Williams-Sonoma is a US based specialty retailer of higher-end lifestyle and home furnishing products. They sell their merchandise through three channels: retail stores, catalogs and six websites. It is headquartered in San Francisco, California. Would you like a lesson on SWOT analysis?
- Their strong brand portfolio caters to an upper-class, higher-end consumer niche of the home furnishing and accessories industries. Their portfolio, focused on various demographic segments and varied customer needs, provides a competitive advantage.
- The company’s core brands are Williams-Sonoma, Pottery Barn and Pottery Barn Kids.
- Williams-Sonoma focuses on kitchen-related cookware and other products including pots, pans, cookware, knives, storage containers, small electrical appliances, table linens, flatware and glassware. They also have higher-end private label food products.
- Pottery Barn stores sell oversized, stuffed chairs, candles, mirrors, frames, pillows, blankets, rugs and window treatments and furniture.
- Pottery Barn Kids is an extension of the Pottery Barn concept and focuses on children’s furnishing and accessories. Pottery Barn Kids also offer the option of customization of products.
- PBteen targets teenagers with its bright colored, sport themed, customized and other theme-based lifestyle products.
- West Elm’s products are more simple and modern than what is usually found in a Pottery Barn store. The merchandise is priced at ‘mass market’ points.
- Williams-Sonoma Home targets high-end customers with its more formal furniture and home decor products.
- In 2008, the company implemented a new retail inventory management system. This gave them a strong retail and operations system, as well as an advantageous distribution system. They are highly successful at logistics, inventory management of stores and delivery of stock through their catalogs and websites.
- Similar products are available at a lower price point in big box stores such as Target and Wal-Mart stores.
- Multiple retail channels increases proximity with customers, which in turn, would lead to top line growth. However, the US home furnishings store industry is fragmented with 50 largest companies comprising 70% of the industry sales, making it a difficult industry to survive in.
- The company has had declining profitability since 2006. The company’s operating profit and net profit declined from $345.1 million and $214.9 million in 2006 to an operating profit and a net profit of $313.4 million and $195.8 million in 2008.
- The decline in profitability, operating cash flows and margins could hamper expansion plans which could erode the investor confidence in the company.
- The company faced a copyright infringement suit in 2008, alleging that they used copyrighted designs for their rugs.
- In 2008 the housing sector in the US experienced one of its most significant downturns in 40 years. This downturn resulted in substantial volatility in the financial markets and depressed growth rates in the home furnishings and accessories industry overall.
- Consumer Confidence in the US declined in 2007-2010, due to lower sales of homes, rising fuel prices, a weaker labor market and stricter laws for borrowing money.
- The company is working on restoring sales and the reputation of its core brands through a five pronged strategy: offering innovative, unique products to its core customers, capitalizing on the changing trends; improving its marketing and visual merchandising for a more exciting shopping experience; and is testing new shipping charges.
- They are stressing value to attain competitive advantage, changing their product display and presentation in stores. This includes remixing the assortment, re-allocating floor space among categories, and improving in-store merchandising.
- They increased retail leased square footage by approximately 8% in fiscal 2009 and also plans to expand or remodel additional 20 stores.
- They are putting high emphasis on direct marketing in order to enhance customer reach. In FY2008, the company improved its online sales operations by implementing new functionality in DTC marketing systems, which enabled the company to reduce catalog circulation and improve the relevancy of its on-line marketing.
- They have also begun to focus on cost cutting in order to obtain a competitive advantage. They reduced the shipping rates of Pottery Barn products. Williams-Sonoma adjusted the shipping rates in its 2008 spring catalog. Reducing shipping rates could lend towards ‘Pottery Barn’ brand revitalization, acquiring new customers and also translate to growth.
- Moving into a global economy could diversify risk and create a more recognizable brand name.
- They can also consider partnering with Whole Foods, Inc., an organic grocery chain that caters to demographically similar customers.
- Williams-Sonoma faces intense competition from local, regional and national retailers including department stores, specialty stores, mail-order retailers, discount and mass merchandize stores, and national chains. Their major competitors are Bed, Bath & Beyond, Crate and Barrel, Wal-Mart, Target, Home Depot, JC Penny, Haverty Furniture, and Cost Plus.
- Any continued long-term slowdown in US housing market will continue to affect their sales and revenues. As sales of houses slow down, so does the sale of home furnishings, home improvement products and accessories.
MarketLine. (2010). Williams-Sonoma Company Overview. Retrieved on September 8, 2010 from www.marketline.com
Wikiwealth. (2010). Williams-Sonoma (WSM) Stock Research, Investment News & SWOT Analysis. Retrieved on September 9, 2010 from http://www.wikiwealth.com/research:wsm
Charles E. Williams established the first Williams-Sonoma store in Sonoma, California in 1956. The company began its direct-to-customer (DTC) business in 1972 by launching its flagship catalog, under Williams-Sonoma brand. They acquired Pottery Barn, a retailer of casual home furnishings, in 1986, from The Gap. The first Pottery Barns Kids store was opened in 2000, and its website followed a year after. Williams-Sonoma is a US-based multi-channel retailer of lifestyle products that focuses on home furnishing and accessories. The company offers home products ranging from culinary, and serving equipment such as cookware, cookbooks, cutlery, informal dinnerware, glassware, table linens, specialty foods, cooking ingredients to home furnishings. Williams-Sonoma markets these products through retail stores, catalogs and through the Internet.
Mr. Williams procures the merchandise for the company from foreign and domestic manufacturers and importers located in about 43 countries, located primarily in Asia and Europe. The company operates through two segments: retail and direct-to-customer (DTC).
- In 2008, the company operated 600 retail stores in 44 US states, Washington, D.C, and Canada. This includes 256 Williams-Sonoma, 198 Pottery Barn, 94 Pottery Barn Kids, 27 West Elm, nine Williams-Sonoma Home and 16 outlet stores.
- They also sell their products through six websites: williams-sonoma.com, potterybarn.com, potterybarnkids.com, pbteen.com, westelm.com, and wshome.com. They also have seven successful mail-order catalogs.
- Their extensive store network helps it cater to a varied consumer needs and segments and create product awareness and loyalty.
- Online sales, improve their margins by cutting down its operating costs. The websites and catalogs create awareness about its products amongst customers. Multiple retail channels enable the company to enhance its reach, cater to a wider customer base and meet their diverse needs efficiently.