remodel, and really make it an easier place to shop, which is part of our mission of making it easier for customers to feel at home.
It does start with product, right? Making it easier to shop and cut through the different clutter and get to the price points and the quality of product that they need.
WOLDT: I know it’s still fairly early in the process, but what sort of response have you gotten from shoppers to the changes that you’re making?
HARTSIG: I’ve got a few things. One is on the store remodels themselves. We started with a store Watchung, N.J. It’s the town where we did our Store of the Future. This is part of the discipline and training of this new team, as opposed to having Hail Mary’s and trying to do something but never scaling it — trying to really perfect something in the store and work until it works.