Summary: <p><a href="https://www.youtube.com/watch?v=IgFoId-snig">YouTube Video</a></p> <p>Let’s go through a case study based on an article written by Warren Shoulberg Senior Editor of Forbes.</p> <p>Article: <a href="https://www.forbes.com/sites/warrenshoulberg/2018/09/27/pier-1-is-sinking/#466c2da1640d">Pier 1 is sinking </a></p> <p>These are the facts of the case:</p> <p>“Unfortunately, the disaster befalling the home furnishings retailer… [is]<br> result of man-made decisions and circumstances that are increasingly making<br> its long-term (maybe even short-term) prospects look pretty gloomy…<br> Another rotten quarter – …increased losses and failure to meet even the most<br> pessimistic of forecasts… the stock has lost half its value since the start of the<br> year…<br> Pier 1 has been awash in problems for a generation but the difference this time<br> is that most retailers that sell home furnishings… are having pretty decent<br> years, benefiting from demographics, a good housing market and an overall<br> economy that play to the segment’s strengths…<br> How did the retailer get lost at sea? Let us count the ways:<br> 1. First off there is a physical store base that reflects a different era in<br> retailing… vastly overstored for the current retail climate. Many of those<br> locations are free-standing, often in mall adjacency areas, but as its no<br> longer a destination store it has none of the advantages…<br> 2. Starved for cash over the past decade, the stores have grown tired and<br> rundown. Competitors like Target are spending billions to update their<br> physical plants, Pier 1’s budget has significantly fewer zeroes.<br> 3. Layouts are cluttered, not particularly intuitive to shop and merchandise<br> classifications are oddly over-assorted in some areas and under<br> represented in others. Furniture floor samples are sometimes broken,<br> damaged or otherwise uninviting to shoppers.<br> 4. While about a quarter of the company’s sales are now online, that<br> drastically trails competitors that get half their sales through the web.<br> a. The company is still paying for shutting down its e-commerce<br> operation years ago during a particularly nasty cash crunch.<br> 5. Earlier this year the CEO said the company realized, after doing some<br> research, that it had misjudged its customer profile and was targeting a<br> much more upscale shopper than the people in fact who bought at the<br> store. It’s not clear what’s more troubling: not knowing your<br> customer…or admitting it.”</p>
