Six Forces of Bed, Bath, and Beyond

Six forces of Bed, Bath, and Beyond

Buyer Power - HIGH

Buyer Power is high in the home goods industry because there are a large number of competitors that sell fairly undifferentiated products. This causes high price sensitivity with consumers and price wars among the firms in the home goods industry. Buyer Power is also high due to low switching costs and highly competitive established companies occupying this industry.

Supplier Power - LOW

Supplier Power for Bed, Bath, and Beyond is low. This is mainly due to the high number of vendors that they have available. Bed, Bath, and Beyond’s annual 10-k report for the fiscal year ended February 28, 2015 reported that they had 8,600 suppliers with the largest accounting for only about 4% of merchandise purchases (BB&B 10-k Report). The top ten largest suppliers only account for 10% of merchandise purchases combined (BB&B 10-k Report). This gives Bed, Bath, and Beyond the power to negotiate deals that heavily weigh in their favor. The company has a reputation of being ruthless in their dealings with vendors by negotiating hard and holding out until their demands are satisfied (Lieber).

Threat of New Entrants – LOW TO MODERATE

Bed, Bath, and Beyond has a fairly low threat of new entrants. Barriers to entry are low in the retail industry, but economies of scale advantages help prevent new entrants from taking any significant portion of the market share. There are many established companies in the home furnishings market such as Wal-Mart, Target, Dillards, Macys, and JCPenney that have these advantages. They are able to purchase their products from manufacturers in bulk for less and then sell them to their customers at a lower price.

Threat of Competition - HIGH

The threat of competition to Bed, Bath, and Beyond is high because there are a large number of established competitors in the home goods industry. Many of the products that Bed, Bath, and Beyond carries are fairly undifferentiated with...