Background

Pier 1 Imports offers a unique selection of merchandise consisting of items

imported from many countries around the world. The company operates in the highly

competitive specialty home retail business, both in its brick and mortar and online

businesses. It competes primarily with specialty home sections of large department

stores, furniture and decorative home furnishings retailers, small specialty stores and

mass merchandising discounters. Decorative accessories includes decorative accents

such as: lamps, vases, dried and artificial flowers, baskets, ceramics, dinnerware, bath

and fragrance products, candles, seasonal, and gift items account for approximately

61% of Pier 1’s U.S. sales. Furniture is generally constructed metal or handcrafted

natural materials, including rattan, pine, beech, rubber wood and selected hardwoods

with either natural, stained, painted or upholstered finishes and accounts for

approximately 39% of U.S. sales. Pier 1 stores average 9,900 gross square feet, which

includes 7,900 square feet retail selling space on average. As of March 2, 2013, Pier 1

imports operates 1,062 retail locations in the United States and Canada with each store

carrying approximately 6,000 stock keeping units1.

Big-Est

As a Big-Est retailer, a company would “offer the most dominant assortment in

specific categories of merchandise.”2 Frequently the Big-Est retailer are the category

killers because they carry the largest selection of products. We ranked Pier 1 above par

in this Est. They offer a dominant assortment of home goods; they do offer time savings

for the customers by being a one stop shop in furnishing/decorating for almost every

1 Pier 1 Imports 2013 Annual Report. (2013). Retrieved from http://www.pier1.com/Annual-Reports-Proxy-Statements/ir_annual-report,default,pg.html2 Ander, W. N., & Stern, N. Z. (2004). Winning at retail: Developing a sustained model for retail success. (p. 63). Hoboken, NJ: John Wiley & Sons, Inc.

room in the home. Pier 1 has made e-commerce a focus in their strategy, investing in a

new website in 2012. They make it easy for customers to shop and offer either in-store

pickup or delivery options.

One area where Pier 1 can approach the Est Threshold in Big-Est, is their

utilization of really incorporating all the rooms in the home. As of now, they only sell

small items for the bathroom, and in terms of their biggest competitors in Big-Est, this is

where the competition is pulling away. Bed, Bath and Beyond is a huge competitor on

the Big-Est spectrum, as well as IKEA and Target (in-stores and especially online).

These competitors have lower price points and larger stores so they can support a

bigger selection of products, whereas Pier 1 has a higher price point and smaller stores

so they have to find a way to compete on the Big-Est in the product lines that they are

losing on. Pier 1 can possibly start carrying more product lines online, similiar to Target

who have a considerably smaller selection in store than compared to their websites. If

they do choose to emulate that strategy, they can utilize their already established online

presence to draw attention to the new product lines and in stores can have advertises

supporting this as well.

Another point in which Pier 1 needs to perform better as a Big-est retailer, is that

they need to focus on improving consistency in customer service. As of March 2, 2013,

the company employed approximately 21,400 associates in the United States and

Canada, of which approximately 3,700 are full-time employees and 17,700 are part-time

employees3. Refining customer service policies will be a challenge for Pier 1 because

the majority of employees are part-time. Pier 1 needs to not just compete in having a

large selection but they also must provide that extra customer service in order to stay on

3 Pier 1 Imports 2013

track and get ahead of the competition.

Cheap-Est

Being the Cheap-Est means that Pier 1 Imports would have to be the “best on

prices [and] stores must singularly devote themselves to being the low cost operator.”4

As are a home goods category specialist, Pier 1 achieves greens fees because it “does

just enough for customers to be acceptable … based on what a retailer’s core

customers don’t want or need.” 5 Compared to competitors, they are not the cheap-est.

IKEA is their leading competitor when it comes to cheap-est home goods, whereas Pier

1 Imports has noticeably focused more on being the hot-est among the home goods

retailers.

Pier 1 imports was founded in 1962 in San Mateo, California. Originally, they

catered to “hippy baby boomers and featured love beads and incense”6. At the time,

they were also competing with a Cheap-Est strategy. However, throughout the decades

they progressively moved away from a culture of low prices and focused on providing

better quality and trend setting designs. When going into a store today, they still sell

small trinkets that are reasonably priced, but they focus their brand equity on bigger

items such as furniture and various home goods.

When compared to Pier 1, IKEA emerges as the competitor most is focused on

being the Cheap-Est. IKEA focuses on supplying affordable style home furnishings by

operating online and a smaller number of brick and mortar stores with stripped down

warehouse style buildings7. IKEA has positioned its brand to be known for being

4 Ander, W. N., & Stern 475 Ander & Stern 1436 Pier 1 imports. (2013, October 31). Retrieved from http://en.wikipedia.org/wiki/Pier_17 List of countries with IKEA stores. (2013, November 25). Retrieved from http://en.wikipedia.org/wiki/List_of_countries_with_IKEA_stores

inexpensive with low to moderate quality by choosing not to use high-end materials but

offering innovative designs generally not found in many other stores. However, Pier 1

has developed a position where the brand is known for being moderate quality at a

moderate price. The choice of competitor strongly influences how Pier 1 ranks in terms

of a cheap-est retailer. When Pier 1 is compared to Crate & Barrel, Pier 1 ranks higher

because Crate & Barrel focuses on providing high-quality timeless more expensive

pieces, with just a few less expensive pieces that are seasonal in nature.

Hot-Est

Pier 1 imports ranks as above par, approaching est as a hot-est retailer. In order

to be a hot-est retailer, stores need to be experts in the products they carry, passionate

about sharing their expertise, and sell customers on the latest – most fashionable

products. The retailer needs to have strong organizational structure, distribution

systems, strategic product timing, and sophisticated promotional strategies. Stores

should regularly change their look and layouts too keep atmospherics fresh for

shoppers.

Pier 1 import’s Annual Report shows that nearly twenty-five percent of the

company’s annual sales occur during the traditional holiday season, November and

December8. During this time the store merchandise noticeably changes. Pier 1 offers

entertaining sets for Thanksgiving, ornaments for Christmas, and various trinkets for the

other holidays. The company predicts holiday buying trends and merchandises stores

accordingly.

Unfortunately, Pier 1 has run failed to maintain a hot-est position during non-

8 Pier 1 Imports 2013 Annual Report. (2013). Retrieved from http://www.pier1.com/Annual-Reports-Proxy-Statements/ir_annual-report,default,pg.html

holiday times. The store has made the common mistake of sticking with a trend.

Walking into a Pier 1 in 2013 takes you back to 2001. The company is still offering the

same products in the same aesthetically overwhelming store layout, refer to Appendix B

for store photographs. Pier 1 does modify atmospherics throughout the year, however it

is only slight seasonal changes. Compared to Home Goods, a strong Hot-Est

competitor, Pier 1 does not provide consistently changing product selections.

Customers are more likely to see the same home furnishings and accessories on

multiple visits to a Pier 1 store, whereas customers are more likely to find a different

product mix each time they visit a Home Goods store.

On the Pier 1 website, the company boasts, “If it's interesting, if it's impressive, if

it's colorful and cute and one-of-a-kind—then odds are it's probably from Pier 1

Imports”9. This tagline reads as a declaration of being hot-est, and the product offerings

can be described as colorful and cute, but overall the products haven’t significantly

changed over the years.

The company states it offers unique merchandise “of more than 6,000 items

throughout the year – and while the broad categories of our merchandise remains fairly

constant, individual items within these merchandise categories change frequently

throughout the year to meet the changing demands and preferences of our customers”.

With such a large number of items it is difficult for Pier 1 to be nimble and efficiently

respond to the consumers’ changing needs. As consumer preferences change, Pier 1

responds with different products but in order to be a successful Hot-Est retailer, Pier 1

needs to anticipate the changing consumer preferences and trends.

Quick-Est

9 http://www.pier1.com/about-pier-1/about_us,default,pg.html

Pier 1 also qualifies as green fees for Quick-Est. Within the home goods

category, there does not appear to be a strong demand for quickness. Customers want

to make sure their time is well spent, but the category doesn’t lend itself well to making

a fast decision, customers practice higher involvement when trying to pick out a dining

room table and dishes that serve as a home investment. Due to this, saving time has

not been a trade-off for price, service and selection at Pier 1 imports.

Quick-Est implies that the retailer is trying to “expedite the customer’s total time

commitment.”10 In order to do this, a company must have “convenient locations, lots of

locations, adequate parking, provide quick shopping, efficient at check out, and

shopping processes [that are] simple, fast, and accurate.”11 Pier 1 has adequate

parking, which acts as green fees and does not position them to be quick-est.

Even though the home goods category is not traditionally focused on providing

quick-est benefits, Pier 1 cannot disregard saving time for the customers. The typical

consumer is becoming more deficient in time; therefore Pier 1 needs to provide

simplified and streamlined service aspects for the consumer. The company could

reinterpret their checkout process; instead of using the cash register as a place for add-

on selling, which can result in long lines, employees can use the retail floor for add-on

selling since it is shown that people do not like waiting in lines12. Pier 1 has started a

“bricks-and-clicks”13 concept where a customer can order online and pick-up in store,

thus making the time to wait for shipping shorter and eliminating the need to pay in

store. These services increase customer satisfaction and retailer productivity. Quick-est

10 Ander & Stern 12611 Ander & Stern 12612 Ander & Stern 12813 Ander & Stern 132

will likely never be Pier 1’s est, however, it is important to keep it in mind since time is a

valuable commodity that does not appear to be becoming more readily available in the

future.

Easy-Est

Pier 1 imports attempts to be a hybrid with winning in the easy-est category. An

easy-est retailer is typically known for a store that can help customers solve a problem,

and provide excellent customer service14. However the retailer also must be able to do

other tasks such as: help create ideas, offer an enriching experience, and provide

information to help customers make decisions easily15. Pier 1 currently meets some of

the easy-est requirements however given the store layout and the product selection

they have a long way to go before they could truly win through an easy-est strategy,

which is why they are on par with Easy-Est.

Looking at the customer service aspect of Pier 1, after researching some

customer reviews and personally visiting of one store, they seem to have great

customer service. From my own experience I was greeted as soon as I walked into the

store, multiple people helped me when I needed something and when I asked for a

product someone walked me directly to a product and even provided multiple examples.

This was a can win for Pier 1 and the easy-est side of their business.

This customer service ties directly the enriching experience of the store, while

their customer service was great; the store layout was confusing and crowded. This

could be a struggle for many people to be able to find the products to match the look

that they are trying to achieve. This in store layout might be overcome by the customer

14 Ander & Sten 10415 Ander & Sten 105

service offered in store, but not everyone wants to continually ask where certain

products are located.

In terms of helping customer make decisions, Pier 1 offers multiple products for

any need. With each store having over 6,000 items in store and their website offering

even more products, Pier 1 has a lot of options for customers. While this may

complicated the decision for some people, the advantage of this over their competitors

is that a customer can pick the correct look for their home as compared to have only a

couple options that may work for you home. However when this product select is tied in

with the great customer service that is knowledgeable about the entire store, Pier 1 has

an opportunity be to win in the easy-est retailer category.

“Easy-est retailers often cater to customers who do not know exactly what they

want16.” In today’s market place consumers are more informed than ever before. Many

customers have browsed online for different options or looks that they are trying to

achieve before ever stepping foot inside a store. Especially in today's digitally

connected life, many women and a growing number of men have already planned out a

look through social media sites such as Pinterest when furnishing a room or looking at

decorations for holidays. With over 25% of their customer researching products online

before stepping in the store17, Pier 1 is most likely not a store where people go to figure

out what style they would like, by the time they have stepped in the door they have an

idea in mind and are simply looking to see if Pier 1 has the products to meet their

16 Ander & Sten 104 17 Pier 1 Imports 2013 Annual Report. (2013). Retrieved from http://www.pier1.com/Annual-Reports-Proxy-Statements/ir_annual-report,default,pg.html

needs. This creates an opportunity for Pier 1 to be a true easy-est retailer by helping

people plan a look before they even step foot in the door by utilizing sites like Pinterest.

Overall the customer service is a big win for Pier 1 in the Easy-Est category, as

well they have the opportunity to carry over this great service online to help people plan

out looks before they even step foot in the door. However for people who are simply

walking into the store without direction or ideas of products they are looking for, Pier 1

does not have all of the tools inline to win in the Easy-Est category as compared to their

competitors.

Overall Recommendation

In order for Pier 1 Imports to improve their position in the home furnishing

category the company needs to make a few changes. These changes include: utilizing

their E-Commerce website and other online material, highlighting the unique products in

store and have their customer service keep customer coming back and finally focus on

their hot zone strategy. A hot zone is the utilization of a “hot idea” in order to try and

predict tomorrow’s trends. Pier 1 needs to look at their hot zone and really assess

correctly “the needs of customers, the competitive environment, and the retailer’s own

internal strengths and weaknesses.”18

Pier 1 has an opportunity to showcase trends and display how their products can be

used for everyday or holiday decoration by utilizing their website and social media

platforms. By influencing people early in the decision making process, it displays their

effort to be a problem solving company that can help you gather ideas for planning and

offer the great home décor and holiday accessories. We also recommend Pier 1 re-

evaluate their coupon communication strategy specifically regarding the credit card.

18 Ander & Stern 180

Where they can win is in the area of customer service. When reviewing customer

comments on Facebook there was a mixture of praise for the stores sprinkled with

service complaints. Most of the concerns were regarding emails, coupons and Pier 1

credit cards. They have the products to draw people in, however they need to

capitalize on their customer service to keep customer wanting to come back for any

other home good need. Compared to their biggest competitors, since they are a smaller

square footage store, they have such an opportunity to capitalize on the personal selling

and develop that culture and experience within their stores. Overall, Pier 1 is not in a

terrible position but they are in a good position to grow and become a leader in their

home-furnishing category.

Appendix A

Appendix B

Photographs taken November 22, 2013

Pier 1 imports Store #0411

2689 Edmondson Road, Cincinnati, OH 45209

Appendix C

Pier 1 imports Digital Presence

http://www.pier1.com

https://www.facebook.com/pier1

https://twitter.com/pier1

http://www.pinterest.com/pier1imports/

https://plus.google.com/+pier1/about

http://www.youtube.com/mypier1