Pier 1 Goes Back to Basics
Cecile Corral -- Furniture Today, June 25, 2007
Unlike many retailers stretching their brands to tap more markets, Pier 1 Imports is going back to its roots, tapering back its brands to focus on its "core business," declared Alex Smith, president and ceo, during the company's first-quarter earnings call last week (see financial coverage in this issue, page 19).
This means Pier 1 Imports — at least for the time being — will be just that. Gone will be the 24 clearance stores by July 31, the 33 Pier 1 Kids locations by Oct. 31, and the e-commerce and catalog businesses by Aug. 31.
The new and temporary business perspective is part of the 1,184-unit retailer's recovery plan.
"Clearing the decks and focusing on our 1,000-plus stores just seemed to make sense. We're not saying this is forever, it is just where we need to be today," Smith explained. "First of all, our catalog and ecommerce are very small, very small businesses in relation to our total business, and we didn't see them growing in the short term to where they would be more significant. Also, we have an incredible geographic network of stores. Don't quote me, but something like 80% of our target customers live within 10 or 15 minutes of a Pier 1 store, so we have incredible coverage, and we're focusing on turning around our Pier 1 stores."
As the company frees up resources from the additional business segments, its emphasis is on improving Pier 1 Imports units with new merchandise and more skus that Smith described as "unique to Pier 1 that sets us apart in the marketplace."
Pier 1 will increase its sku-count of merchandise, with more than 2,000 new skus in stores between now and the end of January 2008.
Already this month, 350 new skus have been added to the floors.
Smith would not specify how the new goods would differ form prior offerings, only to say these items would feature "more handiwork, decoration, and will nod in the direction of the country in which it was made."
In terms of price points, Pier 1 is "still trying to find our sweet spot," Smith said.
Also still under evaluation is what the final sku-count per unit will be, he added.
Supporting this merchandise effort is a bolstered buying team, which has recently grown to 18 from 12 buyers — positions filled through in-house promotions and new hires, he said.
"We're thinking differently about how we buy our merchandise," he continued, adding that Pier 1's buying team is now armed with "a clear understanding of our customer and our place in the world."
He added that since the new team and buying strategy were recently introduced, Pier 1 has "more samples in our sample room than ever before. It's just a pity that you can't see them."
Marketing is another area being streamlined. Upon finding that its television and catalog advertising did not provide "good returns on investment," Smith said, they are being axed for now. Also gone are coupons and other discount activities, as a measure to preserve margins.
Instead, monthly mailers will be more prolific while the website, www.Pier1.com, will be used to promote the retailer and its new wares available in stores only.
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