Pier 1 Slims Mix To Fatten Sales

Fort Worth, Texas—Pier 1 plans to reduce the number of skus carried at its stores over the next year by 10 to 15 percent. The move is part of an effort to widen aisles, reduce clutter and, thus, sell more merchandise, said chairman and CEO Marvin Girouard during the company's second quarter conference call.

“In the past year, we have been clearing space to create a stronger visual presentation,” he said. “We had too many skus for our 9,000-square-foot size.”

Reductions will take place “across the board, beginning in tabletop,” Girouard said. He explained that, for example, instead of offering seven dining room sets, the company would offer five, or instead of six bedroom sets, three or four. “We need to offer a choice, but not too broad a choice,” Girouard said.

Specifically, he said the company had already cut back 10 percent of the overall goal, would reach approximately 30 to 40 percent by the end of the year, 60 percent by next summer and 100 percent by early fall.

Pier 1 is currently testing four new formats to carry the slimmed-down assortment at eight stores. As part of the tests, the company is looking at factors like “which (product) adjacencies are better suited to each other,” Girouard said.

To better show its merchandise, Girouard said the company will move away from stacking product on product, such as presenting candles on desks it also aims to sell. The goal, he said, is to get away from “product becoming a display element.”

As part of a shift in its advertising plans, Girouard said the company will back away from television ads during the remainder of the year while it settles on a new agency. After starting its search for a new firm in July, he said, Pier 1 will announce its selection this October.

“We will immediately work with them for the remainder of the year,” he said. “But for the rest of the year, we plan to allocate most marketing dollars to newspapers, magazines and direct mail. Next year, we will again consider all forms of advertising.”

In another effort to offer the most merchandise to shoppers while not crowding stores, Girouard said smaller Pier 1 locations will use free-standing pedestals with marketing information about larger pieces like furniture and rugs. Customers can then place their orders in the stores.

“This gives us a new offering to customers looking for larger and more expensive items,” he said.

Recently, in an effort to compete with companies like Pottery Barn that have child-focused divisions (Pottery Barn Kids), Pier 1 purchased Cargokids, an 18-store retailer of children's furnishings and accessories also based in Fort Worth. But, in a move that the company soon reversed, it kept the existing name rather than branding the new division with a Pier 1 moniker.

“I think I was mistaken and thought (CargoKids) was a stronger brand than it was,” Girouard said. “In new markets, we found that CargoKids didn't mean anything so putting Pier 1 Kids got us instant name recognition.”

He also said the company was looking to get more into the direct mail business by sending catalogs to its credit-card customers, with plans to target the rest of the country should things go well.

“I am more optimistic today than I was three months ago,” Girouard said, “and certainly much more than I was a year ago.”