With the collapse of the US home furnishing giant 3B, who can take the opportunity to fill the gap?

It is learned that on April 23, the US home furnishing retail giant Bed Bath & Beyond announced that it had filed for bankruptcy protection and planned to wind down its business in an orderly manner. What impact will this event have on the entire US home furnishing market? Who can fill the market gap in the short and long term?

In fact, the entire home furnishing retail market in the United States declined overall in 2023. During the pandemic period in 2020 and 2021, American consumers were trapped at home and bought a large number of home furnishings. Starting last year, due to continued high inflation, Americans began to cut consumption of non-essential items, and home furnishings were one of them.

However, as a giant in offline home furnishing retail in the United States and one of the former category killers, if 3B Company fails to find a buyer, there will still be a very large market space left.

If 3B collapses, how much market space will be left?

From 2019 to 2022, annual sales of 3B companies fell from more than $12 billion to more than $5 billion. But according to Wall Street estimates, 3B companies' projected sales in 2023 are about $6 billion, which means there is about $5 billion to $6 billion in market share waiting to be divided up.

However, due to the cooling of the overall market and the rise of competitors, the average monthly traffic of 3B companies fell by 26% in 2022. The latest data from Coresight Research found that as of late February this year, less than 10% of household goods consumers had purchased from 3B company stores in the past three months.

In the seven days ending April 3, 3B's customer traffic was down more than 42% year-over-year. 3B estimates that its total net proceeds from all remaining merchandise sales will be approximately $718 million.

In addition, if no buyer is found, the liquidation plan of 3B companies may drag down the profits of the entire U.S. retail industry in the short term. The reason is that a large number of liquidated household and maternal and child products have flooded into the market and the goods have been sold at lower prices.

After 3B went bankrupt, who are the new leaders?

According to Edward Yruma, an analyst at Piper Sandler, once the liquidation of 3B companies is completed, their market share will be dispersed to other competitors. Considering that 75% of industry sales are offline, revenue may also shift more to physical stores.

Edward Yruma predicts that Walmart and Target will be the long-term beneficiaries of the market share, as they occupy a large share of the offline home furnishings market in the U.S. He predicts that Target's annualized earnings will eventually be increased by about 40 cents per share, and Amazon and Walmart will also gain more sales.

Michael Baker, an analyst at D.A. Davidson & Co., predicts Target will receive $500 million to $1 billion in additional sales, though that would represent a relatively small portion of its $19.5 billion in home goods and decor sales by 2022.

In the long run, smaller companies such as Williams-Sonoma will also benefit from the exit of 3B companies, and Wayfair and Overstock may achieve modest sales growth, as both have recently seen a rebound in online traffic, Bank of America said in a report.

Curtis Nagle, a retail analyst at Bank of America, estimates that for every 5% revenue reduction at 3B companies, Wayfair could increase sales by 2%. For every 1% revenue reduction at 3B companies, Overstock could increase sales by 3% as it also sees an influx of new customers.

In addition, 3B is still looking for buyers for some or all of its assets, so some parts of its business may be retained in existing or other forms. The closure of the BuyBuyBaby business may give rise to a new leader in the offline retail market for maternal and child products in the United States. Currently, there is no national retailer in the United States that specializes in selling baby products.

Editor✎ Ashley/

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