Free-thinking, flexible Pier 1 on fast-track
Kids Today Staff -- Home Textiles Today, March 3, 2003
With a flexible footprint, a compatibility with its competitors, and an easier store-opening process than larger boxes, Pier 1 Imports sees a positive future ahead, with sustainable top-line growth of 13 percent to 15 percent over the next three to five years.
Part of its success is due to its constant flow of merchandise, as customers see new items in the stores every month, said Cary Turner, evp and cfo, at the Bear Stearns' Retail, Restaurants and Apparel conference held here last week. About 65 percent of merchandise is new every year. Sales per square foot now stand at $200, up from $150 five years ago, and with the goal of $250 within the next five years.
Pier 1's stores are also complementary to most of its competitors, he said, including Target, Wal-Mart, Bed Bath & Beyond, Linens 'n Things and Cost Plus.
Unlike its competitors, Pier 1 doesn't have a lot of the pre-opening costs and timing issues that bigger boxes have. "We can open a store within two weeks," he said. A new store achieves 85 percent of maturity within its first year, he said, due to several factors: it's a well-known brand; "pent-up demand" in the area; and high merchandise margins and low real estate costs.
The store base is also relatively new, thanks to an aggressive remodeling plan, and half of its stores are younger than five years.
It also has a flexible store format that can measure 8,000 square feet or 18,000 square feet, depending on the demographics of the area. Its Southampton store, for example, was 9,000 square feet for 10 years — too small, he said. It underwent renovation to become 18,000 square feet, and will do "well over" $5 million this year, he said. On the other hand, a location in Oshkosh, WI, didn't warrant a large location, and makes as much money as the Southampton store at 8,000 square feet.
Its private-label card program has been a strong performer, though it "will never be a profit center," said Turner. "We might make a penny or two."
But with five million customers on its file now — 27 percent of its card sales are on its Pier 1 card — the company can learn what people buying. The card averages $152, while the store average ticket is about $54.
The card came with another unexpected benefit: as traffic builder. The company introduced in-store credit card payment capabilities two years ago, but didn't expect the positive responses. Fifteen percent of its customers make payments in the store, he said, and then 75 percent of them turn around and make more purchases that day. "It truly is a loyalty card."
Meanwhile, on pier1.com, sales equal the volume of 10 of its stores, he said, and the site is a great clearance center as well.
"The key here is to be information rich," he said.
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