Pier 1 sets sights on younger consumers
May 6, 2002-- Home Textiles Today,
Although bed and bath accounts for 17 percent of total company revenues, Pier 1 is developing a younger customer following through its marketing programs.
"We know our customers," said Cary Turner, senior vp, cfo of the Ft. Worth, TX-based home furnishings specialty retailer. The company breaks out its merchandising approach in terms of trend, style and basic, Turner said at the Lehman Bros. Retail Seminar here last week. "In trend, we introduce new ideas: in style which is 60 percent of the mix, these are winners from trend. And basic is our opening-price-point merchandise, everyday in-stock items."
While the core customer for Pier 1 is age 18 to 49, "we see an increase in the younger segment," Turner said. One of the ways the company attracts these customers is through an ever-changing product mix. "We change assortments 66 percent each year."
In terms of merchandise, Turner said "we do business at regular price on two-thirds and on-sale on one-third."
Technology is affording Pier 1 significant opportunities, Turner said.
"With our database we find five million customers create 29 percent of sales, at three times the average dollar sale. Our platinum and gold card customers buy three to five times average."
Another unique element is that 15 percent of proprietary card payments are made in the store, which then result in more traffic and sales building.
Pier 1 also sees significant increases in the bridal/gift registry program, which now accounts for 1.6 percent of sales. "And it could grow to 3 percent," Turner said. The interior designer program, which gives accredited designers a 20 percent discount, could grow to 3 percent to 4 percent from its current base of 1.6 percent, Turner added.
And Pier1.com, with 2000 skus, "is a great clearance center; it eliminates the need for opening more clearance stores," Turner said.
The company is heavily promotional, with 40 percent of its efforts on TV with Kirstie Alley as the spokeswoman in a new series of offbeat commercials as well as 14 drops of inserts, each with a circulation of 20 million.
The company also is putting muscle behind its 2001 Cargo stores acquisition, which is now named Cargo Kids. The 18-store chain has a merchandise mix of 75 percent dedicated to kids age 4 to 12 and 25 percent for places in the home that kids would most likely spend their time — family rooms, home office and studies, Turner said.
"We know our customers —they have 2.2 kids and we know what they need." Turner said the company sees a 300-plus store count potential. Eight to 10 new Cargo stores will open this year.
Overall, the company sees growth with other retail formats and alliances with a goal of top line growth of 13 percent to 15 percent, Turner stated.
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