Too many retailers. Too much OmniChannel. Too many discounters. Too much competition. That's how I felt when I went through the quarter today delivered by Bed Bath & Beyond (BBBY).
First, let me just say that I love Bed, Bath. I happen to live three minutes from the original store. When we are going to open the beach house for the summer, we go there first: towels, chairs, Keurig, trash cans, throw rugs. You name it. Across the street is Harman where we get everything for the bathroom. Everything. Toothpaste, soap, cosmetics. My daughter and I just love the place. We come with coupons, we get deals. We always feel like we are getting terrific bargains. We even buy the candy there, right on that wall when you are getting there or leaving. And their small travel sizes? Ideal.
Here's the problem. I think if there were a Target (TGT) closer, the new Target, I could get everything there instead of Bed, Bath and Harman. That's how much better Target's gotten under CEO Brian Cornell. (Target is part of TheStreet's Action Alerts PLUS portfolio.) And if I wanted to and had the time, I could get everything at Amazon (AMZN), just order away, I have Amazon Prime. Beach stuff? Why not go to West Elm? It's sensational. Or Wayfair (W) if you want some discounts, or its Joss & Main online catalog if you want more upscale. (Amazon is part of TheStreet's Growth Seeker portfolio.)
Costco (COST) has every single one of the household goods we buy. It just happens to be a little farther down the road and is therefore inconvenient, but just to us, not the neighbors of Costco.
I can't figure out where J.C. Penney (JCP) figures in, but it will certainly try to be in the mix, mostly on price. Only Sears Holdings (SHLD) is shrinking, but not fast enough to help anyone other than short-sellers.
There's just too much competition out there. Which is why I say a 2.2% comparable store growth in this environment's pretty darned strong. Sure, it's not strong enough if your stock ran in anticipation of the company going private, but it's enough to satisfy some who aren't simply looking for a good retailer who gets it right when the stock's at the right price, which it obviously isn't yet.
Ever since Target and Wal-Mart (WMT) got new management while Nordstrom (JWN) stepped up its Web presence and Williams-Sonoma (WSM) decided it wasn't going to cede any ground to anyone, I have realized you have to be very careful in this group. It's just too crowded. Now, we often hear that the consumer isn't strong when we see weaker months in certain retailers. I no longer think that's the case. New household formations are running higher than they have in years owing to pent-up demand from the Great Recession. We are seeing 2 million households being formed vs. just 500,000 average for the seven years in the downturn. There are plenty of shoppers. Through the Internet, though, they have eviscerated everyone in the cohort. A complacent retailer is a dead retailer, and even a good one like Bed, Bath can be left behind.
Too many stores. Too much competition. Not enough shoppers. It's just a tough group and I think over time it is just going to get tougher as customers get more acquainted with mobile websites and lose loyalties that once were etched in stone.