2007 Issue 1

What's Happening?

Pier 1 appoints a new CEO.  Pier 1, once the darling of inexpensive home décor, has fallen on hard times.  So what else is new in the world of specialty retailers?  By their nature, specialists cannot be everything to everybody.  And often specialty store sales cycle as trends come in and go out.  This includes Gap, Talbot’s, Abercrombie and Fitch, but strangely not Williams Sonoma or American Eagle, at least in recent years.  Why? 

Williams Sonoma has created an exciting shopping experience using both national brands and their own merchandising skills.  Instead of relying exclusively on in-house products as so many specialty stores do, they instead embrace national brands such Le Creuset, Cuisinart, All-Clad and Calphalon to name a few.  Yet we think of Williams Sonoma as a brand itself.  Their ability to intermix high margin table top, condiments, cook books and seasonal foods with national brands is artful.  In effect they benefit from the product integrity of great brands and use them to enhance their own quality image.  

American Eagle has also enjoyed a long run of success, in the ever perilous apparel business.  It offers what can best be described as fresh young styling that is allowed in everyone’s home.  It is, in my opinion, the 21^st century preppy outlet.  American Eagle keeps its prices reasonable, does a masterful job of merchandising key items in depth (like the Gap used to do) and keeps its stores looking interesting and fresh.

What makes these two specialty chains different from some other specialists that seem to continually go through cycles?  I believe it is their commitment to evolve with a customer as opposed to enveloping the customer with their own a point of view. Of course they must have focus since they are specialists, however that focus must evolve with current trends or languish waiting for new customers to show up.  In that regard, Abercrombie and Fitch comes to mind.  Abercrombie does change its product offerings, but not to the extent that the products look fresh and new, in terms of styling or coloration.  To put it a different way American Eagle evolves product from customers, Abercrombie evolves product from product.

Pier 1 is another store that has not evolved. Their customer can best be described I would think as young, impulsive and not wanting to invest in décor but rather to enjoy it and change it.  I wonder if anyone from this company has ever been to Pottery Barn or Restoration Hardware, much less Lowes, Target or Wal-Mart.  The world of weekend decorating has changed and Pier 1 has not.

In the vast world of retail competition, two aspects are critical for the retailer to excel: location and a merchandising hook.  The merchandise must be compelling, the customer must understand why they want to go to that store, and that store must be convenient enough to warrant the distance for that product.  Both Williams Sonoma and American Eagle offer compelling merchandise in major mall locations.  In the case of Pier 1, the product is neither compelling nor unique and many of their locations are suspect.  They have free standing stores and stores in some small traditional centers with neighbors such as Barnes and Noble, PetSmart, Toys-R-Us.   These are destination stores as opposed to stores with a mall crawl strategy which would better suit Pier 1.

Certainly Pier 1 and the Abercrombie and Fitch can come back, but they both must undertake a more dramatic reinvention than just changing the next merchandise offering.

 

IT'$ THE CU$TOMER, $TUPID!

Each month I highlight a personal shopping experience and/or a well known instance where the customer service was either terrific or horrific.  Unfortunately, horrific customer service is more prevalent these days and usually makes better copy. 

The huge customer service faux pas that you all know about is the American Airlines fiasco in Texas.  (And more recently JetBlue in New York.)  Customers were kept on a plane on the tarmac for close to ten hours.  To their credit, the pilots tried to return to the gate but to no avail. Do you wonder how this happens?  I don’t.  In my experience, the perpetrator of bad customer service is a slave to process and rules rather than to the most important aspect of their employer’s success, the customer.  Lately, about 80% of my flights have had issues, mostly delays.  None of us wants to fly when it is dangerous due to weather or when there is a mechanical issue with the plane, but so many airline problems seem to be neither.  And when a plane is delayed for whatever reason, wouldn’t we all enjoy some fast and honest communication? 

Recently, I took an American Airlines flight from Chicago to London Heathrow, where I had a two hour layover at Heathrow before my connecting flight. We enplane in Chicago, sit on the plane for 45 minutes while maintenance people on onboard, and then learn the plane is broken.  The flight will depart, but with a new plane that will be brought to the gate.  We deplane.  American must unload the luggage, move the plane, bring in a new plane, and reload the luggage and the passengers.  Now please select from the following list how long American Airlines estimated it would take to accomplish the above:

A.  Thirty minutes,

B.  One hour,

C.  Until the Cubs win a World Series, or

D.  They have no idea. 

After a delay, the desk agent assures us that we will still make our connection because the computer is showing a close to on-time arrival.  Meanwhile, on the tarmac I am looking not at our new plane but at what appears to be total confusion surrounding the original plane, still containing everyone’s luggage.  Also the crew has left the gate area, a sure tip that we are not leaving in five minutes. 

The agent refuses to rebook us because either her computer shows no problem with our connecting flight or she sees rebooking 300 passengers as a huge problem.  Luckily, the agent I reach by phone rebooks us out of Heathrow even though his computer also shows that we will make our original flight.  As I said, honest communication and who is taking care of the customer?  The plane arrives in Heathrow four hours late.  And to all of you who have flown American to London, the final fallacy.  “There will be agents at the gate to assist you with connections.”