1. If Williams-Sonoma continues with its’ present strategies and objectives, where will it be in 5 years? Given today’s economy, and the bleak economic outlook, I do not believe Williams-Sonoma will continue to exist with its’ current strategies and objectives to serve its’ below target market consumers. Bottom line is many consumers cannot afford the products being sold by the company. Although, the company’s target market is in the 10% of wealthiest consumers, and had total earnings of over 3.5 billion. (2010 shareholders meeting).
Other avenues of generating revenue must be explored. I fear that even the 10% will eventually become more cost conscious in the years to come. On the lines of the company improving its’ position in the next five years, I think the company should continue to improve on concepts already in place. An example is the Pottery Barn Teen website. (pbteen.com). Williams-Sonoma had used the concept in moderation starting with WS bridal registry.
The idea took flight and as a result, moved the concept to its’ retail operations such as Pottery Barn, resulting in a 500% jump in online sales generating over 1 billion in revenue.
(Prophet.com). Still with all these profits and improvements, if WS cannot hold by decreasing its’ prices so that others not in the 10% range can afford their products, the company will fail like the housing market. Over the next five years, the company should consider expanding its’ product line to include bath décor to complement the already established retail home furnishings.
2. If you were CEO of Williams-Sonoma, what strategies would you recommend? There are so many recommendations. I would first build on the internet base I talked about earlier. If I can improve internet sales over 500% I certainly want to keep that going. I would incorporate interactive websites. Having the ability to talk to, chat with an associate while I’m shopping in my underwear is always helpful. Next I would improve my e-commerce presence by advertising on social media outlets and improve accessibility to shopping by posting web-apps. I would consider lowering price points so I could tap into the more than 10% of consumers without becoming “Wal-Mart”. Now the company did do something to increase its’ position that I found useful.
That was to decrease its’ overall lease space by 2%. (2010 shareholders meeting). This reduction in retail occupancy costs attributed to the 1 billion dollars the company enjoyed last year. I would also consider expanding the company’s customer base by broadening the product line to similar to Home Goods or Bed Bath and beyond who currently double the revenue of Williams-Sonoma. (Redistribute assets earmarked for traditional cataloging to online accesses. Not only will this save money, but will also impact paper usage. I believe advertising in this was has all but outlived its’ usefulness.
3. Describe the competitive strategies used by each of Williams-Sonoma’s competitors. Which of these are most effective? Williams-Sonoma has six major competitors plus one more in their market. The company holds only 7.9% market share (FY10) to main competitor Bed, Bath and Beyond with an astonishing 34.4%. (William-sonoma.com/investors) BBB’s strategy is to offer competitive prices for quality products. Its’ target market is middle to upper middle class and this is the reason it fairs better in the current market. The Bombay Company’s strategy was to increase its’ footprint by increasing outlet store locations so it could offload clearance items and increase sales to the outlet mall customer base. (Homeaccentstoday.com).
Crate and Barrel decided to complete a nationwide marketing campaign that targeted catalogs and websites. While Pier 1 Imports, in a bold move consolidated chains, and licensed their name to Sears in Puerto Rico. (turnaround.org). Door to Store decided to convert and market to style-minded customers at low prices capitalizing on web selling and shipping nationwide. (buyfurnitureyoulove.org). Rolling Pin Kitchen Emporium switched most of its locations to upscale malls and targeted marketing thru websites and catalogs. While Restoration Hardware seemed to advertize to its wealthiest customers targeting the top 10%, attempting to expand its base. If I had to choose one of these strategies I would have to go with the one I mentioned first.
I am aware that this was not a in the original case study but in researching I found the Bed Bath and Beyond strategy to be most formidable considering the company doubled the revenue of Williams-Sonoma last year. There is a reason why the company commands 35.4% market share in FY 09 while WS was at 7.9%. (Williams-sonoma.com/investors) Williams-Sonoma is only utilizing a portion of marketing power while watching other companies progress thru a tough recession and recover by constant restructuring.
4. How is Williams-Sonoma using the Internet as a distribution channel now, and how would you recommend that they us the Internet in the future? Williams-Sonoma launched a bridal registry as a test bed for furthering the use of the internet. (prophet.net).This shift was so successful it moved the use of the internet to Pottery Barn, and other retail outlets. The result was 500% increase in internet sales and a 1 billion dollar profit. They also used the web to launch PB Teen which focused on the gap in age between Pottery Barn and Pottery Barn Kids. Each website is interactive now but PB Teen was the first with outstanding success.
This appealed to dialed in kids wanting something to improve their own piece of sanity, their bedrooms. The interactive site allows the exchange of ideas, instant feedback and the customer has the ability to view products they like. Williams-Sonoma has already completed its’ internet shift. I feel they can rely more on the model by providing 24 hour online support to those consumers that have odd hours. Furthermore I believe the company should limit its’ use of hardcopy catalogs unless specifically requested because this focus had established itself as a business, does nothing for it in the future. Another approach is marketing thru social networking sites. This approach, along with direct marketing does have its’ costs and would show profit after the initial cost blast. If the company wishes to improve its’ position of 7.9% market share, it will need every edge it can possibly have.