Dive Brief:

• Bed Bath & Beyond CEO Steven Temares said the company has found a way to save millions on freight "over the next couple of years," on a recent earnings call revealing some disheartening quarterly results.
• The company will open a new 755,000 square-foot distribution facility in Monroe, Ohio in the fall of 2019, allowing it offer two-day shipping to roughly 90% of the country in an effort to protect margins on the back of rising shipping costs.
• The retailer is also working on inventory reduction strategies. "SKU rationalization, SKU space reduction, show more carry less and assisted-store ordering," brought inventory down by 6% in the second quarter, Temares said.

Dive Insight:

With six straight quarters of same-store sales shrinkage and a 48% dip in profits for the second quarter, Bed Bath & Beyond is taking a fresh look at nearly every facet of its business.

Supply chain will play a major role in Temares' plan for a comeback at the store well-known for having product squeezed into every corner from floor to ceiling. 

Right-sizing inventory is a big part of that. Temares said the company is on track to reduce inventory by 5% year over year by the end of the fiscal year. He is also working on sourcing more items directly from manufacturers in order to improve margins as coupon use and shipping costs for e-commerce orders have been pulling them down. 

On the freight side, Temares said the retailer is looking at savings through:

• Expanding its TMS to include more vendors and destinations
• Shipping more volumes through a consolidated network instead of direct to store
• "Working with our suppliers on a host of transit time and freight cost reduction opportunities"

Though most of the chain's efforts will admittedly not bear fruit for some time, the new warehouse offers a concrete opportunity to improve the profitability and speed of e-commerce fulfillment.

"This facility will operate not only as a fulfillment center for our direct-to-customer shipments, but also as a cross-dock facility for shipments to our retail stores service in the Greater Cincinnati and Northern Kentucky markets," Temares said. "When fully operational, we would expect this new DC to further advance our direct-to-customer delivery speed and deliver on our goal of being able to consistently execute on a delivery promise of click to home within two days."