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Flocking to dock at Pier 1.

In the not so retail-friendly '90s, retailers from the most obscure niche stores to the largest department store chains have seen limited opportunities coming their way.

Pier 1 Imports, the Fort Worth-based home furnishing specialty store chain, has taken advantage of virtually every opportunity -- and then some. After experiencing single digit gains during the early 1990s, Pier 1 will see sales grow between 12 percent and 14 percent annually for the next several years, reaching nearly $1.5 billion in the year 2000, Tactical foresees.

Pier 1's future looks as bright as the colors of many of the decorative home furnishings that grace the shelves. Sales are expected to top the $1 billion mark in 1997, up 13.4 percent over last year. Why are the company's candles, throw pillows, and glass jars selling like hotcakes in comparison to those of other retailers?

Pier 1 has updated its merchandise selection in order to cater to the interests of customers. Pier 1 customers are a young group, half of all sales in 1997 will go to customers who are below the age of 40, Tactical research indicates. At Bed Bath & Beyond, its specialty competitor, the under-40 crowd will represent approximately 34 percent of its sales.

In contrast, at traditional department stores, over one-third (37 percent) of all home furnishings sales will come from customers 50 or older. At Macy's, in particular, two-thirds of its home furnishings sales will be from the 50 plus crowd. Meanwhile, looking at the department store chain landscape, those aged 30 to 49 will represent more than half (53 percent) of J.C. Penney's home furnishings sales, while Americans between the ages of 50 and 64 will account for 42 percent of Sears' home furnishings sales in 1997. At discounters such as Wal-Mart and Kmart, home furnishings sales will be more evenly distributed among the various age groups than at other retailers.

'Golden' Opportunities

Over the past few years, Pier 1 has expanded at a breakneck pace. The company adds more than 50 new stores to its roster annually, phasing out about 20 less profitable ones. The company has closed approximately 150 low-traffic stores since 1985, replacing them with over 500 new stores.

In 1997, Pier 1 will have approximately 759 stores operating throughout the U.S., Mexico and the U.K. Pier 1 has become a hotspot in the Midwest (where the company has established many of its new stores) over the past few years and struck gold in California, where 12 percent of the company's stores are located.

The response to Pier 1's expansion as a franchise has been phenomenal, so much so that the company has set its sights on the magic number of 900 stores by the millennium's end. To avoid oversaturation of major metropolitan areas, Pier 1 is targeting small cities such as Boise, Idaho.

Bigger, Trendier's Better

Pier 1 has benefited in recent years from consumers' ambivalent attitude toward department stores. Many consumers have indicated that they simply want to be able to enter a store and find what they want quickly.

Pier 1's spacious, uncluttered stores (which average over 9,000 square feet) and focus on imported home furnishings and furniture make the stores desirable to customers in a hurry.

The average Pier 1 store will ring up $1.37 million in sales in 1997.

Pier 1 attempts to distinguish itself from more traditional home furnishing specialty stores in a number of ways. For starters, nearly all of the retailer's wares are imported, enabling the store to maintain an exotic aura.

Furthermore, much, if not most, of the store's merchandise is hand-crafted, an additional plus with many shoppers, especially when considering that over one-quarter (27 percent) of all U.S. households cite crafts as a hobby.

To stay ahead of the furniture and home furnishings competition in a country where 20 percent of all households participate in home furnishings and decorating, Pier 1 keeps its prices significantly lower than its specialty counterparts, nearly 30 percent lower.

Pier 1 is willing to go to great lengths to attract customers. Like many of its competitors in the home furnishings business, the company stresses presentation and customer service, but also employs a number of "going the extra mile" tactics.

For instance, all of the retailer's stores are connected to a computer that maintains a database of inventory numbers and locations; Pier 1 will ship decorative home furnishings to customers for a mere $6. The store also ships furniture items at regular UPS prices.

In order to keep customers coming back, Pier 1 rewards them for their patronage and loyalty. The company determines each store's 150 best customers through management reporting analyses and issues Platinum and Gold cards to all those customers.

Store Profile

Number of stores

759

Average store size

9,070 square feet

Average sales per store

$1.37 Million

Ike Lagnado is principal of Tactical Retail Solutions Inc., a multidisciplinary market research and consulting firm in New York City that publishes the Tactical Retail Monitor.
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Title Annotation:Pier 1 Imports Inc.
Author:Lagnado, Ike
Publication:HFN The Weekly Newspaper for the Home Furnishing Network
Date:May 12, 1997
Words:834
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