Coming out of its recent 2023 bankruptcy, Bed Bath & Beyond entered into its painfully slow resuscitation efforts under Executive Chairman Marcus Lemonis. Yet, notwithstanding plans to open hundreds of new locations across the country, California has specifically not been included on the list of states targeted for brick-and-mortar expansion. Lemonis bluntly laid the blame on the business climate of California, leaving fans on the West Coast to find other shopping alternatives not associated with the brand.
California’s “overregulated, expensive, and risky” condition
In a post on X (formerly Twitter), Lemonis states “California has created one of the most overregulated, expensive and risky environments in which to do business in America.” He adds that “when you combine high taxes, high fees, mandatory wage increases and a laundry list of regulations it makes it so that it’s harder to employ people, harder to keep doors open and harder to deliver value to customers.” It’s not part of partisan disagreement, it’s part of the actuarial fact.
The revival strategy of the company excluding California
Bed Bath & Beyond revived itself with its joining The Brand House Collective brand, rebranded Kirkland’s stores, and a flagship “Bed Bath & Beyond Home” store in Nashville, Tennessee as also stated in this article, Bed Bath & Beyond returns with a slightly different name to Nashville at this location – Brand House has promised to validate any unused coupons. It has a plan to add about 300 more stores in a “curated, smaller format” over the next two years, thereby improving the profit margin earned and customer experience. Almost all other states are on the list of expansion now, except California, which has totally unique cost structures and regulatory demands that cannot be sustained for physical locations for now.
Response by Governor Gavin Newsom and political repercussions
The office of California Governor Gavin Newsom reacted sharply on social media to the claim that “like most Americans, we thought Bed, Bath & Beyond no longer existed” post bankruptcy and after full-scale closure of its stores and that “we wish them well in their efforts to become relevant once again”. Newsom himself was of the same disbelief, saying he, too, thought the chain had already folded. Local officials, however, remain concerned about the broader message: San Jose Mayor Matt Mahan urged state leaders to “focus on solutions” for businesses and job creation rather than dismiss company decisions as political theater.
Economic realities concerning the decision
According to Lemonis, the surpluses that California is reported to have do not accurately reflect the true burden of cost on the ordinary citizens and businesses. He has argued that “higher taxes, higher fees, and higher wages” combined with what he terms “endless regulations” would make unsustainable what counts on slender margins in the retail business. Retail theft and safety regulations further compound operational challenges, leading to elevated insurance costs and security investments—all factors that, according to Lemonis, make it untenable at this stage to have a footprint in California.
But how can one access Bed Bath & Beyond?
This means no new stores will be established in California, but Lemonis assured shoppers that the retailer will be ramping up its e-commerce platform to deliver across-state goods directly to consumers. Its website now boasts that most items can be delivered within 24 to 48 hours, with special same-day service available in certain metropolitan areas, thus allowing Californians to enjoy almost instant gratification from the brand’s home goods without having to contend with the overhead of physical stores. The digital-first strategy allows the company to sidestep California’s cost pressures while maintaining customer loyalty through easy access to product delivery.
Alternative physical options
For customers who want the in-store experience, The Brand House Collective will gradually convert their existing Kirkland branches—there are currently 14 of these in California—into Bed Bath & Beyond Home micro-formats. These smaller footprints will be stocked with only the most popular items within the brand and will continue to accept legacy coupons. If success in Nashville follows through to wider deployments, proponents in Los Angeles, San Diego, and throughout the Bay Area may eventually see these boutique-style outlets requiring neither a full-scale return to the big-box model nor a complete redesign.
Future set: Conditions for change
Lemonis concluded that Bed Bath & Beyond was prepared to revisit the possibility of buying into California at a later date when the business climate changed. He called for “common-sense” reform that would allow enterprises to thrive: “often called the world’s fourth largest economy, California stagnates as an economy when it prioritizes regulatory complexity over growth.” Until then, the digital delivery strategy of the company will be executed within California, supplemented by small-format stores, in collaboration with The Brand House Collective.
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