Thursday, May 10, 2012
Bed Bath & Beyond Acquires Cost Plus
Bed Bath & Beyond has announced the acquisition of Cost Plus, a specialty food and home furnishings discounter. At first glance, one might wonder why a firm facing increasing competition from online players such as Amazon would double down in brick and mortar stores. Let's take a closer look. First, I find it interesting that the two firms were working together a bit over the past two years. Bed Bath & Beyond had opened several in-store Cost Plus shops in the past few years. It seems like a very good strategy to date a bit before getting married. More firms should pursue this strategy before major mergers. One might ask, though, why they needed to merge if they were working together effectively through a strategic partnership. That's a tough question to answer from the outside, but perhaps there are additional forms of cooperation that could not occur efficiently without a merger. Let's hope so. Finally, Bed Bath and Beyond seems particularly interested in Cost Plus because it mainly sells unique food products tht cannot be found at other retailers. It seems that thy view the proprietary product line, particularly in food items, as protection against online rivals such as Amazon. This move to proprietary items is a major trend tht will continue as retailers fight the "showrooming" threat.