Pier 1 Taking Business Back Online

Jul 01, 2010
George Anderson

By George Anderson

One of the first things that Alex Smith did when he took
over as CEO of Pier 1 Imports was shut down the company’s website. "It
was horrible," he
told attendees at the company’s annual shareholder meeting this week.

years into Mr. Smith’s tenure at Pier 1 and things are looking up. The retailer
posted a profit in the first quarter (its first  in six years) and same-store
sales were up 14.3 percent during the period.

"We not only survived the recession, we survived it stronger and fitter," said
Mr. Smith. "We are virtually debt-free with cash in the bank."

now, Pier 1 is ready to go back online. Mr. Smith said the company plans
to launch a site-to-store option in September. Consumers would go online to
choose an item and then pick it up at one of the company’s 1,050 stores in
the U.S. and Canada.

Taking this route, according to Mr. Smith, allows the
company to offer the convenience of online ordering without having to develop
the infrastructure needed to properly manage a consumer-direct operation.

Smith doesn’t believe that Pier 1’s online reentry will be a negative for the

"The pie is still there," he told Dow Jones Newswires. "We
had a very acute business situation that we had to fix. [E-commerce sales were]
de minimus, so we weren’t giving up a whole lot by getting rid of it."

Discussion Questions: What is your assessment of the general direction taken
by Pier 1 Imports? How successful do you expect it to be with its site-to-store
online model?

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9 Comments on "Pier 1 Taking Business Back Online"

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Dick Seesel
10 years 10 months ago

This makes obvious sense; it’s hard today to picture any national retailer trying to maximize sales without a “clicks and bricks” strategy. In fact, I was shopping recently for some barstools at my neighborhood Pier 1, and I was baffled that the items (out of stock in the store) weren’t available to buy online. Now I understand the rationale behind Mr. Smith’s decision to pull the plug a few years ago, but frankly his return to e-commerce is long overdue.

John Boccuzzi, Jr.
John Boccuzzi, Jr.
10 years 10 months ago
Site-to-store is a tough model since part of the convenience of online shopping is direct delivery. It will be interesting to see how they approach the online store. Some suggestions: 1) Create a “Pick It Up Yourself Savings” program. Depending on the amount someone purchases on the web site a discount would be applied to the order. 2) They could also leverage current online shoppers by offering a social network aspect to the site. Online shoppers would have the ability to share a coupon with friends. For example, if the “Pick It Up Yourself Savings” was $10 for your order, you could pass on a 10% coupon to friends through Facebook and other social sites. 3) Create two savings coupons for people when they pick up their order. The first would be a coupon for any additional purchases made at your pick up. The second would be a coupon for online orders made within the next 20 days. This helps increase the market basket at pickup and also helps create future visits to the site.… Read more »
Mark Burr
10 years 10 months ago

“It was horrible,” and he’s right. It was horrible. It’s a surprising statement from a CEO, but not a bad one. They don’t have far to go to improve from where it was. Any improvement at all would work.

Best of luck to them. Always like their stores. Good luck!

Roger Saunders
10 years 10 months ago

Alex Smith’s move of bringing Pier 1 back to the online space is well timed. Pier 1 had, at best, a weak position online. It needed to be shut down, and then “reinvented.” Now is the time.

No surprise to the best merchants…consumers conduct their product research online. Based on the Simultaneous Media Usage Survey (SIMM) of 23,000+ Adults “40% of Consumers research products online Regularly,” and “53% say that they do so Occasionally.”

In the last 90 days, those 13% of those consumers maintain that they specifically researched for Furniture online before buying and 15% researched Home Decor online before buying. Those types of figures are only going to grow over time, as Time, Travel, Costs, and familiarity/comfort with retailers’ sites grows.

Doug Fleener
10 years 10 months ago

I think it’s a smart move and will absolutely have a positive impact on their business IF they make the pick-up process quick and painless. I always thought the best thing Circuit City did was perfect the click and brick concept with the 24 minute guarantee. It’s vital that customers know they can get in and out quickly with their purchase.

Ed Rosenbaum
10 years 10 months ago

Alex Smith is doing a smart thing by initiating a clicks to bricks internet program at Pier 1. Yes, the website was poor with no way to order online. Now Pier 1 will have it. I think they are a prime candidate to experiment with the program because of the inventory they carry in each location, and only a small storage space to maintain much more than what is on the sales floor.

Pier 1 took on tremendous debt by building a huge glass edifice new office building just outside downtown Ft. Worth. This was a big part of their debt repayment problem. Once they were able to do some consolidating and sell the building, their future became less cloudy. With Mr. Smith at the helm and more consolidating by programs like this, I believe Pier 1 will see a surge in both growth and profitability.

Craig Sundstrom
10 years 10 months ago

I’m only willing to give partial credit: should you get praise for waiting three years to do something you should have done right away? Of course it’s possible it took that full amount of time to implement what seems to (admittedly naive) me like very basic changes, but that doesn’t sound too good either.

Cathy Hotka
10 years 10 months ago

This is a step in the right direction, but still frustrating. Customers wanting to purchase a wedding or birthday gift for an out-of-town friend or relative will still head to Crate & Barrel, which handles shipping.

Jonathan Marek
10 years 10 months ago

Smith was smart to fix the basics of the business first, then turn back to online. It’s also unfair to ding Pier 1 for not having done something like this online offering sooner. A couple years ago, it wasn’t clear Pier 1 would still be in business today. The stock closed at 11 cents on March 13, 2009. It’s at $6.50 as I write this less than 16 months later. Getting rid of an unprofitable distraction like their poor online business must have been critical to this impressive turnaround.

Going back online is the logical next step in the turnaround. In my opinion, it is another smart play: focus on supporting the installed base of the store network with a low-cost online infrastructure, rather than trying to launch a risky, high-cost, grand-scale ecommerce effort in a competitive space.


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