Breaking the mold, grocery leader Kroger and home goods retailer Bed Bath & Beyond have struck an unusual partnership, with Kroger planning to carry an assortment of the latter’s signature home and baby products on its ecommerce channel as well as in select stores starting in early 2022.
The deal makes sense on both fronts, as Kroger is looking to expand into new categories beyond grocery as it battles big box titans Walmart and Target, and Bed Bath & Beyond hits square in its demographic of moms and families with Kroger’s shoppers, at a time when sales have slipped after a pandemic surge.
The news, which also included a stock buyback plan, sent the home goods retailer’s stock soaring 83% in one day, a month after plunging following a disappointing earnings report. Its products will be sold online through Kroger’s Ship marketplace, which it launched last year through a partnership with French platform provider Mirakl. A branded shop-in-shop experience piloted in select stores will follow.
“Bed Bath & Beyond has a compelling portfolio of products that complement the items our customers already love to shop,” said Rodney McMullen, Kroger’s chairman and CEO, in a release. “This strategic online collaboration and in-store pilot will provide Kroger shoppers easy access to essential home and baby products alongside their favorite grocery staples – continuing to fulfill our commitment of providing our customers with anything, anytime, anywhere.”
The companies said the offerings in store and online will include popular items such as bedding, storage, baby furniture and gear from Bed Bath & Beyond and buybuy Baby’s assortments, including the retailer’s own white label items as well as national brands.
“Our collaboration with an exceptional retailer like Kroger underscores Bed Bath & Beyond’s authority in the home and baby categories,” said Mark Tritton, Bed Bath & Beyond’s President and CEO, who came over from Target two years ago. “Today’s announcement is a key milestone, bringing Bed Bath & Beyond and buybuy Baby products to reach more customers than ever before. Our product assortment combined with Kroger’s customer base will present extensive opportunities for current and future customers.”
Neil Saunders, managing director of GlobalData Retail, said the timing of the deal is fortuitous for Bed Bath & Beyond as home product sales wane after 18 months of explosive growth driven initially by the lockdowns.
“As such, the deal with Kroger provides some lift to an outlook that was in danger of losing altitude,” Sauders said in a note. “Kroger represents a huge channel for Bed Bath & Beyond and can bring more shoppers into contact with the brand. This alone will help the company resolve one of its key issues: Remaining on the consumer radar.”
On the other side, Kroger “needs to push beyond groceries and bolster its non-food business, so the partnership makes strategic sense,” Saunders said. He added that Bed Bath & Beyond should seize the moment to push its own items and drive loyalty through the deal, as Kroger could eventually launch its own competing products in the category.