For shoppers needing a shower curtain, wedding gift, or new pillow, paying list price is nearly unheard of, unless they forget the huge stack of coupons they likely have collected in the mail from Bed Bath & Beyond. The home goods retailer fills direct mailings and print advertisements with percentage off coupons for virtually anything in the store. It also has a lenient acceptance policy, such that it generally allows consumers to use even long expired coupons to reduce the price of their shopping baskets. Thus, coupons appear essential to Bed Bath & Beyond and its brand image.

lo-res_mhhe005224-sSo why is the retailer experimenting with something completely new and different? A pilot subscription program asks selected customers if they would be interested in paying a $29 annual fee, in return for 20 percent off every purchase they make. The test program was available by invitation only, and the retailer has not yet released information about whether it was successful or if it plans to expand the subscription program, called Beyond+, to other shoppers.

But it clearly hopes to achieve several goals through this shift. In particular, it might gain access to new revenue streams, in the form of the subscription fees themselves. Bed Bath & Beyond also hopes to increase the loyalty of shoppers who already visit the stores often, and who might appreciate the convenience of an automatic discount, rather than having to remember to bring their stack of coupons with them on every visit.

The move also is an evident response to competition with Amazon. Relative to Prime membership, the subscription in Beyond+ lacks some benefits, such as the access to streaming content that Amazon can provide. Although it promises free shipping, those shipping rates are slower than Amazon’s too. But with the 20 percent discount, Bed Bath & Beyond asserts that its products generally will be less expensive than the same items sold through Amazon.

Bed Bath & Beyond is not alone in its experimenting either. Retailers such as Lands’ End, Walmart, and Restoration Hardware have all introduced subscription plans, offering various benefits for different subscription rates. Thus far, Prime remains the most expensive.

But these other retailers do not have the same reputation for offering coupon discounts as Bed Bath & Beyond does. For shoppers who have been collecting their hundreds of coupons for literally decades, shifting to a non-coupon experience might seem unnatural, even if the savings are the same.

Discussion Questions:

  1. Do you anticipate that Bed Bath & Beyond eventually will do away with coupons altogether? Why or why not?
  2. Should all retailers introduce subscription plans for their regular customers?

Source: Imani Moise, “Bed Bath Tries to Move Beyond the Coupon,” The Wall Street Journal, October 6, 2016.