• Cecile Corral

Pier 1 Catalogs Drive Sales, Key Market Research

Fort Worth, Texas —As it plunges ahead with its turnaround strategy this new fiscal year, Pier 1 Imports has left practically no area of its business untouched by these winds of change. Updates to its merchandise assortments, a streamlined expense structure and improved target marketing are at the forefront.

At its fourth-quarter and fiscal 2006 year-end call earlier this month, the 1,200-store home furnishings specialty chain outlined plans to improve its standing in the increasingly competitive home furnishings retail marketplace.

Marvin Girouard, chairman and ceo, started out by noting that Pier 1's “new modern furniture collections are doing well and the updated color palettes have re-energized our home textiles business.”

Most notable in March, he pointed out, were better merchandise margins with a higher percentage of regular price sales.

“This is clearly a step in the right direction and we expect a return of customer traffic and sales momentum over the next few months, as we continue to implement our new marketing program featuring new television advertisements, spring and summer catalog mailings, magazine advertising, direct mail and internet marketing.”

During the week of March 13, Pier 1 circulated 10 million copies of its first spring catalog, “our largest distribution to date,” Girouard said. In early April the retailer mailed its late spring catalog, a 36-page book with several pages devoted to Mother's Day.

In late May, Pier 1 will mail its summer catalog to 12 million customers.

A total of nine direct mail catalogs are planned for this fiscal year; this represents Pier 1's entry into the direct-to-consumer business through catalogs.

“We do believe catalogs have become a major sales driver for Pier 1,” Girouard said. “They have a number of critical areas we see as complementary to our retail stores…initially as an advertising vehicle and longer term as a definite new business opportunity with future growth. Catalogs represent an effective marketing tool, to build brand awareness and increase store traffic, that Pier 1 has not used in the past.”

“We think the market potential for this business is well over $100 million in revenues over the next few years,” he added. “As we plan for the future we may need to further invest in this opportunity to allow this direct business to grow to its full potential.”

Aside from driving store traffic and bolstering sales, Pier 1 is using these catalogs to learn about customers, test merchandise collections and study market preferences.

New TV ads began airing in late March and will carry different promotional events throughout the year. The most recent TV ad began airing on April 10; it supports Pier 1's dining and tabletop event.

In addition, the store's new national magazine ad campaign will hit newsstands in June.

“We believe that over the next several months the new merchandise and marketing will start to improve customer traffic and gain sales momentum,” Girouard said.

Another key effort is a recent realignment of the design and buying staff. The merchandise departments have been altered so that the design team is now separated from the analytical buying group, which still consists of 13 buyers.

Pier 1 has also replaced “a couple” of buyers and it has shifted the responsibilities of most of the buying staff.

On the merchandise design side, the company is working farther ahead in hopes of providing customers with more proprietary designs and collections. The retailer has increased its speed-to-market process, strengthening relationships with key factories globally “in order to improve buying power and merchandise quality,” Girouard explained.

Also aiding in the improved flow of goods to stores is the recent opening of a new Seattle-area distribution center, which serves Pier 1 stores in the Pacific Northwest region of the United States and western Canada. The logistics team now uses the port of Tacoma — as opposed to heavily congested Southern California ports — to receive merchandise. As a result, store delivery time for this region is expected to shrink to no more than two days from what used to reach as many as seven days on average.

In news related to real estate, Pier 1 has stepped up the number of units it plans to close this fiscal year to 35, from 20 as originally planned. In turn, it will open 40 new Pier 1 stores — but no new Pier 1 Kids units — in fiscal 2007.

In fiscal 2006, the company shut down 38 stores, also up from the originally planned 27. And it doubled the number of Pier 1 Outlet stores as of the end of the fiscal year. It currently operates 34 Outlet stores, positioned to transition merchandise and maintain clean visual presentations in the mainline stores.

On Pier 1 Kids, the company has been “working hard” to leverage this business segment. Recently the decision was made to move its distribution center operations to the Pier 1 Savannah, Ga. facility – a shift expected to significantly improve margins for Pier 1 Kids.

In addition, by this summer, the company will relocate Pier 1 Kids' home office operations into the Pier 1 corporate offices and integrate IT functions to allow for more synergies. The aim here: improve Kids' profitability.

Finally, Pier 1 has plans of testing a new catalog for Pier 1 Kids this year and may close “a few locations” as well as try new store formats that include operating a Pier 1 Kids inside a Pier 1 store.

Cecile CorralCecile Corral | Senior Product Editor, Home & Textiles Today

Cecile B. Corral has been a product editor with Home Textiles Today since late 2000. She covers the area and accent rug, kitchen textiles, table linens, beach towels, decorative bath and decorative pillow categories, as well as some retail subjects.

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