Not many years ago, California appeared to be many people’s dream location. It was a good place to build a business. The many ports allowed easy access to the Pacific rim countries and Latin America, as well as excellent railroad connections, airports, and roads connecting it to the inland United States. Agriculture thrived in its long growing season. Likewise, many saw it as a wonderful place to live. Nearly ideal weather, a booming job market, room to grow, and the magnificent sights of the Pacific coast almost lifted it into a land of fantasy.
Many people achieved those dreams. In fact, according to the local Center Square California website, “Until 2020, California had gained population in every year since 1900.”
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Alas, as the old saying goes, “All good things must come to an end.” It looks like the Golden State may have reached that point. The problem is not that its abundant natural resources have disappeared. The dilemma is that the government has become so onerous that many companies and individuals see greener pastures elsewhere.
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On August 20, 2025, the one-time retail giant, Bed Bath and Beyond, announced that its rebuilding plans do not include California, a state where the chain reportedly operated over three hundred outlets before its 2023 Chapter Eleven bankruptcy.
A Chapter Eleven bankruptcy is very different from the more traditional Chapter Seven bankruptcy. When a company enters Chapter Seven, it is completely liquidated, and its assets are sold off to partially satisfy its creditors. Chapter Eleven affords a company some space to reorganize its operations and debts in the hope that the resulting enterprise will be able to discharge its obligations at a later date.
Online versus Brick-and-Mortar
Given its one-time size and public reputation, the name Bed Bath and Beyond has value in and of itself. A new management team, headed by the well-regarded Marcus Lemonis—who also runs the nationwide Camping World chain—has refashioned the brand into a largely online operation.
However, online retailing lacks certain advantages of more traditional “brick-and-mortar” stores. Looking for goods online is a kind of hunting expedition. The customers know what they want, and they search for it. If they find what they want at a price they are willing to pay, they hit the “buy now” button and the shipping company drags their prey home for them.
Shopping in a store is a very different process. It is far more human. Customers walk into the store, often in groups, scanning the shelves for items that appeal to them. If they find what they want, they take it to a counter where another human being rings up their purchases. Additionally, there is always the chance that the customers may see items they did not intend to purchase when they walked into the store. Such “impulse purchases” add significantly to the profits of any retailer.
No Going Back (to California)
The current issue facing Bed Bath and Beyond is discerning the optimal combination of online and brick-and-mortar retailing. Now that their online operations have shown some success, they have decided to open a few strategically located stores—plans call for about seventy-five in the near future. The first opened recently in Nashville under the name “Bed Bath & Beyond Home.”
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However, Mr. Lemonis made news recently by announcing that he will not be opening any locations in California, although customers in that state will still have access to the online store. He announced this in a press release dated August 20, 2025.
Mr. Lemonis’s language was terse. “This decision isn’t about politics,” he began, “it’s about reality. California has created one of the most overregulated, expensive, and risky environments for businesses in America.” Such a system has several disadvantages, including paying more taxes and making it more difficult to hire and keep employees. These factors, in turn, detract from the customer’s experience.
The press release concluded, “Businesses deserve the chance to succeed. Employees deserve jobs that last. And customers deserve fair prices. California’s system delivers the opposite. That’s why Bed Bath & Beyond will serve California customers directly through BedBathandBeyond.com, on our terms, and with their best interests at heart.”
The Governor’s Attitude
Governor Gavin Newsom’s reaction was unusual. Instead of either reassuring Mr. Lemonis or countering his arguments, Mr. Newsom opted for veiled ridicule.
“After their bankruptcy and closure of every store, like most Americans, we thought Bed, Bath & Beyond no longer existed. We wish them well in their efforts to become relevant again as they try to open a 2nd store.”
If this were a “one-off” situation in which a single struggling company picked a fight with the country’s largest state (by population), the event would be unworthy of much notice.
However, the governor’s “devil-may-care” attitude lit up many press outlets within a couple of hours after the exchange.
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This struggle involves more than one company. International financial website The Daily Overview recently listed eleven large companies that have substantially reduced their activities in California or left the state entirely. Some of them are nationally known names, including automakers Toyota and Tesla, software giant Oracle, computer maker Hewlett Packard, brokerage firm Charles Schwab and food conglomerate Nestle.
A Disastrous Policy
Other states roll out the red carpet to persuade such firms to relocate to their areas. Yet, California affects indifference, as though the presence of big business diminishes the semi-socialist environmental and workers’ paradise they want to create.
In a very real sense, the saga of Bed Bath and Beyond is a microcosm of the state of American retailing over the last three decades. It prospered when malls and shopping centers became the centers of American retailing. When the “one-two punch” of Internet marketing and COVID isolation hit such companies, they languished for a while, then all but threw in the towel. Now the healthier ones are trying to rebuild themselves using a more moderate model.
This pattern is in the nature of every business enterprise. Government does have a proper role in regulating business, as has been the case since the medieval ages. However, that reality must not blind society to the fact that government regulation cannot become so onerous that business is strangled, private property is confiscated and jobs are lost—sometimes permanently.
That is the point that Bed Bath and Beyond is trying to make in California. The Golden State’s political leaders would be wise to consider it carefully. Unfortunately, Governor Newsome’s responses to Mr. Lemonis’s legitimate concerns indicate that the governor is not seriously contemplating a change in strategy. The day will come when the state will become off limits for business.
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