Bed Bath & Beyond and Bye Bye Baby signage is displayed outside a store in Los Angeles.

Patrick T. Fallon | Bloomberg | Getty Images

bed Bath and Beyond CNBC has learned that its brick-and-mortar heyday may never return, but former corporate siblings Bye Bye Baby and Harmon’s are about to open their doors again.

that group Baby’s Intellectual Property Buy Buy Buy In a bankruptcy-driven auction in June, Dream On Me’s owner, Dream On Me’s chief marketing officer, plans to reopen 11 stores in the Northeast as soon as this autumn, Avish Dahiya, Dream On Me’s chief marketing officer, told CNBC.

But the group is not stopping here.

The marketing head, who is also an official in the Bye Bye Baby transition team, said it is working on an ambitious plan to bring the brand back to its glory years, with 100 to 120 stores in the next one to three years.

“We certainly see merit in expanding to that number across the US,” Dahiya told CNBC in the company’s first interview since the acquisition. “Similar to what we’ve done in the Northeast, it will be more cluster-based versus one-off.”

Dahiya said: “We believe omnichannel is critical to the success of the business and stores play a role, so it’s important that we have stores up and running as soon as possible.”

Meanwhile, private investor Jonah Raskus, who brought the dog-walking app Wag! Going public through a special purpose acquisition company in 2022, plans to reopen five Harmon stores in the tri-state area of ​​New York, New Jersey and Pennsylvania with potentially more down the line.

Raskus told CNBC, “This business never failed. This business was shut down because Bed Bath was failing.” “We have the flexibility to decide which stores to reopen… We have the ability to focus on the right places at the right time where customers really want us back again.”

When Bed Bath & Beyond filed for bankruptcy On 23 April, it repaid its creditors by auctioning off parts of its broken empire to investors. No one was willing to buy the entire company, but some saw the value of its individual assets – and managed to buy them for a song.

Overstock bought the intellectual property bed bath name banner At $21.5 million, the price was described by Bank of America internet analyst Curtis Nagle as “fairly cheap” to CNBC. In the meantime, the owners of Dream on Me have a chance to recreate Bye Bye Baby after getting their trademark, data and It has 11 stores on lease for around $16.7 million, which is far less than it could cost for the series as an ongoing entity. (The new Bye Bye Baby will operate independently from Dream On Me.)

Raskus, on the other hand, acquired Harmon’s trademark for a mere $300,000, whereas the series once could have gone for $5 million to $10 million, he said.

New operators at Bye Bye Baby and Harmon have a chance to make something out of bankrupt businesses because of better balance sheets and less exposure to underperforming locations, according to Neil Saunders, retail analyst and managing director at GlobalData.

“People have picked up the remnants of Bed Bath & Beyond and they’ve managed to get some really good deals in terms of the intellectual property and the price they paid for the business,” he said.

What will be the new bye bye baby offer?

When Bye Bye Baby’s doors reopen, shoppers can expect smaller stores, national brands and a focus on experiences, community building and learning, said Dahiya, head of marketing at Dream On Me.

Dahiya said that about 80% of the staff — including merchandise, technical and marketing teams — previously worked at Bye Bye Baby, and the company has named Bed Bath veteran Glen Carey to head its stores. Carey spent nearly two decades with BB&B, overseeing stores under the namesake banner of Bye Bye Baby and Bed Bath, according to her LinkedIn profile.

Revamped Bye Bye Baby Registry is envisioning events and product demonstrations that will allow new parents to meet each other, learn from each other, and test out big-ticket items like travel strollers before making a purchase .

The brick-and-mortar footprint is important to the company’s overall strategy because it will give it a competitive edge that will differentiate it from mass retailers. Target And walmartThis would be difficult to do if the business was only online. Big-box stores have leaned heavily into the baby category, but they lack the expertise and focus that comes with a specialty store.

,[Mass retailers] Have one or two aisles for the child. We have a children’s store. That’s the difference, isn’t it?” Dahiya said. “We’re very focused on the category we’re in.”

When it comes to children’s goods, especially higher priced items that are more technical, consumers require more “hand-holding” that is better suited to the in-store experience than online, said Melissa Gonzalez, principal at architecture and design firm MG2. Founder of Lionesque Group.

“It requires a lot of education that really can’t be accomplished online in a way that doesn’t feel overwhelming and intimidating,” Gonzalez told CNBC. “On average, when someone spends more than $200, it’s a different price point of consideration where they need multiple touch points before making a decision and, on average, it’s not as comfortable to do that online only.” ”

Diaper bags on display at a Bye Bye Baby location in Brooklyn, New York in January 2023.

Gabrielle Fonrouge

Dream On Me has been in the baby business since the 1990s. While its manufacturing capabilities and expertise make it well suited to the competition, busy families need convenience and are already comfortable doing their baby shopping at Walmart and Target. To survive this time around, Bye Bye Baby will need to focus on offering a unique value proposition, said GlobalData’s Saunders.

Saunders said, “Bye Bye Baby isn’t the only one that’s failed. Before that, Babies R Us and Toys R Us, which had baby-related things, failed. It’s a difficult model to obtain.”

“It really needs to focus on expertise and that means having products that other retailers don’t have, services that other retailers don’t have and really strong advice and expertise in the baby category To be famous for and at the same time be really cool places.”

What’s next for Harmon?

Raskus, who bought the intellectual property for Harmon’s, was a longtime customer of the chain when he heard that 50 of its stores were closing.

Immediately, his curiosity was piqued, and he began contacting a board member to find out if anything was wrong with the business.

“There was nothing there. There was no red flag,” Raskus, 37, said during an interview with CNBC. “The exact line was, ‘There are a lot of fires to put out here every day, this was something we needed to move forward.'”

Investor Jonah Raskus bought the intellectual property rights to discount chain Harmon.

Courtesy: Masonre Studio

When Bed Bath declared bankruptcy a few months later and investors began noticing banners bearing its name and Bye Bye Baby, Raskus began asking about Harmon, who was lost in the noise.

They learned that the company projected sales of about $150 million in 2022, had been profitable every year for the past two decades, and that seven out of every 10 customers who walked into the store bought something.

“I went and discussed it with my lawyers and we said, ‘Okay, what’s the lowest bid we can get rejected?'” Raskus recalled. “And that’s what we did.”

With a bid of $300,000, they secured the rights to Harmon’s trademark and plan to reopen five of its best-performing locations in New York and New Jersey by the end of the year. There could be more, Raskus said.

David Abrams, founder and CEO of brokerage and advisory firm Masonray, is advising Raskus and is scouting locations for the stores, one of which could open in Manhattan.

“There’s probably never been a better time to be a renter,” Abrams said. He said he is looking for a storefront with better rents and visibility.

An aisle view of a Harmon store in Brooklyn, New York in January 2023.

Gabrielle Fonrouge

Basically, Harmon’s is a drugstore chain that sells a lot of similar products. cvs And Walgreens But it earned a cult-like following with its wide assortment, travel-size products, low prices, and its beloved private label Face Values.

Standing outside the now-shuttered Harmon’s location in New Rochelle, New York, where Raskus and his family used to shop about an hour north of Manhattan, he pressed his face against the glass and remembered how good times were. How was the store during

Raskus said, “What stood out was the wide aisles, great lighting, the staff were very friendly.” “In today’s age, where at times your personal shopping experience can be nice, painful or hellish, this was refreshing. I knew I’d find what I needed… and I’d be out quick.”

This location, located at the end of the North Ridge Shopping Center with an Italian restaurant and a smoothie shop, was one of Harmon’s better-performing stores and one Raskus is considering reopening.

Jennifer Kiggins, a trainer at Rumble Boxing Studio a short distance away, can’t wait.

“I thought their prices were really great and they had everything you could need, from toilet paper and paper towels to sunscreen to makeup, whatever random thing,” said Kiggins, 28, who runs her Grew up shopping in Harmon with mom. “I feel like it always was.”

Luckily, Raskus plans to keep everything the same, apart from a few customizations and tweaks.

“I’m not just buying a retailer, I’m buying something that was a community-owned favorite store that they went to their whole lifetime and all these different life-cycle journeys. … So I think it’s very exciting,” Raskus said.

“Everyone loves a comeback story and everyone loves to come back to something they thought was gone and is now back again.”

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