Bed, Bath and Beyond might be phasing out its famous coupons

Bed, Bath and Beyond may be ditching its coupons, after realizing that the ubiquity of 20% off deals is backfiring for the company.

The retailer is now testing a beta version of its new "Beyond+" loyalty program. The program offers perks including free shipping and 20% off every entire purchase, for a membership fee of $29 per year.

The 20% discount is a familiar one for Bed, Bath and Beyond customers, thanks to the company's propensity for distributing 20% off coupons. The retailer's famous coupons have become a problem for the company - but a new loyalty program could end them entirely.

"If the test of the program is successful, it could usher in a time when BBBY stops or limits the distribution of its free coupons," UBS analyst Michael Lasser wrote in a research note released in late September. "But, that could have severe consequences."

Continuing the aggressive coupon strategy while expanding the Beyond+ loyalty program seems impossible. After all, why would customers pay $29 for something they could get for free?

Lasser notes that the new loyalty program demonstrates that Bed, Bath and Beyond "is experimenting in an effort to change its eroding fortunes."

While once coupons helped get customers in the door, Bed, Bath & Beyond's promotions have backfired for the retailer in recent quarters. Customers increasingly expect the 20% discount, and won't buy anything at Bed, Bath and Beyond unless they have a coupon.

The new Beyond+ program could provide Bed, Bath and Beyond a way to finally end a coupon strategy that is no longer helping the retailer, while still allowing customers accustomed to always taking 20% off their orders to continue to do so.

Bed, Bath and Beyond did not respond to Business Insider's request for comment on how Beyond+ could impact coupons. However, in September, the company hinted that it was looking to adjust its couponing strategy.

"The coupons critically - it's always been an important part of our value proposition, but at the same time we're committed as an organization to smarter, more intelligent marketing, personalized, targeted, being more meaningful and being more efficient," Bed, Bath and Beyond CEO Steven Temars said in a September call with analysts. "We need to be working and we are working on becoming a lot more intelligent about our marketing and making it much more personalized."

While the Beyond+ test is still small, it reveals a company that is increasingly trying to ditch coupons, at least in their current form. Basically, it is time for customers to stop assuming that they will always have a 20% off coupon handy - soon, the discount may cost you $29 every year.