Case Name :      Let’s Take This Private: Linens ‘n Things Versus Bed Bath & Beyond

Authors :           Frank C. Schultz, Tina Doede, Elizabeth Nicknam-Retana

Source :             Ivey Publishing

Case ID :            909M61

Discipline :        General Management

Case Length :    12 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

The case focuses on the housewares subgroup within the overall retail sector. During the period considered by the case (1970s to 2006), housewares in North America saw the emergence of two “big-box” retailers – Linens ‘n Things (LNT) and Bed Bath & Beyond (BBBY). LNT and BBBY were founded within four years of each other and their corporate headquarters were just 16 miles apart. Despite this remarkable similarity in starting conditions, their performance outcomes diverged sharply. On the surface, both companies were pursuing a similar business-level strategy of cost leadership, but key strategic decisions led them down quite different evolutionary paths. Both companies focused on providing consumers with high-quality houseware goods in a no-frills, value-priced environment, but LNT’s decision to build centralized warehouses – seemingly consistent with a cost leadership strategy – ended up bringing it into direct competition with Target and Walmart. In contrast, BBBY allowed for greater decentralization in decision making, thereby allowing more store-level decision making and greater customization to local consumers’ tastes. As a result, BBBY was able to better differentiate itself from Walmart and Target. The case allows instructors to introduce basic strategy concepts, such as industry and environmental analysis, business-level strategies, core competencies and administrative heritage. At the time of the case (February 2006), BBBY’s market capitalization was approximately $10.7 billion, while LNT had just been acquired for $1.3 billion by a private equity firm. The case begins right after the acquisition and takes the perspective of the new CEO of LNT, who is tasked with devising a turnaround plan.