Bed Bath and Beyond’s Marketing Problems Are Yours Too Retailers

By Bob Phibbs

coupon marketing bad for retail business

Coupons so hot you can buy them on Ebay...

20% off coupons that don’t ever expire according to BuzzFeed.

A coupon culture so out of control, users teach others how to game the system, “If they don’t give it to you, just say, ‘OK no problem. I just won’t buy it here.’ Chances are, they will want your business and will do whatever it takes to work with you.  I even saw managers allowing customers to negotiate a price on a clearance item!”

Who am I talking about? Bed Bath & Beyond.

Recently they announced they’d be scaling back their coupons as profits have dropped by 10% and according to the Chicago Tribune, “Company executives largely blamed it on an order of magnitude increase in expenses related to coupons.”

And that’s because their customers are addicted to not paying full price.

BBB has created a physical and online culture that basically makes a customer feel stupid if they don’t find a way to get a coupon.

In fact, one site recommends leaving an item in your online cart to get a 20% coupon in response.

And they’re not the only retailer doing this...many retailers have become overly promotional.

What is it about getting a deal that makes marketers think it is the only lever?

Oh right, they don’t have to pay the price for those deals – their stock-market investors do.

It's like their way how to approach a customer is solely with a discount coupon.

Selling from discount is pervasive in retail right now…and here’s a dirty little secret...

Luxury retailers have this problem too.

Go into most any high-priced brand or store within a store. Sure, they’ll sniff an air of exclusivity. They may offer you a cappuccino or you might smell the faint scent of flowers, but the dirty little secret is often right out in plain site…a calculator.

When everything is available with a discount and Wall Street doesn’t have your back, what are you going to do when you can’t pay your taxes, your employees, your mortgage?

One of the truths Ron Johnson said about the old JC Penney was that coupons are a drug. He tried to go cold turkey and offer everyday low prices instead...which famously didn’t work... as all shoppers stayed home, sales tanked, and Ron’s work was actively dismantled.

But he was right...

When you feel the only way to get customers in the door is to discount past your profitable price, you have fallen on your own sword.

Oh, you may not feel it at first as the blood seeps out. You're so horny for the deal you tell yourself, I had to do it to make our numbers.

But as you do it over and over again, it gets easier.

When such a retailer inevitably loses its way after a pattern of couponing, the owner realizes the path to failure was a determined effort to avoid the truth about what hand they had in the demise of their own profits.

Using coupons trains your customers to wait.

Like an Uber driver, there’ll be another along shortly.

Bed Bath and Beyond consumers have now been trained to wait. And you know what?

They are rewarded every time.

Are yours?

But I get it…

In an age of anxiety and in our depersonalized world where shoppers are nervous about their jobs, their finances, and their relationships, customers who use coupons are, by extension, made to feel smart. See how much money I saved is a way to say I'm no fool.

If your profit margins drop from 50% to 40%, you'll need to make 20% more sales just to replace the lost profits.

The only way to do that would be to increase your foot traffic 40%. That would mean you’d have to sell about one out of every two people who came through your doors. Most salespeople’s closing ratios are a fraction of that.

And that’s the real nub of the problem…

If you’re a luxury brand, you may think customers will put up with the silent, disengaged and disengaging presentation.

If you’re a big box, you think vendors will continue to do the heavy lifting of making a brand cravable.

If you’re a boutique, you’ll rally around ShopLocal, never looking in the mirror that you’re just like everyone else.

And when your employees can’t sell the merchandise, can't welcome a stranger or suggestively sell the add-on, your store is little more than a warehouse.

And that’s a shame because shoppers are actively out there, right now, looking to meet someone with an open heart.

To discover the perfect gift for themselves or others.

And when they find that, they’ll buy that - coupon or not. Even at Bed Bath & Beyond.

See also, Retail Sales Tip: Selling Luxury Products Without A Discount

IN SUM

As one commentor noted, “It looks like the only reason you shop at Bed Bath & Beyond in the first place might be disappearing: The company is reportedly in financial trouble because they’ve conditioned their customers to never pay full price for anything. I hate to laugh at the misery of others, but that rule flies out the window when it’s a Fortune 500 company with business practices that even I would have raised an eyebrow to. Seriously, what the hell did they think would happen?”

And that’s my point to you that if discounts are the only reason customers will shop with you – they are loyal to the deal not you.

And they’ll go where someone else will give them their deal.

There’s another way. Limit your sales to real sales.

Train your retail employees to provide an exceptional experience that sells your merchandise.

Train them to put the value back in relationships, instead of taking it off the price.

Of course that means you'll have to make retail sales training a priority.

But what's the alternative, continuing to discount? That’s unsustainable.

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