A Pier 1 In Every Port?Stephanie Anderson Forest
Many dream of touring the globe, but few get the chance. Those who don't can go to Pier 1. For 31 years, the retailer has helped America's armchair travelers fill their homes with colorful, handmade knickknacks and furniture from 44 countries. Shoppers can find a carousel horse from Thailand, Italian dinnerware, or rattan chairs from Indonesia.
Now, America's largest purveyor of home furnishings is taking its knowhow overseas. It set up shop in Britain last fall and plans two stores in Puerto Rico by yearend. Mexico and Central and South America are on the list for 1994. Eventually, Pier 1 Imports Inc. wants to sell in the Far East, where this summer it will open an office to support the expansion. All told, Fort Worth-based Pier 1 plans to have about 250 stores outside the U.S. and Canada within seven years, accounting for an estimated 5% of sales and 10% of operating profits.
UNIQUE FORMULA. Pier 1's move makes sense, considering its slowing growth at home. For the fiscal year ended Feb. 27, sales were up only 7.3%, to $629.2 million, vs. double-digit growth rates in the late 1980s (chart). Profits were down 12.5%, to $23 million, because of losses at a unit that has since been sold. And although Pier 1 plans to add 300 outlets to its 608-store network in North America by the end of the decade, opportunities are dwindling.
But even world-seasoned Pier 1 faces big challenges in going abroad. Exporting a shopping experience is tough. Few American stores have tried, and most foreign retailers have bombed in the U.S. "Being able to replicate [retailing] concepts around the world has been more difficult than anyone thought," says Robert Kerson of retail consultant Levy & Kerson Associates Inc. The folks at Pier 1 think their formula will travel because it's unique. Pier 1 stocks unusual items, prices them moderately, and displays them in an integrated fashion, so shoppers feel as if they're in a sort of U.N. of tchotchkes. For instance, blue Japanese sake cups are stacked not with other goods from Japan but with blue European plates.
In foreign markets, Pier 1 must make sure it's not bringing coals to Newcastle. So, in the Far East and Europe, it plans to stock posters of U.S. pop heroes and other Americana. Asian stores won't get chopsticks, which are popular in its U.S. stores, but Native American artifacts instead. In Japan, furniture will be built smaller to suit tiny apartments.
CHEERFUL CLUTTER. Pier 1 certainly has the financial wherewithal to go global. Its debt load is only 35% of capital, and it has $74 million in cash. And its store overhead tends to be low, partly because its display style is cheerful clutter rather than expensive elegance.
CEO Clark A. Johnson, who was a partner with pro golfer Jack Nicklaus in MacGregor Golf Co. before joining Pier 1 in 1985, isn't taking any chances. In most countries, the retailer will work through joint ventures and licensing accords. Even in Britain, where it plans six more stores by yearend, Pier 1 moved cautiously, buying a 50% interest in a London-based retailer--already conveniently named The Pier. Its four stores sell merchandise similar to Pier 1's. But The Pier stocks more items that English customers seem to want. For instance, co-owner Alison H. Richards says wardrobes sell well because of scarce storage in many British homes, and Indian textiles conjure fond thoughts of the former colony.
Johnson doesn't think he needs a partner in Puerto Rico, where he plans 13 to 15 stores over the next three years, because the market resembles Florida's. There, Pier 1's 35 stores draw Cuban and Hispanic Americans with the same inventory used elsewhere in the U.S. But Johnson will keep careful track of what sells, because he sees the island as a stepping-stone to other Latin markets.
Figuring out what puts smiles on non-American faces is critical, because Pier 1's success depends more on local whims than local needs. "You can live the rest of your life and never go into a Pier 1 store, because we don't sell anything that you have to have," says President Marvin J. Girouard. Since the stores appeal to shoppers' imaginations, Pier 1 must learn what people in different cultures find exotic and clever. If it succeeds, the international stores will do what their U.S. counterparts do: satisfy the wanderlust that lurks in us all.