Bed Bath & Beyond Partners With Kirkland's and The Container Store for a Return to Physical Retail - RetailWire

Oct 30, 2024

Tom Ryan

Beyond Inc. plans to invest $25 million in Kirkland’s Inc. and $40 million in The Container Store Group Inc. as part of strategic partnerships to bring Bed Bath & Beyond back to physical retail.

Bed Bath & Beyond, which was acquired by Overstock.com last August, hasn’t reopened any stores since shuttering all of them in bankruptcy proceedings. Overstock.com rebranded to Beyond as part of the merger.

With the partnership, Kirkland’s becomes Beyond’s exclusive brick-and-mortar operator and licensee for a new, smaller “neighborhood” Bed Bath & Beyond format, with up to five locations scheduled to open next year, according to Chain Store Age. The concept will range up to 15,000 square feet (versus Bed Bath & Beyond’s traditional average store size of 30,000) and feature “a curated assortment of iconic legacy vendor partners.”

Beyond, which also owns Overstock and Zulily, expects to capitalize on Kirkland’s merchandising, product development, and sourcing teams, particularly its expertise in home décor. Under the setup, Kirkland’s would own the inventory and develop the merchandising in the physical Bed Bath & Beyond locations. Kirkland’s is also pausing its website replatforming to collaborate with Beyond and leverage its e-commerce expertise.

Additionally, Beyond is utilizing Kirkland’s 325-store footprint to explore potential opportunities for store conversions or entry into new markets.

Strengthening its capital position, Kirkland receives a $17 million loan, of which $8.5 million is convertible into Kirkland’s stock. The company will also purchase $8 million of Kirkland’s common stock.

Amy Sullivan, Kirkland’s CEO, said, “We expect the investment from Beyond will not only enhance our financial performance but also provide meaningful opportunities to introduce Kirkland’s to new customers in a cost-efficient manner while we continue to re-engage our core customer and extend our reach across multiple formats.”

Marcus Lemonis, executive chairman of Beyond, said the deal fits Beyond’s vision of growing through “asset-light” collaborations with like-minded retailers, which includes foregoing expensive leases.

“We understand that retail is both an art and a science and have vetted the management team and infrastructure of Kirkland’s Home as an ideal organization to help bring the iconic Bed Bath & Beyond brand back,” said Lemonis. “The key to retail is efficiency in assortment, space management, sourcing, and merchandising, all while recognizing that smaller, tighter footprints with significantly lower fixed cost models is a winning recipe.”

Meanwhile, under the Container Store deal, co-branded Bed Bath & Beyond in-store shops will open inside The Container Store’s 103 locations, and the storage-focused retailer will gain access to Beyond’s e-commerce and omnichannel capabilities, similar to the Kirkland deal.

The broader available in-store offerings and online access promise to drive in-store and web traffic to particularly support The Container Store’s high-margin Custom Spaces services business, which is outperforming the retail side.

“This agreement will enable us to harness Beyond’s data platform and analytics to better identify and target customers at critical points in their purchase journeys and enhance communications with new and existing customers,” The Container Store’s CEO Satish Malhotra said in a statement.

The $40 million investment represents a lifeline for The Container Store, which is struggling to return to profitable growth. The Container Store will issue 40,000 shares in a new stock series that will give Beyond a 40% equity stake. The deal is contingent on existing lenders amending borrowing terms.

Lemonis added about the arrangement with The Container Store, “Partnerships like this further support the value of iconic brands leveraging each other’s assets and core competencies while improving customer conversion and retention, enhancing margins, and optimizing marketing expenses which are the principal drivers in delivering value creation and profitable growth.”

What do you think of Beyond’s “asset-light” partnership deals with Kirkland’s and The Container Store to monetize Bed Bath & Beyond?

Are in-store shops and smaller physical stores the optimal path to bring Bed Bath & Beyond back to physical retail?

Will the Bed Bath & Beyond banner’s revival likely benefit more from Kirkland’s or The Container Store’s partnership?

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