Pier 1 CEO: Homebodies Spending Bucks Enough To Lift Home Retailers
The poor housing market is supposed to hurt home furnishings retailers, but Pier 1 (PIR) CEO Alex Smith things he knows the reason why his company is flourishing: Consumers dressing up dwellings for leisure activities are compensating for those not paying to fill up new homes.
Consumers who are fixing up existing homes to make them more pleasant places to entertain friends and just relax are largely responsible for the unexpected success that home furnishings retailers, Pier 1 included, have enjoyed of late. That success that can be measured in their consistent estimate-beating earnings reports.
Pier 1 has a plan to keep its momentum going. In a turnaround, the retailer first concentrated on getting back customers who cut back purchasing at a chain that couldn't decide what merchandise and prices really belonged in its stores. It did that by improving the product selection it carried, returning to its position as a moderately priced retailer of good quality home furnishings and using Pier 1 credit card-based promotions to convince customers who had been among its most loyal that it could meet their standards again.
Those consumers, in turn, were supposed to influence others who may have drifted away from Pier 1 altogether. But the retailer certainly planned to help in that regard and put marketing dollars behind limited television and radio advertising to tout the message that it had good products at reasonable prices.
Now, Pier 1 is building on its test of local radio advertising by launching an national effort this month . It also has rolled out new television advertising and will place a greater emphasis on TV in the holidays.
Pier 1 is taking steps on line, too. A retailer that only recently made its entire product line available for purchase on its website, Pier 1 will invest in social media by taking a basic presence on Facebook and Twitter and building content with promotional postings and product showcases. Facebook will be a particular area of concentration. In November, the retailer will inaugurate a social media acquisition drive that will provide a $1 donation to Toys for Tots for every new "fan" that registers on its Facebook page.
Not long ago, Pier 1 looked as if it would shift only slowly from a marketing emphasis on its most loyal customers, to former customers who had drifted beyond credit card ownership then to consumers in general. The shift to winning over new customers must be attributed, at least in part, to Pier 1's recognition that it has a story shoppers want to hear. Said Smith in a conference call, as transcribed by SeekingAlpha:
Our recent market research indicates that in this economic environment, our customers have moved away from extravagant expenditures and are spending more on investing more time at home with their families and friends, focusing on cooking and entertaining. This is good for us. Our customers know they can come to us and always find new interesting, colorful and well-priced products to freshen and brighten up their homes.As a result, he asserted, Pier 1 has been able to cut back on the deep-discount clearance events it once counted on to bring customers to the store -- and could count on to cut profits to the bone -- while employing a more rational strategy of gradually lowering prices on slow moving products to sell them at the best profit available. Even doing so, Smith asserted, Pier 1 has gained market share. By broadening its customer acquisition initiatives, Pier 1 is reaching out to a consumer who doesn't mind spending modestly to have a better time at home.