DALLAS - Empty shelves, dated merchandise and sparsely populated stores.

This is the scene in Bed Bath & Beyond locations across the United States as the once-mighty home goods chain heads towards bankruptcy in what could be the largest US retail collapse since Toys “R” Us.

The retailer has warned it does not have the funds to pay its lenders, and stalled efforts to find a bidder could put the retailer on a path towards liquidation, Bloomberg News reported on Friday.

It is a far cry from Bed Bath & Beyond’s category-killer heyday, when the retailer’s ubiquitous discount coupons and cavernous stores made it a staple of back-to-school shopping lists and wedding registries across America.

Employees and customers worried about the chain’s future after the company said it would shutter another 87 stores in addition to the 150 closures it announced last August.

With a bankruptcy filing growing increasingly imminent, competing retailers like Target and Walmart are poised to score a fresh crop of customers if the company is forced to shut its doors entirely.

Target has benefited from the “continued rationalisation of the retail landscape from department stores to speciality players such as Toys ‘R’ Us”, Mr Rupesh Parikh, an analyst at Oppenheimer & Co, said in a note to clients last week. “We believe the company could continue to capitalise on ongoing challenges at retail, including at department stores.”

In the case of a full liquidation of Bed Bath & Beyond, Target could grab as much as 20 per cent of the company’s business, adding US$1.11 billion (S$1.46 billion) in sales, Mr Parikh said.

Only a handful of late-morning shoppers trickled into the store near Dallas on Friday morning. Among them were Mr Peter Grimshaw and his wife Katherine, a couple in their 70s, who were stocking up on towels and other bath products after recently moving to a new home.

Mrs Grimshaw, a Bed Bath & Beyond customer for “years and years and years”, criticised what she saw as a less abundant selection of merchandise since the Covid-19 pandemic. But she said she kept coming back as she found it easier to shop there than at larger stores.

“Since the move, we have probably come here five or six times,” said Mr Grimshaw of Bed Bath & Beyond. “If they shut it down, we would have to go to three other stores just to get what we can find here.” BLOOMBERG