Pier 1 case: Exports Success to Foreign Markets

Numerous companies have confronted the challenge of exporting American retail shops abroad and have failed Pier 1, though, plans on succeeding. With a well thought out, rational strategy, the 31 year old, $700 million novelty store has ventured overseas with The Pier in the United Kingdom. It is planning more international expansion during the next few years.

At the heart of Pier 1’s overseas strategy lies a strong customer focus, which guides the company’s domestic strategy as well. According to director of merchandising Adrian Long, Pier 1 has a tradition of ‘moving with the customers’. As the customer has matured so has Pier 1.

Opportunities in the United States appear to be dwindling though. Sales were up only 7 percent from 1991 to 1992, contrasted with double digit growth rates during the late 1980s. Pier 1 is not abandoning its domestic efforts – actually the company plans to open 300 new outlets during the next ten years but it is keenly looking abroad for more exciting opportunities. The Pier in the United Kingdom is merely a first step, followed by two stores in Puerto Rico opened in 1993. Next on the list are stores in Mexico and Central and South America. At the same time, the company is looking eagerly toward the Far East for additional possibilities. By the year 2000, Pier 1 hopes to have about 250 stores abroad, outside the United States and Canada.

Pier 1 is not expanding overseas blindly. To hedge its risk, the company is working primarily through mechanisms, such as joint ventures and licensing arrangements that minimize the risk to which it is exposed. Pier 1 owns only 50 percent of United Kingdom based The Pier.

In order to be competitive in foreign markets, Pier 1 has made several significant changes in its international strategy, particularly with regard to product mix. In the United Kingdom, Pier 1 is offering products more in line with local tastes. The size and layout of European homes tend to dictate different needs. For example, since built in and walk in closets are rare in the United Kingdom, closets wardrobes tend to sell well there. Similarly, since European homes tend to be smaller than American homes, furniture items sold in the US market, such as bedside tables are too large and must either be modified or discontinued.

Color preferences also vary overseas as a result of the quality of outdoor light. In the United Kingdom, warm colors tend to prevail, such as pale yellows, warm greens, and peaches. In warmer climates such as Spain and Greece, however, whites, azure blues, bright yellows, and reds tend to be preferred.

With regard to other goods, Pier 1 is finding it necessary to accommodate a variety of cultural appetites. In the United Kingdom, Indian goods sell well as a result of the trading history between the two countries.

Even with its attention to cultural details, what Pier 1 recognizes is that the company is not about the specific goods that lines the shelves; rather, the company is about the shopping experience it provides buoyed by colorful, exotic merchandise. Pier 1 can thus remain true to its central role without offering the same goods in every store around the globe. 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. But the goods are so enticing that the customer often cannot help but make a purchase.

The key to Pier 1’s international success lies in getting close to customers abroad, an ambition that falls squarely in line with its domestic strategy. Pier 1 must become acclimated into the cultures in which new stores are located to be able to determine what those customers consider exotic and clever, so that the new Pier 1 outlets can stock items unusual in those cultures sold at moderate prices and displayed in an integrated fashion as the outlets in the United States successfully do with goods that Americans consider unique.

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