Its products were more expensive than other big retailers’ products, but they weren’t necessarily better. At the same time, Pier 1’s product selection seemed to toe the line between quality and price. consumers with international furniture designs that only high-end city boutiques had at the time. Pier 1, which first launched in 1962, began as a brick and mortar destination for interesting designs from around the globe. The biggest one was Pier 1’s inability to refresh its product line to have it compete with other growing retail players. “They have been facing a number of challenges - probably over the last decade,” said Forrester principal analyst Sucharita Kodali.
New businesses have threatened its positioning by offering similarly internationally sourced items but cheaper and not in-store. Pier 1, in the pre-digital age, was a destination for interesting international designs that were perhaps a bit more expensive. But, according to Moody’s analyst Raya Sokolyanska, “it has accelerated over the past couple of years in the home goods sector.” New digital entrants offering more consumer choice has been a growing threat to traditional retailers for as long as a decade. While Pier 1 was able to grow e-commerce sales - it grew from 12% of total sales in 2015 to 25% in 2018 - that also pushed drove down profitability. Digital entrants like Wayfair and Amazon have had impact on every national home furnishings retailer. Pier 1’s problems aren’t exactly new, although they have come to a head recently. Modern Retail reached out to Pier 1 for comment but did not receive a response. “The whole business is really underperforming,” said GlobalData Retail managing director Neil Saunders. Despite an attempt to turn things around in 2018 - which included store redesigns, an expensive marketing splash and new and cheaper products - Pier 1’s financials continued to decline, leading it to where it is today. In the past five years, players like Wayfair, Amazon, Target and Homegoods took over the furniture and home furnishings industries by offering wider selections at cheaper prices.
This past quarter, net loss was $59 million and EBITDA was minus-$41 million. Pier 1’s financial performance has been bad, to say the least.
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