Pier 1 plots aggressive growth strategy
Home & Textiles Today Staff -- Home Textiles Today, September 9, 2002
Pier 1 Imports sees a base of at least 1,500 stores from its current 900-plus units that currently deliver $1.6 billion in sales driven by an average 15 percent annual growth rate in earnings over the next several years, the company told an audience at the Goldman Sachs Retailing Conference here.
Charles Turner, executive vp and cfo, pointed to Pier 1's unique market position and merchandising style as key drivers to that growth. During his Friday presentation, he positioned the company as a value player on a par with Bed Bath & Beyond, above Target and Cost Plus and below Williams-Sonoma and Pottery Barn.
The company last week reported August comp-store sales at 8.6 percent and second-quarter sales comps at 5.8 percent.
Pier 1 employs a three-tiered merchandising strategy: trend, style and basics, Turner explained.
"One of the things we believe the consumer is looking for is something that's new and different," he said. "That's one of the reasons we're always introducing something new into the stores. If, last year, it was a deep red, this year it's maybe a little more purple. The earlier we bring product in the better off we are."
The company began selling some Halloween goods in July, he noted. Moreover, Pier 1 stores begin transitioning into spring merchandise in late January as clearance events end.
"As we speak the stores are setting up some Christmas items," Turner said. "And as they yell and scream that we're setting Christmas up too early, they're also buying them off the shelves. And we get a very early read on what skus are selling out quickly so we can reorder some still for December."
The mix, which has been set for about the last four or five years, involves a 40 percent sales base of furniture. "We're a furniture store, but we're not a furniture store," Turner quipped. "That allows us to make money every month of the year. Our furniture carries our business for the first six months of the year."
Pier 1's fiscal year begins in March, he noted.
That later start transitions to an accessory and gift-related items business.
In the three-tier product scheme, trend items later become style items and, then at the basics end, are price-sensitive staples.
In marketing, the company makes sure it "talks" to its customers every month with its proprietary credit card, on which its five million cardholders charge 28.6 percent of total sales — averaging 15 percent more on a per-transaction basis than other credit cards or cash, Turner said.
Additionally, the company communicates with existing and new customers with a mix of television, direct mail and newspaper FSIs, all carefully timed to play off each other.
Another developing area is the chain's bridal gift registry, which is delivering strong incremental sales.
"We know we're not the top tier," he acknowledged. "But we're getting 1,000 to 1,500 new registrants per week — that's 2 per store, amounting to 1.5 percent of sales, which we believe can grow to 3.0 percent."
Additionally, Turner said the Back-to-School category was another still-developing segment, identifying it as a "second Christmas."
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