It’s no secret that the entire home furnishings business has been on fire, recording exceptional wins over the past year as we all stayed home and redecorated.
In this climate, success is expected. And then there’s Williams-Sonoma. The parent company of brands like West Elm, Pottery Barn and Rejuvenation, as well as its namesake kitchenware line, blew the doors off the retail market (and Wall Street forecasts) when it released its first-quarter numbers earlier this week. But in reporting these stellar financial results, the company also laid out perhaps the most compelling retail positioning of any home furnishings player in the industry—something anyone competing in the space would be wise to pay attention to.
First, the numbers: The company reported that Q1 sales were up more than 40 percent, profits were up 300 percent, and business was continuing on trend even after the quarter closed. In the context of the broader home retailing business, these numbers are near the top of the list. Williams-Sonoma’s strategy to achieve these results involves a large number of initiatives, but certain elements emerge as keys to its success, and should serve as guidelines for others looking for similar achievements.
Digital First
In the report, Williams-Sonoma cautions that its strategy is not “digital only,” but it’s clear where the emphasis is. After tracking at around 55 percent of all revenue coming from e-commerce pre-Covid, digital sales spiked as high as 70 percent last year. That number has settled to 65 percent this past quarter. With its long heritage of direct sales through catalogs, the company has nailed the formula for reaching customers however and wherever they want to buy. Its success in the mailbox is a clear signal that retailers who downplay print catalogs as a vehicle to drive online sales are making a mistake.
Pruning Physical Stores
While Williams-Sonoma still operates hundreds of retail locations across its multiple nameplates, it closed 33 stores this past quarter, with no plans of slowing down—over the next five years, it will reduce its physical fleet by 25 percent. You’ve got to love CEO Laura Alber’s no-nonsense explanation for some of the downsizing: The company is exiting “malls we just don’t want to be in,” she said on the earnings call. Other retailers need to keep examining their store footprint to get maximum return on their investments.
Cross-Merchandising
Several years ago, Williams-Sonoma began instituting a Key Rewards program that awarded benefits to frequent shoppers across its family of brands. This past quarter, sales through this tool were up 165 percent—and when talking to analysts after releasing its earnings, company executives said to look for a big expansion of these efforts in the future. If retailers are operating multiple brands, this is something they need to seriously consider.
Third-Party Selling
The company has been building on its Marketplace segment, which features merchandise from third parties—often small maker brands that provide specialized and differentiated offerings. The initiative accounts for 6 percent of Pottery Barn’s revenue—but, more importantly, it gives shoppers access to things they might not be expecting or even be aware of. This is very different from search-driven marketplace businesses at Amazon or Walmart, and is something that, once again, other retailers should be looking at. You can sell someone else’s goods and still maintain a strong brand.
Eco-friendly
Even if you’re a skeptic on the business returns of going green, Williams-Sonoma’s efforts in this area are quite admirable. The company said it is working to be carbon neutral across its entire business by 2025 and has made sustainability a core value in its operating mantra. You can debate it from a financial standpoint, but there’s no arguing it’s the right thing to do for the planet—and that it’s a move that resonates with consumers now more than ever.
These are just some of the initiatives Williams-Sonoma is undertaking. Taken together, they’re working not only to make the company more money, but to make it a better retailer, too. That’s never a bad combination.
Homepage image: © JHVEPhoto/Adobe Stock
"industry" - Google News
May 28, 2021 at 03:04AM
https://ift.tt/2SAHe7u
The home industry is hot. Williams-Sonoma is hotter - Business of Home
"industry" - Google News
https://ift.tt/2RrQtUH
https://ift.tt/2zJ3SAW
Bagikan Berita Ini
0 Response to "The home industry is hot. Williams-Sonoma is hotter - Business of Home"
Post a Comment