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Bed Bath & Beyond, Toys ‘R’ Us and RadioShack all shut down for the same reason

 

In the 1980s, a new type of specialty retail chain started to emerge: “category killers.”

The stores’ powerhouse business model was aimed at giving shoppers access to every different size, style and color of a product imaginable – all in one place and at reduced prices.

Category killers, which began to dominate entire merchandise categories, opened stores typically under 50,000 square feet – bigger than independent shops but smaller than Walmart superstores – in strip mall centers all over the suburbs. Shoppers embraced these overstuffed emporiums.

Staples is “a classic ‘category killer,’ like Toys R Us,” Mitt Romney, then Bain & Co.’s managing general partner, said in 1989.

These companies, along with RadioShack, Blockbuster, Barnes & Noble and others, spread into the 2010s, remaking how Americans shopped and steamrolling right over mom-and-pop stores.

But the category killer’s time has passed.

Toys “R” Us, Blockbuster and RadioShack are gone. Staples and Barnes & Noble are still around, but they have struggled and closed hundreds of stores.

Another category killer fell this week, when Bed Bath & Beyond filed for bankruptcy.

Once the go-to stop for everything in customers’ homes, Bed Bath & Beyond was brought down by shopping changes, competition and its own missteps. But it was also a retail concept designed for a bygone era.

“That model was exciting and novel. If you liked that category, it was like a kid walking into the candy store,” said Z. John Zhang, a professor of marketing at the Wharton School of the University of Pennsylvania. “The concept has become passé.”

How category killers developed

During the heyday of the category killer, a period when the game show “Shop ‘til You Drop” was a long-running television series, people wanted to accumulate as many goods as they could, largely unaware of how these products were made or their toll on the environment.

Buying at enormous volume, retailers could demand lower prices from suppliers and undercut their competitors.

By focusing on one area of merchandise and becoming a leader in the area, companies bet customers would turn to them whenever they needed, say, new toys for their kids, a DVD player, or bedsheets.

The combination of global supply chains, cheap container shipping overseas, falling telecommunications costs and computers enabled the category killer concept.

Companies could suddenly commission manufacturers around the world to create products and monitor supply in real time.

“What was key in the development of many category killers was the adoption of modern supply chain methods,” said Marc Levinson, an economist and historian, and author of “The Great A&P and the Struggle for Small Business in America.” “It became possible to communicate from an office in New York with a supplier in China.”

Large companies with the ability to invest in sophisticated technology and software systems gained an advantage over local and regional stores.

https://www.cnn.com/2023/04/29/business/bed-bath-beyond-toys-r-us-category-killer-retail/index.html

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