Garber on Business: Pier 1 and The Almighty 'Price-point'
Garber on Business: Pier 1 and The Almighty 'Price-point'
I've said it before, and I daresay I will say it many, many times before my I give up this earthly existence, but Price-point is everything. Really.
I received a glossy mail-drop sales brochure today, really more of a booklet. Twenty-four pages, full-colour, and probably cost a pretty penny to produce.
The booklet came from Pier 1 imports' Canadian operation, headquartered in Windsor, ON (or at least mailed from there). Back in 2004, Pier 1's U.S. company was in dire straits, having foundered in the retail market for several consecutive seasons. Back then, they admitted their problems in reaching their market, and a business paper said: "A revamped advertising strategy, sharper prices and a reduced merchandise mix are in the works by Pier 1 imports as the home furnishings retailer responds to tougher competition and declining same-store sales."
The story went on to say: "At the retailer's shareholder meeting June 25, chairman and CEO Marvin Girouard attributed the sales softness to tougher price and assortment competition from discounters and general weakness in the home furnishings sector."
Well, DUH!
A different story a few months later was more specific: "Pier 1 imports, Inc. suffered a 39.5 percent drop in profits for the third quarter due to stiff competition from low-price megastores such as Target and Wal-Mart, where heavy discounting has taken place, and a lack of television advertising that has left its floors less trafficked.
"Marvin Girouard, the company's chairman and CEO, said, 'The third quarter was particularly difficult due to a challenging retail environment and company-specific issues from marketing and merchandising programs that are in transition during the last half of the fiscal year.
" 'Although weak store traffic and high merchandise discounting has negatively affected short-term profits this year, we are implementing longer-term plans, such as sku reductions, stronger visual merchandising and creative new marketing programs, to achieve improvements in sales and profitability. In the interim, we continue to carefully monitor inventories and control expenses.'
"The company, said Girouard, has taken a hiatus from television while it revamps all its advertising with the help of outside firms. In October, Pier 1 announced it had named two agencies to helm a strategic and creative repositioning of its marketing initiatives. At that time, Deutsch Inc. and OMD Midwest began work on a new marketing campaign to be launched in March 2005."
In April of this year -- under the stewardship of a new CEO, Alex W. Smith -- the company was able to declare its first profitable quarter in 12 such periods. Among other things, the company reduced its operating costs by lowering administrative salaries, but the crux of the problem -- the fact that its goods are basically overpriced -- has never been addressed.
The company also sold its headquarters in Texas (it is leasing back for a period of years), a move that also improved its profit outlook, without addressing its pricing policies. Said Alex W. Smith, the Company's President and Chief Executive Officer: "To see our customers respond so enthusiastically to our merchandise and in-store experience during the fourth quarter was very energizing for all of us at Pier 1 imports. We have confidence that if we concentrate on developing powerful assortments that speak to our customer base and further enhance our customer service and in-store presentation, that we will continue making progress in returning our Company to profitability and beyond."
Of course, this is all Investment-Speak Babble. My candid observation is that the company has simply never examined its pricing policy vis-�-vis today's marketplace and competitive pricing. It's just that simple. And they (and others like them) will continue the slow descent into retail oblivion until they wrap their little CEO and CFO heads around the concept that -- more than ever in today's market -- the consumer is King (or Queen). Nothing is as it was a decade or 15 years ago in the marketplace. The internet has changed all that.
Here's a prime example: You see a bamboo �tag�re in a Pier 1 imports store (note the lower case "i" in imports, by the way, an attempt at modesty in their logo that fools no one), and it's priced at $280. You seem to recall seeing one virtually identical at a garage sale last weekend. The garage sale people wanted $15, but of course it was used. Probably dirty. Anyway, you decide that $280 is more than you are willing to pay, so you never actually go out to Pier 1 to view this piece -- or any of their other stuff. Instead, you go on Craig's list and eBay to see if anyone has one for sale. Amazingly, someone is offering the exact same one on Craig's list for only $10. They even mention that it came from Pier 1! You contact the Craig's list people, and discover that they live right down the street from you, and when you go to buy the item, it turns out it's the same garage-sale place you saw it at in the first place. You just saved $270, and you were never tempted to buy any other accessories or pieces of furniture at Pier 1, because you never even entered the store in the first place. And why? Because the price-point of $280 seemed ridiculously high.
So, if you're an exec at Pier 1, you have to ask yourself: Why are our stores slowly coasting downhill? Why did we have to sell off 79 stores in 2007? Could it be that -- despite expensive advertising campaigns and new slogans and new promotional Unicef card offerings (that show our corporate heart is in the right place) -- we are simply charging more than what consumers wish to pay for cheaply made imported goods?
Now, I'm the first to admit that I'm a cheapskate, but there are plenty more shoppers just like me.
We are the ones who have arrived at an age where we don't knee-jerk to every marketplace whim or fad; we have decided that our own personal, eclectic taste is just fine -- and in fact that it is a dignified and reasonable hallmark of our individuality. It's really, really hard to sell to us, and we have become pretty much immune to your latest idea for "marketing" to us. We just ain't buying, it, buddy.
We have travelled to India and Thailand and Turkey and Hong Kong and Shanghai and Prague and Korea and Greece, and we KNOW how little those impulse-buy bamboo items or colourful china plates or hand-painted floral room-divider-screens or embroidered pillows or funky wooden dressers or lush fabric window panels cost at their source. We even know how much it cost us to ship said items home. So don't offer to sell us the same miraculously sourced goods at three times our price-point. Please.
We've also learned the difference between a fake Korean antique chest and a real one. Around the time we learned how to tell if pearls are false or if jade is low quality. And we sure know the difference between a poly-blend and a natural fibre. AND we know machine stitchery (or slave labour) in something "hand-made" when we see it. If we want the real thing, we will go to Chintz & Co. and pay their exorbitant rates, because we know that at least we are getting the real deal. Or we will discover genuine bargain price-points at 7 Sisters, who are importers, but after all, they are true wholesalers, too.
So, back to my harping about The Almighty Price-point, I learned many, many years ago (from a savvy discounter) that price-point is everything. That "turns" far outweigh simple mark-ups, and that the stores (and chains) that will survive well into the '20-teens decade are the ones whose leaders get that simple axiom, too. So fie on Pier 1 imports and its lower-case "i." You'll never get your bar-code scanner into MY wallet.
Garber on Business Pier 1 and The Almighty Pricepoint - To learn more about this author, visit Anne Garber's Website.
Like this article? Share it with your friends
What's in a name? Or a few common words? To the bargain-shopper -- in this case, at least -- it's everything.
I've said it before, and I daresay I will say it many, many times before my I give up this earthly existence, but Price-point is everything. Really.
I received a glossy mail-drop sales brochure today, really more of a booklet. Twenty-four pages, full-colour, and probably cost a pretty penny to produce.
The booklet came from Pier 1 imports' Canadian operation, headquartered in Windsor, ON (or at least mailed from there). Back in 2004, Pier 1's U.S. company was in dire straits, having foundered in the retail market for several consecutive seasons. Back then, they admitted their problems in reaching their market, and a business paper said: "A revamped advertising strategy, sharper prices and a reduced merchandise mix are in the works by Pier 1 imports as the home furnishings retailer responds to tougher competition and declining same-store sales."
The story went on to say: "At the retailer's shareholder meeting June 25, chairman and CEO Marvin Girouard attributed the sales softness to tougher price and assortment competition from discounters and general weakness in the home furnishings sector."
Well, DUH!
A different story a few months later was more specific: "Pier 1 imports, Inc. suffered a 39.5 percent drop in profits for the third quarter due to stiff competition from low-price megastores such as Target and Wal-Mart, where heavy discounting has taken place, and a lack of television advertising that has left its floors less trafficked.
"Marvin Girouard, the company's chairman and CEO, said, 'The third quarter was particularly difficult due to a challenging retail environment and company-specific issues from marketing and merchandising programs that are in transition during the last half of the fiscal year.
" 'Although weak store traffic and high merchandise discounting has negatively affected short-term profits this year, we are implementing longer-term plans, such as sku reductions, stronger visual merchandising and creative new marketing programs, to achieve improvements in sales and profitability. In the interim, we continue to carefully monitor inventories and control expenses.'
"The company, said Girouard, has taken a hiatus from television while it revamps all its advertising with the help of outside firms. In October, Pier 1 announced it had named two agencies to helm a strategic and creative repositioning of its marketing initiatives. At that time, Deutsch Inc. and OMD Midwest began work on a new marketing campaign to be launched in March 2005."
In April of this year -- under the stewardship of a new CEO, Alex W. Smith -- the company was able to declare its first profitable quarter in 12 such periods. Among other things, the company reduced its operating costs by lowering administrative salaries, but the crux of the problem -- the fact that its goods are basically overpriced -- has never been addressed.
The company also sold its headquarters in Texas (it is leasing back for a period of years), a move that also improved its profit outlook, without addressing its pricing policies. Said Alex W. Smith, the Company's President and Chief Executive Officer: "To see our customers respond so enthusiastically to our merchandise and in-store experience during the fourth quarter was very energizing for all of us at Pier 1 imports. We have confidence that if we concentrate on developing powerful assortments that speak to our customer base and further enhance our customer service and in-store presentation, that we will continue making progress in returning our Company to profitability and beyond."
Of course, this is all Investment-Speak Babble. My candid observation is that the company has simply never examined its pricing policy vis-�-vis today's marketplace and competitive pricing. It's just that simple. And they (and others like them) will continue the slow descent into retail oblivion until they wrap their little CEO and CFO heads around the concept that -- more than ever in today's market -- the consumer is King (or Queen). Nothing is as it was a decade or 15 years ago in the marketplace. The internet has changed all that.
Here's a prime example: You see a bamboo �tag�re in a Pier 1 imports store (note the lower case "i" in imports, by the way, an attempt at modesty in their logo that fools no one), and it's priced at $280. You seem to recall seeing one virtually identical at a garage sale last weekend. The garage sale people wanted $15, but of course it was used. Probably dirty. Anyway, you decide that $280 is more than you are willing to pay, so you never actually go out to Pier 1 to view this piece -- or any of their other stuff. Instead, you go on Craig's list and eBay to see if anyone has one for sale. Amazingly, someone is offering the exact same one on Craig's list for only $10. They even mention that it came from Pier 1! You contact the Craig's list people, and discover that they live right down the street from you, and when you go to buy the item, it turns out it's the same garage-sale place you saw it at in the first place. You just saved $270, and you were never tempted to buy any other accessories or pieces of furniture at Pier 1, because you never even entered the store in the first place. And why? Because the price-point of $280 seemed ridiculously high.
So, if you're an exec at Pier 1, you have to ask yourself: Why are our stores slowly coasting downhill? Why did we have to sell off 79 stores in 2007? Could it be that -- despite expensive advertising campaigns and new slogans and new promotional Unicef card offerings (that show our corporate heart is in the right place) -- we are simply charging more than what consumers wish to pay for cheaply made imported goods?
Now, I'm the first to admit that I'm a cheapskate, but there are plenty more shoppers just like me.
We are the ones who have arrived at an age where we don't knee-jerk to every marketplace whim or fad; we have decided that our own personal, eclectic taste is just fine -- and in fact that it is a dignified and reasonable hallmark of our individuality. It's really, really hard to sell to us, and we have become pretty much immune to your latest idea for "marketing" to us. We just ain't buying, it, buddy.
We have travelled to India and Thailand and Turkey and Hong Kong and Shanghai and Prague and Korea and Greece, and we KNOW how little those impulse-buy bamboo items or colourful china plates or hand-painted floral room-divider-screens or embroidered pillows or funky wooden dressers or lush fabric window panels cost at their source. We even know how much it cost us to ship said items home. So don't offer to sell us the same miraculously sourced goods at three times our price-point. Please.
We've also learned the difference between a fake Korean antique chest and a real one. Around the time we learned how to tell if pearls are false or if jade is low quality. And we sure know the difference between a poly-blend and a natural fibre. AND we know machine stitchery (or slave labour) in something "hand-made" when we see it. If we want the real thing, we will go to Chintz & Co. and pay their exorbitant rates, because we know that at least we are getting the real deal. Or we will discover genuine bargain price-points at 7 Sisters, who are importers, but after all, they are true wholesalers, too.
So, back to my harping about The Almighty Price-point, I learned many, many years ago (from a savvy discounter) that price-point is everything. That "turns" far outweigh simple mark-ups, and that the stores (and chains) that will survive well into the '20-teens decade are the ones whose leaders get that simple axiom, too. So fie on Pier 1 imports and its lower-case "i." You'll never get your bar-code scanner into MY wallet.
Garber on Business Pier 1 and The Almighty Pricepoint - To learn more about this author, visit Anne Garber's Website.
Like this article? Share it with your friends
 | |
 |
No article feedback found. |
| |
Leave Your Feedback |
 | |
| |||
David BarrDavid Barr is the President of Venture Opportunities, Inc. David has been a professional business broker/intermediary since 1980 focusing on General Business Brokerage and Mergers and Acquisitions representing client transaction value from $400,000 to $20,000,000. Mr. Barr has handled the sale of over four hundred and fifty companies. David earned a university degree from the State University of New York majoring in economics and business. David holds the Mergers and Acquisition Master Intermediary and the Certified Business Intermediary designations from the International Business Brokers Association. He is also a Senior Business Analyst and a Texas licensed Real Estate Agent. For more information about David and Venture Opportunities, visit www.bizdealmaker.com. - Visit David Barr's Website |
|||
Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
|||
Casey GollanCasey Gollan, Business Coaching & Mentoring Programs. Add $1 Million to $10 Million in the next 1 to 3 years. Since 1996 Casey has to added hundreds of millions of dollars to businesses. Watch a free video see client results Business Coaching website. - Visit Casey Gollan's Website |
|||
Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
|||
Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
|||
David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
|||
Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
|||
Cheryl MatthynssensCheryl is a life skills coach, licensed Chemical Dependency Counselor and a 20 year entrepreneur. Cheryl's dedication to achieving a life of balance led to her expanding her teaching from the simple managing of life's daily challenges to adding financial well being as well. A direct marketer with DrinkACT, she is gaining ground in the online community with her concepts of making sure business owners, entreprenuers and employees have well rounded life styles. She opened up a small affiliate site - The Balance Guide- to help others find resources for mental and emotional well being. Visit Cheryl's blog to see more of the diversity beyond business she has began offering online at www.thebalanceguide.blogspot.com - Visit Cheryl Matthynssens's Website |
|||
|
To learn more about the Evan Elite Author Program please contact us. | |||
 | |
|  |
Subscribe to Anne's articles
 | |
|
|  |
 | |
|
| |
 | |||||||
|
 | ||
 |
||
|
||
|
||
|
| ||
 |
| Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details. |
|
|
 |
| Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media |
|
|
 |
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"
Click Here To Learn More |
|
|
|
|
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
|
|
|
 Networking Difference In A Decade Essence of Leaders Leadership Audit For Business Increase Sales Double Digit Growth eguide |
|
 | ||
 |
Top 50 Marketing Blogs
Top Blogs To Watch In 2008 | |
 |
More PR Resources
Press Release Builder | |
| ||
 | ||||
| ||||
|
| ||||
| ||||
|
|
|
|
|
||||||||||||
|
Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
|
|
|
