July 14, 2010, 3:37 PM

Pier 1: Too little, too late

It’s flawed thinking with only a tepid return to e-commerce.

After a three-year absence, Pier 1 Imports Inc. recently announced it is making a limited return to e-commerce. There’s only one problem I can see: It’s probably too little, too late.

Pier 1 canceled its e-commerce program, which was put-putting along with annual sales of about $16 million, three years ago. The company was in financial trouble, senior management had to cut costs, so they deep-sixed e-commerce and concentrated on stores.

That was limited thinking then and it remains so now. The growth in the U.S. retail industry has been driven by e-commerce —and not stores—for some time, and that trend is accelerating. Pier 1 is doing somewhat better. In the first quarter of fiscal 2010 ended May 29, total sales increased 9% to $306.3 million from $281.1 million in the prior year, while comparable-store sales rose 14.3%.

Now Pier 1 is planning a constrained return to online retailing by making its entire inventory available online by September. But purchases will be limited to making a reservation online, and then paying for and picking up the merchandise in a Pier 1 store. “Our initial return to online shopping will be site-to-store, which will allow us to leverage our store base without any of the complexities around payments and fulfillments,” says a company spokeswoman. “We believe this is a natural and low-risk extension of our business reach and brand.”

To me, this whole approach smacks of low-risk, low-reward. If Pier 1 wants to be more than just a consumer afterthought in the Top 500 online housewares and home furnishings space, which generated sales of $3.58 billion in 2009, they might want to speed their e-commerce planning up—a lot.

Segment leader Williams-Sonoma Inc., which recently told Wall Street analysts that e-commerce will account for about one-third of its total sales this year, already controls about 26.3% of the Top 500’s online housewares and home furnishings sales. And Williams-Sonoma, No. 26 in the Internet Retailer Top 500, has ambitious plans to make e-commerce even more of a growth driver. “We are in a unique position to gain market share in the next five years,” chief marketing officer Patrick Connolly recently told Wall Street analysts.

Pier 1’s plan to use limited e-commerce to drive store sales is outdated. Today, the opposite is true—more consumers now research their purchase online and then find the web merchant with the right product to complete the sale. If consumers want to purchase indoor and outdoor furniture, lamps, vases, baskets, ceramics, dinnerware, candles, and other decorative accessories—the type of merchandise Pier 1 is known for—they increasingly are going to power up their personal computers or iPhones and buy online. They won’t be visiting as many stores.

If Pier 1 wants to truly rebound and become an even more successful retail brand, they need to think more —and not less—about e-commerce. By putting a tepid toe back into the waters of e-commerce, what they are doing is too little, too late.

Online shoppers don’t want to make a reservation with retailers. They want to pay the check and get on with the meal.

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