Pier 1 Sees Omni-Channel Success In Third Quarter 2014

By Anna Rose Welch, Editorial & Community Director, Advancing RNA

E-commerce traffic increases during the quarter and company refocuses on marketing to draw customers into stores, as well as online

As people become more invested in home improvement and refurnishing initiatives, Pier 1 has been drawing customers into stores and online to spruce up their homes. Pier 1 reported a sales increase of 9.6 percent to $465.5 million in its 2013 third quarter, up from $424.5 million. Comparable store sales also grew 6.9 percent during the quarter. CEO Alex Smith cites various factors that contributed to the company’s quarterly success, including record sales from Black Friday and the post-Thanksgiving holiday weekend. He also references success with the company’s omni-channel strategy, 1 Pier 1. He says, “Pier1.com continues to outperform our expectations, representing over 4 percent of total sales in the third quarter and reflecting increases in both traffic and conversion.”

This is good news for the retailer, considering it has been hard at work making improvements to the company’s omni-channel strategy. One such improvement took place in Q2’14, when the company spent $28 million on capital expenditures, a bulk of which ($15.4 million) was spent on a new POS system, which was implemented in all stores, and on e-commerce initiatives. The company aims to spend $75 million this year on capital expenditures, half of which, Smith says, will be spent on technology and infrastructure improvements alone.

This summer, the company celebrated the first anniversary of the launch of its e-commerce site, which occurred in July 2012. Since then, the company has continued to see increases in traffic to its online site and, judging from the 4 percent increase in e-commerce sales this quarter, has begun to benefit from these significant investments. Following its second quarter, the company had seen many new customers from its e-commerce endeavors. Over the past year, the company has worked to improve its site and streamline the checkout process, enabling customers to use coupons and get discounts on the items they purchase online. The company also invested in a new email platform that would someday allow the company to send more personalized emails to customers in the company’s growing database.

However, while e-commerce is increasingly important these days, the company acknowledged it might’ve been too focused on its online initiatives, after a weak second quarter resulted in a dip in stocks. As Smith told a CNBC reporter, “We got really overexcited with where we were going with our online business and we were very focused with building out that business.” Apparently, the company had cut some of its advertising costs in favor of drawing customers online rather than into stores. In particular, Smith cited July marketing as the leading culprit because it failed to provide “appropriate messaging around clearance and promotional activity” and ultimately encouraged a fall in store visits. To help the store improve on its marketing strategy, the company hired a new EVP of marketing, Eric Hunter. Leading up to this holiday season, the company began airing commercials on network TV and launched holiday ads in November, with plans that “increased TV weighting” would lead customers to stores.

Read how workforce management helped sales at Pier 1 Imports

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