What does Bed Bath & Beyond know about selling wine?

We’re about to find out, since the housewares superstore chain has bought Cost Plus World Market, best known to regular visitors here for its usually excellent inventory of cheap wine.

Wall Street, as is its wont with any sort of acquisition, was bubbly and enthusiastic about the deal. The shares of both companies went up when it was announced, and the usual sort of biz-speak was thrown around, including the dreaded term “synergy.”

The Wine Curmudgeon, who has spent many years writing about business, always cringes when he hears that word, since it’s usually used to make a case for something where no case exists.

The big money guys, though, see the deal as can’t miss. Bed Bath & Beyond wants to get into the specialty food business, while World Market has been stumbling financially for several years and is probably better off as part of a larger company with deeper pockets. Or so the wise guys say.

But no one has explained how a company that sells coffee makers and bedspreads is going to take to selling wine. Because there are more than a few differences between the two, and I don’t think it’s unfair to ask if anyone at Bed Bath & Beyond actually understands the three-tier system.

This is no knock on Bed Bath & Beyond. It’s well run, the prices are good, and it practices customer service in a way that would make my grandfather, who ran a men’s clothing store in a small town in central Ohio, smile. I shop there regularly, and always keep one of their 20 percent coupons in my car. But wine ain’t toasters:

• What will the corporate accountants say when they discover that three-tier adds another layer of cost that they can’t get rid of? Or that, if and when they open stores in Pennsylvania and New York, they won’t be able to sell wine in them? Or that a wine that is big seller in a World Market store in Texas may not available for sale in Illinois?

Private label wine is becoming increasingly important as retailers try to find new ways to boost margins.Trader Joe’s, one of World Market’s competitors, is largely about private label wine like Two-buck Chuck. Housewares, on other hand, is still largely about brands. That’s a difference in mindset that seems almost insurmountable.

• Regional wine. World Market, as odd as it may seem, tailors its wine inventory to local tastes. Its Hawaii stores carry Hawaiian wine, the Arizona stores have Arizona wine, and so forth. I can imagine the conversation when someone tries to explain that to the Bed Bath & Beyond corporate types, whose idea of regional is that they can sell Calphalon in all 50 states.

Hopefully, the deal will work, since I don’t want to lose a source for cheap wine. But I wouldn’t be surprised if it didn’t, and I hope the bosses at Bed Bath & Beyond appreciate the difficulty of their task.

One thought on “What does Bed Bath & Beyond know about selling wine?

  • By alex - Reply

    Hello this is Alex from the wine forum http://www.winebasic101.com everyone wants to get into the wine busiess. First costco is taking over as the number one wine seller of any other retailer. Costco also wants to start making there own wine and selling. Now bed bad and beyond wants a piece of the market. I think they should stick to what they know best sometimes to much verticle and horizontal intergration is to much. Private labels is the way the go. As with anything private labels make more money than national brands.

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