If you haven’t heard the news, the Bed Bath & Beyond (“BB&B”) brand name lives again! This time, it will resurrect as the rebrand for Overstock, who purchased the brand name and a few assets for only $21 million — in cash. That shows you how far BB&B had fallen, much of what we discussed in our positioning in business article about Bed Bath & Bankrupt. Will this be a success story of how to rebrand, or an epic failure?
Overstock CEO Jonathan Johnson summarized this … Don’t expect new retail shops to pop up, however. BB&B will only resurrect online — anywhere you found Overstock.com. The move was made for a very simple reason: Overstock was a bad name. Johnson summarized this rebranding move very succinctly in a recent NPR interview, “Overstock has always had a great business model but kind of a boat anchor of a name. The Bed Bath & Beyond name is a great name, but it has an outdated business model that had become a boat anchor.”
From this same NPR interview, the Overstock low-down on how to rebrand was described as such, “[Johnson] also admitted that Overstock was self-aware enough to know that it's a bit of an embarrassing name to put on your wedding registry. Bed Bath & Beyond is not. So basically, he argued both Bed Bath and Overstock were each carrying an albatross that, combined, maybe they can ditch.”
The genesis of the bad name is that the word “overstock” indicates liquidation. The brand was struggling for a reason: what it offered and what shoppers expected were worlds apart. And as Johnson says, who wants to list a liquidation store on their gift registry?
How will this rebrand play out? Two of our positionists decided to weigh in on the topic. Let’s get their thoughts…
Lorraine Kessler bets it will work
Overstock’s purchase of the BB&B name and related intellectual property is a coup, one I believe will result in a positive case study on how to rebrand. Here’s why: Overstock has spent the last several years clarifying its focus – “everything for the home and nothing that is not.”
The company eliminated non-home products, representing 20% of its revenue, and doubled its SKUs of home and home furnishings. Overstock did so because they found that customers buying health and beauty, apparel, jewelry, watches, and electronics didn’t have the same loyalty and were much more one-and-done customers than those buying home goods. Conversely, those who purchased home products came to the site more frequently, converted at a higher rate, and had a larger average order value. Rationalizing product lines that make money takes grit. In the words of A.G. Lafley, former Chairman and CEO of P&G, “strategy involves making explicit choices — to do some things and not others — and building a business around those choices.”
The “all home” category focus, excluding other adjacencies, is strategically right.
The proof is in the pudding. A Forbes article [October 2022] reported sales of home-only products sold on Overstock were up 53% over 2019. “Our business is growing. We’re taking market share, and we’re doing so profitably,” Johnson told CNBC’s The Exchange. In the same interview, Johnson boasted Overstock racked up its tenth consecutive quarter of profits. Profitability has attracted suppliers who like being paid for their goods, allowing the company to add 600,000 new SKUs.
Bigger may not always be better, but bigger with a clearer category focus and track record for profitability is hard to beat.
If you’re looking for how to rebrand, I believe Overstock with the BB&B name is a courageous and smart marketing move, one that could make history if executed properly. Specifically, there are three moves on how to rebrand that make this work beyond Overstock’s prior move to focus on home goods only:
- The name change solves a big problem efficiently. Johnson articulated the issue by saying, “We’ve long looked for ways to rebrand but wanted to do so in a way that wouldn’t take years or cost hundreds of millions of dollars. The name Overstock has been a headwind for us. It’s been two decades since we were a liquidator, and still, the perception lingers.” Nothing short of a name change of a drastic nature could accomplish this as efficiently. It might become a new model for faltering businesses on how to rebrand.
- PR around the novelty of the name change benefits Overstock/BB&B. It is one thing to gain news attention for a name change. These are common and typically merit a short news cycle. The re-outfitting of a company with a well-known brand name with another famous brand name is novel and, as this article and others show, has extended the coverage well beyond the ordinary. Contained within every shock is an advantage.
- While “Beyond” may be too open-ended for the overly literal, within the focus of “everything for the home,” it is specific enough. The downfall of BB&B had little to do with its specialist position not being specialist enough and everything to do with management missteps. Customers were not confused by what they could buy at the store: everything for the home. They were instead disappointed when shelves were empty. The “home” category tent is big, but it is still specialist relative to broad generalists Amazon and Walmart.
When it comes to positioning, while there may be disagreement on this point, I don’t think BB&B was ever a narrow product specialist. It wasn’t just a bed store. Or just a bath store. Or just a kitchen store. It was always an everything for the home store, and customers like me got it. This decision allows Overstock to leverage its considerable purchase power with home goods suppliers to deliver a difference savvy shoppers will value – the ability to buy quality and style for less.
Overstock is banking on its tuned strategic focus, strong online buying infrastructure, and renewed supplier relations to make its “more for less” positioning work in the home products space. With the new name and all that it means, I predict Overstock’s change to BB&B will shortly overtake No.3 Wayfair. Time will tell.
Mark Vandegrift bets it won’t work
I was never a fan of the name Overstock. We had a former client who was interviewing with the company for a marketing role, and he asked our opinion on their current marketing. My first response was, “ditch the name!” I’m glad to see the current CEO realized it was a “boat anchor.” There’s no way Overstock could ever mean anything other than liquidation-level products offered at a huge discount. They spent millions in TV advertising to try to convince consumers otherwise before throwing up their hands and making this move. It goes to show how important it is to choose a good brand name that starts the position.
Now that it has happened, would I have chosen BB&B? No, and that’s why I think this move is not a lesson on how to rebrand. The CEO included this comment in the company’s press release, “Combining the strengths of the Overstock operational model and the BB&B brand will create a powerful synergy,” Johnson said. “I’m excited for consumers to experience the new Bed Bath and an even bigger and better Beyond.”
That last phrase is a positioning killer. Instead of focusing on being a specialist on their own island, they’re going to be all about the “Beyond” which means they’ll sell anything and everything. We already have a sea of generalists, both online and off: Walmart, Target, Amazon, Costco, Sam’s Club, BJ’s, Meijer, and the list goes on. Also, in their perceived market space, you have Wayfair.com who is already five times the sales of Overstock.
The only way adopting BB&B as their rebrand would work is if they are willing to return to the principles I wrote about in my article about why BB&B failed. They must return to be a focused specialist. For Bed, offer the widest variety of bedroom products. In Bath, do the same. And as far as “& Beyond,” keep it tight and focused. The original BB&B opened it up to basically mean “Kitchen” and it worked because we as consumers are willing to accept the close association of bed, bath, and kitchen. Extending well “beyond” those three rooms is what eventually killed BB&B, among other things.
If the new Overstock.com/BB&B decides to focus, they may have a chance and this rebrand may work. But Wall Street and the C-Suite never like focus. They want it all. And positioning principles demand that you can’t have it all. My bet is for a relatively brief run once the new BB&B name and advertising is rolled out in the states. Then the Bed Bath & Beyond brand name will meet yet another unmerciful “end.”
Boom or bust: Where is your brand headed?
If you think your company can have it all, don’t call us. Innis Maggiore is here to help find and FOCUS you on a position that will differentiate you from the competition and is as highly meaningful to your target audience as possible. If you’re looking for guidance on how to rebrand, contact us today.