Introduction
Pier 1 is North America’s largest specialty retailer and original global importer of unique furnishings with annual sales of over $1.5 billion (Dishman, 2012). It is has stores in more than 1,000 locations, including the United States, the U.K, among other countries and territories. Pier 1 eliminated its e-commerce in 2007 and all its sales came from in-store (Dishman, 2012). The company’s total marketing investment accounts for 4-5% of sales, allocated across shared mail, direct mail, TV, newspaper, and online (Dishman, 2012). The company believes that increasing the amount on paid search advertising will result in an increase level of in-store sales. The company also plans to spend marketing dollars more efficiently in order to increase sales across all stores. This would help offset the impacts of economic downturn that affected the sales of furniture and high consolidation purchases.
Pier 1 believes that e-commerce would not do justice to its products because according to the company’s CEO, customers enjoy quality products and great products. The customers do not get the opportunity to experience the products and enjoy the services offered at a physical store. In order to ensure quality service, Pier 1 hires and trains its sales staff and provides a great ambiance with new fixtures and attractive arrangement of merchandise. According to Smith, they group furniture in a manner that invites customers to linger, while rugs hung out on swinging displays. Additionally, the store allows customers to touch and feel the products, something they cannot experience over the internet.
The company expects to derive 10 percent of its revenues through online sales (Dishman, 2012). This is because Pier 1 has not completely declined to enjoy the benefits of e-commerce. The firm plans to spend $100 million on technology to streamline point-of-sale system as well as refine its recently re-launched website (Dishman, 2012). This enables Pier 1 to serves its customers online shopping as well as in-store shopping. A similar amount will also go towards re-modeling of stores, relocations, and better merchandising fixtures over the next three years. These will help the firm increase its sales revenues and recover fully from the economic slowdown that slowed the company’s growth towards the end of 2007 (Dishman, 2012). Following the loss experienced by the firm in 2007, it changed the management in an effort to rejuvenate the company.
The new CEO made changes to the inventory process and the supply chain because the previous system was not efficient and individual buyers arranged with suppliers. This slowed the delivery process and it was always uncertain to receive merchandise. However, with the re-introduction of e-commerce, vendors were able to log in online, which made the process more visible and easy to truck. The growth was not sustained again due to an epic of housing crisis that affected sales negatively. However, Pier 1 managed to recover because most competitors closed their businesses. The company stated sourcing merchandise from emerging markets such at lower cost. Pier 1 received 58percent of its sales from India, but this may leave the company vulnerable due to fluctuation in dollar prices and other trade disruptions (Dishman, 2012).
In conclusion, Pier 1has realized the potential of e-commerce and it has started investing on e-commerce to supplement in-store sales. However, the company has not fully utilized the potential of e-commerce and has only introduced a mobile site that only features selected items. The company should invest more on online advertising as well e-commerce to maximize its sales as the business world adopts new technological advancements.
Work Cited:
Dishman, Lidia. “Why Pier 1 is choosing bricks over clicks--and winning.” Forbes. November 5, 2012. Web September 25, 2013.
