Q1 2019 Highlights
Williams-Sonoma, Inc. saw net revenue growth of 3.2% to $1.241 billion and comparable brand revenue growth of 3.5%, including double-digit comparable growth for West Elm.
Williams-Sonoma, Inc.'s ongoing tech improvements are bolstering the customer experience and growing engagement, which should continue to be a boon for the retailer as its digital transformation plays out.
Both sales and earnings came in above expectations, margins improved and full year guidance was raised in the Pottery Barn and West Elm parent’s Q1 2019.
“Customer acquisition and engagement continued to grow as we delivered more compelling and differentiated experiences to our customers,” said president and CEO Laura Alber. “We also reached a significant milestone for our company as we were named, for the first time, to the Fortune 500 largest companies in the U.S. This accomplishment speaks to the hard work and dedication of all our associates, the ongoing support of our loyal customers and the power of our highly differentiated platform in driving long-term, profitable growth.”
The company expects 30 store closures for a total store count of 595 by the end of its fiscal year, but Alber noted retail is a very important part of its multi-channel model.
“Our stores, our experience centers for our customers, they drive brand awareness and customer acquisition,” she said. “And we’re going to continue to enhance our retail experience in existing stores and selectively invest in new stores for West Elm, which have been outperforming.
“And that said, we’re also going to be closing underproductive stores and stores that we don’t need in underperforming markets. We have 250 stores, that are coming up for lease renewal in the next three years and that is a lot to look at.”
For now, Williams-Sonoma is continuing to work on cross-brand initiatives which continue to build as an important source of revenue growth and customer acquisition. Cross-brand customer spend is on average four times more than single brand customers, but they currently account for only 30% of Williams-Sonoma’s total customer base.
“This gives us runway to drive incremental revenues, as we continue to unlock the power of our unique multi-brand, multi-channel platform,” said Alber.
Alber also said a key highlight of Williams-Sonoma’s Q1 2019 was its ongoing improvements in customer experience. Here is a look at six ways it's utilizing retail tech to achieve these improvements.
we completed the launch of our machine learning search engine across all brands. Powered by algorithms, this new engine allows us to provide customers with more relevant and personalized search results, which will progressively improve with more data over time.
So far this new capability has already driven notable lift in search conversion.
In 2017, the company acquired Outward, Inc., a 3-D imaging and augmented reality platform for the home furnishings and décor industry. Now Williams-Sonoma said its Design Crew Room Planner continues to gain traction. Total rooms created increased more than 40% over its first quarter to 60,000, as its doubled its product coverage across the Pottery Barn, West Elm and Williams-Sonoma Home brands and enhanced the user experience.
“We are seeing significant improvement in engagement as we continuously tune and tweak the experience to remove friction and helping the customers to design their rooms and actually entire home you can do it today,” noted CTO Yasir Anwar. He went on to note, “I think, there is an improvement in conversion.”
The Design Crew Room Planner will launch in the retailer’s Pottery Barn children’s businesses in its second and third quarters.
“We believe 3D visualization will completely redefine how our customers shop for the home and we’re excited to be at the forefront of this industry shift with these 3D-Powered tools that are transforming the shopping experience for our customers,” said Alber.
In its Q1, Williams-Sonoma improved its mobile site speed within search, PIP and homepage through enhancements to its new web app platform. It also expanded its integration of customer-generated content from Instagram to its mobile product information pages with the aim of driving more inspiration and product discovery.
Williams-Sonoma launched its in-house technology Test Lab in the quarter.
While Alber didn’t go into details on Test Lab in the company’s earnings call, she noted it is a “game changer” for the company’s innovation agenda.
“It will enable us to experiment with new ideas and emerging technologies at scale and quickly determine our go-forward strategy,” she said. “Technology innovation is the key accelerator of our growth, and we believe that this is a foundational capability that will significantly transform our digital experience.”
Since the launch of The Key Rewards two years ago, Williams-Sonoma free-to-join loyalty program that offers benefits across all the retailer’s brands, total membership has grown to 5.5 million. Key members currently spend on average three times more than nonmembers, with two times higher purchase frequency and three times more likelihood to shop across multiple brands, according to Alber.
“They also drive a significant lift in sales, as key members typically spend over five times the value of their rewards,” she noted.
To this end, Williams-Sonoma is working to introduce new cross-brand marketing initiatives, broad-reaching gamification, easier reward redemptions and enhanced mobile and desktop capabilities. It also plans to leverage the program to raise brand awareness and drive more personalized content to its customers.
Order Management and Distribution
This quarter, we Williams-Sonoma successfully completed the migration of its order management and fulfillment capabilities to a new platform for all brands in Q1. The tech will enable faster and more efficient order processing and tracking to improve the customer experience. The retailer also fully redesigned its order tracking capability to give customers and internal teams a more accurate and granular view of orders. The company is seeing a 30% reduction in order tracking-related calls at its customer care center from the increased visibility.
To further elevate its customer experience the retailer expects to open its West Elm West Coast DC in the second quarter. This new DC is expected to help improve delivery times and reduce operating costs in the Western region.