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Alasdair James, who became the new CEO at Pier 1 Imports on May 1, believes that the company can and should be doing better in the area of brand traffic. He thinks that a new holistic omnichannel approach can spark new customer engagement.
“Brand traffic has been trending in the mid to high single-digits, which is certainly acceptable when compared to the overall retail landscape, but we can and we should do better,” James said during the company’s recent first-quarter earnings call. “Looking ahead, we will be developing a more holistic omnichannel marketing plan that contemplates specific customer segments, demographics, and strategies that we anticipate will engage new customers and therefore enable us to reinvigorate sales.”
During his first 45 days at the company, James focused on acquiring an in-depth understanding of Pier 1 Imports' strengths, identifying issues and opportunities, and laying the groundwork for evolving its strategy.
“We have a highly collaborative organization that is appropriately facing the challenges of today’s retail environment and the increasingly competitive home furnishing sector,” he said. “Our senior team has worked together for many years and everyone is aligned to our common goals. Many of them have seen the company through various stages of growth and transformation over the last few years.”
James talked about five critical areas of focus: Brand positioning; marketing and promotions; e-commerce; supply chain; and real estate.
“I’m proud to be leading a brand with such tremendous history and equity,” James said. “We have a large loyal customer base who loves our unique aesthetic and appreciates the Pier 1 Imports shopping experience. Unquestionably, we have a rich heritage as the original treasure hunt destination, but in today’s environment where there’s so much opportunity to be copied by others, it’s imperative that we continue to further differentiate ourselves while keeping our treasure hunt roots in sight.”
Pier 1 Imports has a “great deal of strength in key categories like décor and seasonal,” James noted, “but our current positioning is narrowly focused on our core demographic and doesn’t fully reflect the brand’s true value potential in my opinion. Going forward, we’ll be looking at opportunities to refine our positioning across new and existing merchandise classifications and improving upon our customer segmentation be it from a psychographic, behavioral, or demographic perspective.”
Brand visibility is improving.
“We’ve made good progress toward increasing our visibility and improving our promotional effectiveness through new initiatives,” James said. “These include a return to television, the introduction of new shipping thresholds, and reduced markdown levels, all of which have strengthened our competitive positioning.”
E-commerce has grown rapidly in the past five years and currently accounts for 25 percent of total sales.
“We will be exploring opportunities to leverage the solid foundation we have in place and to build on the steady momentum we’ve gained over the last five years,” James added. “In the coming months, we will be further exploring and testing enhancements that we believe will see us accelerate sales growth in this area. Key areas of focus include increasing our assortment breadth and using machine learning tools to better target our promotional investments to our customers.”
James said the company is about halfway through its store optimization plan, which includes approximately 100 store closings through the end of fiscal 2019.
“We’re on track to close 20 to 25 locations this fiscal year and next, which will put the portfolio at approximately 965 stores,” he said. “Going forward, there will be continued opportunities to exit some locations and to further reduce occupancy costs. But our analysis tells us the vast majority of the portfolio will continue to be profitable for the foreseeable future. It is one of the most positive things about my first few weeks in this role.”
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