Pier 1 feeling pressure to adapt
June 21, 2004-- Home Textiles Today,
Fort Worth, Texas — Coming off a weak first quarter, Pier 1 Imports announced during its quarterly earnings call that it soon would be implementing some changes — mainly editing its merchandise mix, reducing price points and enhancing marketing efforts — to improve sales results in an increasingly competitive retail landscape.
These changes follow the unsettling results of a recent national survey of shoppers conducted by Pier 1.
"The early results were not what we expected," said Marvin Girouard, chairman and CEO. "Customers’ perceptions of Pier 1 may be different from what we originally believed."
It seems the survey showed that many customers compare Pier 1 merchandise and prices to low-cost, high-volume stores that carry home furnishings.
"In a number of cases Pier 1 can provide customers comparatively priced items. However, if customers perceive us as being too expensive on most goods, we know they will not shop our stores," Girouard said. "Based on the survey results and management discussions over the last few weeks and months, we are implementing changes in our merchandising and marketing strategies that should achieve positive results for the second half of this fiscal year."
The company expects in the coming weeks to reduce sku counts to 3,500 from 4,500 to eliminate clutter and better present the store’s broad assortment of home goods, said Girouard.
"We have a great mix but a lot of it can’t be seen by the customer," he explained. "Like some dining tables we had recently — the chairs sold well, but not the tables, and we think it’s because the customer couldn’t see them. We used the table to display other products. Also, our candle wall looks like a wall of wax."
Girouard said Pier 1 will trim the fat in product categories that overlap with major discounters, especially tabletop and seasonal goods as well as most shelf items, which he described as "pretty much everything other than furniture."
"The softness of recent holidays made us think," he said. "On items like outdoor candles and picnic items, we’re competing with the Targets of the world."
Another effort under way to make products more attractive to customers is Pier 1’s plan to soon reduce price points on a portion of its merchandise mix. Hand in hand with that move, it will also "enhance in-store signage and again reinforce the overall value proposition," Girouard said. "We have discovered through comparative shopping and our survey that we are perceived as higher priced than some of our competition."
Yet, at the same time, through improved efforts to upgrade quality and create new designs for some product categories, the store said it sees some isolated opportunities to raise price points "on select items."
"We’re looking at Wal-Mart and Target all the way to Crate & Barrel to see," he said.
Pier 1’s method of getting the word out to customers about these in-store changes is also getting a facelift. Starting in August, Pier 1 is changing its newspaper inserts to de-emphasize promotions and underscore the store’s offerings of "unique merchandise, including gifts, furniture and decorative accessories, and again on finding value at the stores," Girouard said.
In its Cargo Kids division, Pier 1 Imports is testing a name change, converting four units in the Washington D.C area to Pier 1 Kids. The company already has one Pier 1 Kids store "that has positive results" in Birmingham, Ala., he said.
Also new for this division will be the introduction of bed sheet programs and the launch of the bath product category — both for this fall.
Store openings for the company for this year include 120 new Pier 1 stores and 15 to 20 new Cargo Kids units. Store closings for the year are expected to reach 40 for Pier 1 and two to five for Cargo Kids.
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