Once a must-shop store for tchotchkes, wicker and affordable Asian furniture, Pier 1 has wound up one of the weakest of home furnishing stores, battered by the bad real estate market.
The retailer said Thursday that its same-store sales were down 11 percent for the quarter, closing out what new CEO Alex Smith called a “truly horrible” fiscal year.
Smith blamed, among other things, the “dramatic and untested changes” to its merchandise — most notably to make it more contemporary — and excessive spending on advertising. The company has been “bleeding … from self-inflicted wounds,” he said.
Others See Slump
Federated and Wal-Mart also blamed slow sales in home goods for lackluster numbers. Federated, which owns Macy’s and Bloomingdale’s, said March same-store sales were up 2.3 percent, lower than expected. Wal-Mart was up a better-than-expected 4 percent but said it was thanks to food and pharmacy sales, not home or apparel.
Unlike competitors including Pottery Barn and Crate & Barrel, Pier 1’s product mix has missed the mark, analysts and some consumers say. Worse yet, cheap sourcing in China is now available to competitors such as Target and T.J. Maxx for rattan and other imports.
“They seem to be battling concept obsolescence,” says Barbara Thau, senior editor for retail at Home Furnishings News. “They had a big niche in imported goods, but now every retailer has gotten into imported goods.”
Pier 1 will gradually rid its stores of some — but not all — of the contemporary furnishings and go back to offering a broader assortment with more color choices and lower prices.
Some shoppers say they now turn to T.J. Maxx, Marshall’s and Target for the imported home furnishings they used to rely on Pier 1 for. “Why would I go to Pier One when I could go to Home Goods or Marshall’s or Target and get almost the same thing — and shop for many more things?” asks shopper Jonelle Gilden.
But Elizabeth Dore thinks Pier 1’s products have gotten better in the 15 years she’s shopped there. She finds “unique and distinct gifts, and they are not only lovely to look at, they are very practical.”
Phil Rist, vice president of strategy for the consumer insights firm BIGresearch, says his research shows that even Pier 1’s loyal customers rarely think of the store as a first choice for furniture. Instead, they’ll turn to Ikea or Wal-Mart.
“They’ve moved to merchandise and price points that aren’t attractive to their core consumers,” Rist says. “They have to make a decision: Who do they want to be?”
