Pier 1 Goes Back to the Future
Specialty retailer Pier 1’s elimination of its online store on September 1, seems like a flashback to a decade ago.
The reason for the close? The company cited inventory concerns due to the uncertain nature of planning when making products by hand rather than on an assembly line. http://www.pier1.com/TheNewPier1com/tabid/198/Default.aspx.
CEO Alex Smith said in June that the e-commerce operation showed revenue of only $50 million to $60 million, or less than 5 percent of total company sales. Smith wants to instead put all the company’s energy into its more than 1,000 stores—a move that he hopes will turn around the soaring losses last year of $228 million.
But by closing the Web store, I think, will only add to the deficit. The company is closing one of the most vital customer channels today for increasing customer loyalty, thus it risks alienating its customer base. Busy customers have grown used to extended sales hours, increased products and services, and the ease of shopping from the comfort of their homes or offices. Not only will Pier 1 lose out on providing global reach, the company may not be able to as effectively track customers’ preferences, administer surveys, and obtain knowledge about customers than it can in the stores, thus limiting its marketing reach.
I wonder if Pier 1 ever considered updating its supply chain strategy before making a decision that may negatively affect its customer base—and its long-term revenue potential.
