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If you don't live in the US and need some background on Pier 1, the company was founded in 1962 and did $1.8bn revenue in 2013.
There are more than 1,000 stores in the US, with the brand importing goods from more than 30 countries.
The company has been on a steep learning curve in its ecommerce business and has come a long way in the last two years. Now in-store and online are increasingly integrated, with Pier 1 committed at all levels of the organisation to providing a consistent customer experience.
I was at Demandware's Xchange 2014 conference, where I listened to Andy Laudato, CIO at Pier 1 imports, as he discussed the company's journey from having to close a poor performing ecommerce website in 2007, to efficiently joining up online and offline business today.
Andy gave some context for the current state of retail and then shared some really interesting stats from Pier 1's work. Take a look.
The state of ecommerce
Andy started by setting the scene, and summed up the situation for a lot of retailers in ecommerce today.
The Pier 1 site in its current iteration is less than two years old. In 2012 the company was 'learning to crawl', but by 2014 the company has 'learned to walk'. To put it bluntly, Pier 1's customers still desire a bunch of new features, and Pier 1 is aware of this and is on the road to developing them.
This is the phase of prioritization that many ecommerce companies have been going through. How do we get the core functionality licked, before moving on to further enhancing customer engagement?
The landscape for retailers
Ecommerce, social media and device proliferation have changed the way that companies sell to and engage with customers.
Pier 1 is a great example of the connected customer's increasing influence on brand awareness online.
Andy showed us a Pinterest board titled 'I love Pier 1'. This is a customer spreading the word, curating product imagery, just for the love of shopping at Pier 1. This can work both ways, of course, for brands, and Andy also joked that 'we don't get to call her and tell her to move that pic or change that font'.
The enlightened customer
In Andy's words, "she moves from innovation to expectation very quickly".
- She has more knowledge than the store employees (so your staff better have the same website data and content that customers have access to).
- She cares and knows about your company practices.
- she doesn’t give many second chances (she might have tried on a dress, it didn’t fit, and so she never went there again).
So with the customer expecting increased levels of service, what does that mean for Pier 1?
Andy gave a good example - "Nieman Marcus sells an armoire for $8000, Pier 1 sells one for $800. Does that give Pier 1 a pass on [providing a good] customer experience? No!"
Another example - "Apple makes around $6000 per sq ft in its stores. Pier 1 does around $200 per sq foot. So, do we get a pass on providing service like Apple? No! We, too, have to email you a receipt, and effectively demo the products."
An internal manifesto for customer experience
As an internal branding exercise, something that would target an org-wide commitment to customer experience, Pier 1 defined the concept of '1Pier1'.
The company expects customers to experience 1Pier1 every day. It’s about making sure that every time they talk to a customer it’s consistent, whether via email, homepage, tv or billboards, and also about reducing variability of experience in store.
The journey is traditinal commerce to ecommerce to multichannel to omnichannel.
Organizational structure and change
The 1Pier1 manifesto leads into three key challenges:
- organizational alignment
- cultural change
- increasing complexity
Lets looks at these three in more detail.
The diagram below shows how customer experience is overseen by management, with an EVP of Sales and CX, sitting above a VP Commerce, SVP Stores, and a Director of Customer Relations.
Attributing online sales to stores
Like John Lewis, Pier 1 is aligned at every level, with store associates provided with metrics that include ecommerce, and given credit for orders picked up in store. Every day, each store gets a dashboard showing in-store vs ecommerce targets.
Ecommerce is significant enough in the overall picture that some territories only make an overall target because of their ecommerce contribution.
The Pier 1 goal is to be the main home furnishing destination (whether that destination is store, website or call centre) for customers, associates, investors and vendors.
To that end, a consistency has to be achieved, where the same memorable experience is created for customers online as is provided in-store. Online must provide a similar feel of visual merchandising and customer engagement, bringing the products to life.
Dealing with complexity
The SKU classification is a lot more complex than it was four years ago. Now, some SKUs are included in all stores, some only partly, and others are being tested. On top of this, there are SKUs available as express request to store (with some only available in store through this method), and of course SKUs available online, now via parcel delivery or in-home delivery (so-called 'white glove' service).
This is a complex task for a logistics network, and means that fulfillment has to get increasingly slick as the customer is increasingly interacting directly with this network. If orders to store are missing an item, this can be worked around, but if orders to a customer's home are incorrect, this quickly impacts business.
As the customer changes the way she shops and browses for information, SKU growth has slowed in-store. However, ecommerce product range is rapidly increasing in 2014, and this trend will continue.
The chart below shows Andy (nicely in shot) expects SKU volume in ecommerce to match those in-store in 2016. So the product landscape is increasingly complex.
Being smart with pick-up and delivery
Pier 1 uses geolocation to help serve in-store pickup. Product searches return a message of 'in stock at X stores near you!'
The stock levels displayed are updated every fifteen minutes and the company is now confident exposing unit number per store to the customers. In-store pick-up is, of course, free.
One of the more advanced elements of this stock checking is the ability for the customer to select ‘find stores that have stock for all items in your basket’.
If delivery via parcel is very expensive, the checkout will default to in-home (white glove) delivery instead, for example for a piece of furniture. If there are other items in the basket, too, they will be added to this delivery. So if the customer orders a wardrobe and a piece of art, they will be delivered in-home together.
So, is it working?
Andy echoed a well-established sentiment, that the multichannel customer is worth more than an online only or an offline only customer.
He added that if that multichannel customer is then part of the Pier 1 loyalty scheme, this enahnces their value further still.
In terms of traffic, the chart below shows how traffic to Pier1.com is now equalling footfall in store.
The keys to omnichannel success?
Andy's tips were as follows.
- Prioritise - What? Why? When?
- Simplify - Through the customer lens.
- Quantify - Measure and adapt.