Williams-Sonoma Drives Supply Chain Efficiency with Customer-Centric Initiative

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Williams-Sonoma Drives Supply Chain Efficiency with Customer-Centric Initiative

By Nicole Gillo - 12/12/2016
In the third quarter, Williams-Sonoma delivered a mild revenue growth of 1.1%. While the current environment is less certain, the retailer remains focused on what it can control, and it’s confident that the ongoing progress on its strategic initiative will improve service for customers and drive long term, sustainable, profitable growth.
 
“We continue to make great progress on our customer-centric initiative which include supply chain and inventory improvement, innovative products at the best value, marketing strategies to increase new customer acquisition and enhancements of the retail experience,” said Laura Alber, president and CEO,  Williams-Sonoma on a recent earnings call with analysts. “The improvements resulting from these initiatives are the reason that even with sales not as strong as we'd like, we delivered Q3 earnings at the higher end of our guidance. And we delivered this earnings performance without cutting investments in our future growth strategies and most importantly these initiatives improved service to our customers.”
 
In the supply chain, Williams-Sonoma has made significant progress in the home delivery experience during the third quarter. This was driven by better positioning of inventory, which resulted in fewer out of market shipments and improved order completeness. Additionally, the retailer is working hard in the upholstery manufacturing operations to ensure multi-unit orders ship together.
 
“These types of improvements are particularly important as they simultaneously provide a better customer experience while also reducing freight costs,” continued Alber. “Our new southeastern distribution center in Georgia is now approximately 75% full and is shipping approximately 60% of our southeastern volume. Average delivery time to customers in this region has improved three to five days. As inventory levels continue to ramp up in this facility and the fulfillment percentage grows, we should realize further improvements in delivery time and service, as well as reduced out of market shipments and freight costs.”
 
The retailer is also taking a very aggressive approach to its retail and real estate strategies to improve the experience in stores. Currently underway is an extensive analysis of stores: reviewing locations and looking at ways to optimize the fleet. As a result of the analysis Williams-Sonoma has identified stores that may close upon natural lease expiration; however, it is also investing in store remodels and seeing positive results.
 
In marketing, the retailer continues to shift its investments from catalog to digital in an effort to acquire new customers cost efficiently. It will continue to capitalize on that heritage as it enhances its system with more information about the customer, allowing it to deliver even more relevant messaging in e-mail, websites, mobile, social platforms and through direct mail. Expansion of the retailer’s digital identity capabilities has allowed it to better understand a customers' behavior across not only devices and channels, but also across brands.
 
Following a cross-brand marketing initiative in Q3, the retailer introduced The Key: its first cross brand loyalty program. The Key is designed to showcase the various brands and reward customers for shopping across the portfolio. Over the next 24 months Williams-Sonoma will continue to expand The Key with elevated technology, services and experiences, including integration with Weston hotels. In addition to providing value and fun to customers, The Key will improve the retailer’s ability to deliver a more relevant experience across all brands.
 
“In addition to the progress we have made on our corporate-wide strategic initiatives, we believe we're well poised for this holiday season,” noted Alber. “We've been working on our personalization capabilities, insight visibility and have made many improvements to our customer experience. All the supply chain progress we have made this year have prepared us to efficiently fulfill peak volumes in whatever channel our customers want to shop. We have great talent and a focus on outstanding customer service in our stores and we have early positive reads on our holiday products across our brands.”