The transformation of the Bed Bath & Beyond (NASDAQ: BBBY) supply chain is taking the next step with an agreement with Ryder System (NYSE: R) announced Monday.
Ryder will develop and operate two regional distribution centers designed to reduce store replenishment times from the current 35 days to less than 10 days. The effort is part of Bed Bath & Beyond’s previously announced $250 million in capital initiatives to modernize its supply chain.
“The modernization of our supply chain is one of our core operational transformation initiatives to create greater efficiencies and reduce ‘out of stock’ occurrences for our customers,” said John Hartmann, COO for Bed Bath & Beyond and president of buybuy BABY. “As we provide our customers with an omni-always shopping environment, it is imperative for our growth to invest in our supply chain to ensure that we are meeting the needs of the business and our valued customers. Ryder is a clear leader in logistics, and we look forward to leaning on their expertise and capabilities to help modernize our supply chain and distribution network operations.”
Bed Bath & Beyond is the parent company of buybuy BABY.
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The two facilities will be in Frackville, Pennsylvania, and in Southern California. Each facility is expected to create 300 jobs for the local economies. The Frackville facility will be 1 million square feet with potential for expansion and open later this year, Bed Bath & Beyond said. It will supply stores in the Northeast, filing both in-store inventory as well as that for online shopping, including buy online, pickup in store, curbside pickup, same-day delivery, and ship from store.
The Southern California location will open early next year.
“When we first started talking with Bed Bath & Beyond about its omni-always strategy, we knew our two companies would be a great fit,” said Steve Sensing, president of global supply chain solutions for Ryder. “We share the same steadfast commitment to providing an elevated customer experience and, in today’s environment, that means meeting consumers where, when and how they choose to engage. Ryder helps brands do just that, so our customers can focus on their core business.”
Last year, a UBS analyst called Bed Bath & Beyond’s supply chain “primitive,” but the company, under new CEO Mark Tritton, has moved quickly to revamp its supply chain to better balance in-store inventory needs with the growing demands of online commerce.
For fiscal 2020, digital sales accounted for about 33% of overall revenue at Bed Bath & Beyond and 40% of sales in Q4. Digital sales comprised 38% of net sales for Bed Bath & Beyond in the first quarter of 2021. The company’s mobile app was downloaded more than 500,000 times in the quarter alone as digital commerce continues to grow quickly.
Last week, the retailer announced a partnership with last-mile delivery provider Roadie to expand its same-day delivery services. The deal nearly doubled the number of ZIP codes where same-day services are available. Roadie has 200,000 verified drivers on its platform, which utilizes underused capacity on vehicles, everything from cars to box trucks, to handle final-mile delivery for customers. The company leverages technology and gig economy drivers for dispatch and capacity.
In May, Bed Bath & Beyond announced an agreement with DoorDash (NYSE: DASH) to provide same-day delivery. The company also has agreements with Shipt and Instacart as part of its “omni-always” fulfillment strategy.
Earlier this year, Bed Bath & Beyond announced the release of Relex Solutions, a retail-focused omnichannel visibility tool designed to provide additional supply chain insight.
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