Pier 1 Earmarks Half its $75M CapEx Spend for Tech Investments

Technology and infrastructure investments will account for 50% of Pier 1 Imports' $70-$75 million in planned capital expenditures this year, but the retailer will have a lot of IT-enabled activity to show for its money. Two of the biggest elements are the July 28 launch of Pier 1's new e-commerce site and the planned rollout of its new POS system beginning this fall.

"We are working diligently towards the implementation of our new point-of-sale system which we expect to pilot in a handful of stores this fall," said Pier 1 CEO Alexander Smith during a recent conference call. "Our game plan is to begin integrating the new POS system with e-commerce by summer 2013, strengthening our foundation as we build out our multi-channel capabilities." Pier 1's POS technology vendors are Epicor and NCR.

The spending on technology has already begun. For Q1 of fiscal 2013, which ended May 26, 2012, Pier 1 allotted $5.1 million of its $12.2 million in CapEx expenditures to IT and infrastructure. Part of the remaining $7.1 million went to creating a dedicated e-commerce fulfillment space in its Mansfield, TX distribution center.

The July 28 soft launch of Pier 1's e-commerce site represents the retailer's next step back into online sales, an arena it left in 2007 before beginning a gradual return in 2010. Last year the company introduced Pier 1 To-Go, a shop online/pick up and pay in store offering that now accounts for approximately 1% of the retailer's comp store sales increases.

For this year, Smith added that "we have fully redesigned the look, feel and functionality of our site, which will be unveiled in conjunction with the launch of Pier 1 To-You," an offering that enables complete online transactions and multiple shipping options for customers.

Pier 1 plans to maintain price parity between its brick-and-mortar and online channels. "We're talking about building a broad franchise here, which is based on our customers being able to shop where they want and when they want," said Smith. "It's very important that the experience that they have is as similar as we can make it whether they're shopping in store or online."

The retailer also announced that it had successfully transferred operation of its reward card business to Alliance Data Systems (ADS) in March, followed by the May reissue of more than one million new cards to existing customers. "The share of business on our rewards card has already grown and sales on the card are up considerably since the transition, with response rates trading ahead of our initial expectations," said Smith. "On average, reward card customers spend 2x to 3x more than non-reward card customers. We believe the opportunity to generate increased traffic and average ticket through the ADS partnership is significant and anticipate it will be one of our key sales drivers going forward."

For related content: Pier 1 Upsells to 50% of Buy Online/Pick Up in Store Shoppers

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