Pier 1 Completes Omnichannel Transformation, Will it be Enough?
Pier 1 Imports, Inc. has been evolving its business model over the past few years to be competitively positioned in the omnichannel retail landscape. The home goods retailer has been experiencing the ongoing movement of shoppers to purchase outside a store, noting direct-to-customer sales ordered outside the store were up 40% in the first quarter 2017, driven by both increased traffic and higher conversion rates on the company's website.
"We are keeping our foot on the gas to drive continued direct-to-customer sales growth through website usability product, compelling inventory and functionality," said Alexander Smith, President and CEO. "Our website evolution is ongoing. We released new code approximately every two weeks."
Pier 1's online-only SKUs are doing well and the company expects to grow its online-only assortment an additional 25% in fiscal 2017 with further increases planned in future years.
The home goods retailer also has another surprise up its sleeve for this year: an online gift registry. Expected to be unveiled later this year, the gift registry on pier1.com will provide the company with another way to drive long-term growth from its omnichannel platform.
Its new non-tender loyalty program was successfully piloted recently as well and will roll out nationwide in August: the Pearl tier in its three level loyalty program. Cobalt and Platinum are the existing tiers which tied specifically to the private label Pier 1 rewards card. The initial pilot was implemented in three states California, Hawaii and Alaska and Pier 1 just launched it in Texas, Pennsylvania, Florida, and Illinois.
Developing this non-tender capability is expected to enable Pier 1 to grow its database of known customers, a group which accounts for the 70% of sales last fiscal year. It also allows the company to recognize and acknowledge these known customers and enables Pier 1 to present personalized offers reflecting merchandise and design ideas that are highly relevant and appealing.
"Pier 1 rewards card customers have for the longest time been a powerful asset for our company," said Smith. "The new loyalty tier will allow us to add to this important customer constituency."
The omnichannel retailer also reports its e-mail strategies focused on frequency and retention generated a nearly 40% increase in demand versus a year ago and the ROI's on those e-mails are much higher year-over-year.
"We are also seeing good results in the digital channels which we use most often for new customer acquisition," said Alexander Smith, President and CEO. These include non-brand search, product listing ads, performance display and social media.
"With our customer data excellence initiative complete, we've now got a new more powerful database, improved segmentation capabilities, driving greater personalization, new campaign management tools and expanded loyalty program allowing us to better engage with customers, and just completed this week a customer relations tool that provides a more seamless path when assisting Pier 1 Import shoppers," said Smith.
"From a high level perspective our marketing strategies are enabling us to bring more customers into our new database, communicate them with more effectively and appeal to the more directly. Over time our ability to offer increasingly personalized incentives and discounts should enable us to reduce the number of broad across the board promotions."
With Pier 1's omnichannel transformation complete and its growing data analytic capabilities the company hopes it has evolved its business model to be competitively positioned in the new omnichannel retail age.
"Operationally we’re controlling costs, closely managing inventories and executing against our supply chain initiatives," said Smith. "Our most pressing mandate is to do everything we can to drive traffic and remain focused on building the purchasing funnel, [grow] under costs, and keep developing great products."