THINK TankJuly 16, 2020

THINK Tank: Is the Pier 1 Name Worth Saving?

As homeware retailer Pier 1 Imports continues to close its physical stores, one company is looking to revitalize the brand’s e-commerce business.

Retail Ecommerce Ventures, a firm co-owned by influencer Tai Lopez and Zoosk founder Alex Mehr, has agreed to purchase the intellectual property of Pier 1 and its e-commerce business for $20 million.

Retail Ecommerce Ventures famously purchased the intellectual property of Dress Barn last after the apparel retailer shuttered its 544 stores.

Pier 1 said in a filing last week that if no “higher or better offers” are presented, they will approve Retail Ecommerce Ventures’ bid at a hearing scheduled for July 30.

 

Q: With Amazon and other major homeware players such as Wayfair, Homegoods, and Target in the picture, is the Pier 1 name still worth something?

 

Emily Pfeiffer: Sr. Analyst at Forrester Research
Shannon Ryan: EVP of North America at Valtech

 

Emily Pfeiffer:
This is a shame. You kind of feel for these retailers, right? You’ve watched them through the process—maybe you’re kind of pulling for them. It’s sad to watch them fall. And so Pier 1 has been growing the digital side of their business for years and years. The growth, although it’s been going in the right direction, hasn’t been enough to offset the decline they’ve seen in in-store sales, so they’ve still been losing, in terms of those total numbers, year over year.

 

Emily Pfeiffer:
They did move to a drop-shipping model in 2016, meaning they added products that were from other suppliers—not their own inventory—to their website, to try to bolster those online sales without taking the risk of bringing in the inventory and picking and packing it themselves. But they also recognized they had to offer free shipping in order to compete. And so they had to make a plan to recuperate those costs by reducing their promotional spending.

 

Emily Pfeiffer:
And so you can almost feel the spiral happening, as you kind of explore this adventure with them. And that’s exactly the same timeframe when Wayfair, for instance, was just blowing up. And they did that by saying, “We’re going to be everything home. We’ve got a purpose. It’s not everything, everything, but within home, here’s the experience we want you to have. And we want you to shop at Wayfair, not because you want to buy a decorative pillow for your couch, but because you’re redoing your whole room. And we’ll give you an experiential shopping process, where you can shop by modern industrial, or whatever your style is, and really get a handle on those products that will make your home feel like you’ve elevated it.”

 

Emily Pfeiffer:
Pier 1 has kind of been the same for decades. For as long as I can remember, it’s not a different style. It’s not a different feel. It’s not a different shopping experience, in-store or online. And so when we compare Pier 1 to other nichey, very limited style retailers like Restoration Hardware or West Elm, you can sort of see how they might fall by the wayside.

 

Shannon Ryan:
“Sad” is a great moniker for Pier 1. This is a retailer that quite honestly, in my opinion, has lost its way. It’s caught in what I would say is no man’s world retail, right? You don’t have the definitive look. You don’t have a niche that you have carved out that is exclusively yours, like a West Elm, or the Restoration Hardware or Pottery Barn. You quite honestly are caught between trying to serve a physical store audience and a digital audience, and therefore you did neither well.

 

Shannon Ryan:
And it was a place, in my opinion, that survived based on geographic proximity and inventory. And quite honestly, those things have gone away now because they can be so well-served by retailers who have a very specific look and an image, or by the Wayfairs of the world who, quite honestly, crush it when it comes to doing this in an online environment.

 

Shannon Ryan:
The idea of paying $20 million for the brand of Pier 1 is, I mean, I’m not going to question the folks over at Retail Ecommerce Venture. They obviously have models that they know way better than I do. I question that, given they bought something called Dressbarn, which I would imagine wouldn’t be necessarily anyone’s favorite place to shop.

 

Shannon Ryan:
And there are lots of other Pier 1s. We can probably come up with hundreds of other retailers that fit that genre of a retailer that is caught—caught between trying to figure out how to serve a physical store customer and an online customer. And, therefore, they’re doing neither well. And it’s a scary place to be. I feel sorry for them for that because it takes a revolutionary type of leadership and intestinal fortitude that is rarely seen in current environments.

 

Emily Pfeiffer:
So just for the sake of devil’s advocating, maybe, just maybe, there’s some magical cross-section between Dressbarn, Pier 1, and the next two or three “Oh my gosh, they on the precipice. Watch them tank. Quick, scoop them up”  retailers.

 

Emily Pfeiffer:
So, maybe there’s actually an opportunity in the data from the customer basis of these combined retailers to really do something useful. Otherwise, it’s a moonshot. I don’t really see it either, but I guess in the scheme of things, 20 million isn’t that much, and maybe it’s a bargain.

 

This conversation first appeared on the July 13 episode of the Retail Rundown.