December 10, 2013, 4:20 PM

Linens ‘N Things needs to take on and best all comers

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In its early days of e-commerce, Linens ‘N Things took a different approach to e-commerce than Bed Bath & Beyond, says Rosenblum. From 2000 to about 2007, Linens ‘N Things developed an e-commerce business that was centered on a fast turn-around on seasonal items, such as flannel bed sheets in fall and winter, while Bed Bath & Beyond focused on a broader selection of housewares and home furnishings, she says. Ultimately, Linens ‘N Things didn’t do enough online to differentiate itself as the best seller of home textiles, housewares and decorative accessories and began losing market share to other retailers. “ viewed itself as a company selling a short lifecycle product and its emphasis was on a fast sell-through,” Rosenblum says. “Bed Bath & Beyond had a different take—that it is mostly selling basics, and so its strategy was to be ‘never out.’ The in-store perception of ‘Oh, they don’t always have what I want’ just bled to the same online perception and that hurt Linens ‘N Things over the long run.”

Galaxy says it’s serious about developing as a recognizable e-commerce brand and building on the company’s once well-known niche. “We plan to leverage Linens ‘N Things’ heritage to connect with consumers by offering Linens ‘N Things branded products, and by re-establishing the brand as a premier home destination both in-store and online,” says Hidary.

But Bed Bath & Beyond also is getting more serious about e-commerce. In June, Bed Bath & Beyond’s growing emphasis on e-commerce, including a new online fulfillment center and a new e-commerce platform, led an investment banker to project web sales for the home furnishings retailer to reach 4% of total sales, or about $373 million, as soon as the next three to five years.

Bed Bath & Beyond, or BBBY, “has launched the first of two new e-commerce sites, and we are raising our estimates as we incorporate growth of the online channel into our model,” writes Laura Champine, an analyst with Canaccord Genuity, the market analysis unit of investment banker Canaccord Financial Inc., in a June 19 report. “Behind sizable investments in a new e-commerce platform, including data analytics and web marketing teams, we believe BBBY can increase e-commerce penetration from its current level of 2% to 10% by the end of fiscal 2015.”

In order for to increase its e-commerce base it needs to focus deeply on a customer acquisition strategy to attract and retain new and repeat customers, Okamura says. In a mature category, and Galaxy also must take market share away from other retailers, especially Bed Bath & Beyond. “Being as good as someone else already is won’t be good enough to build a long-term and sustainable e-commerce business,” he says. “They will have to be a bigger and better product source than other online retailers and build a superior web site that keeps customers coming back. That will take a serious commitment of money and time.”

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