Pier 1 Imports Banking on its Database and CRM Project
Pier 1 Imports, Inc. is banking that its analytics, loyalty, and customer-centric initiatives will translate to higher spend and more new customers, having invested almost 50% of its capital investment in information technology.
While Pier 1's total sales and company comp sales in fiscal 2016 registered low single digit increases on a constant currency basis, the company did achieve strong double digit growth in e-commerce sales, which reached 18% of total revenue. E-commerce sales penetration was approximately 15% in the fourth quarter 2016, up from 12.6% in the fourth quarter of last year, representing e-commerce growth of about 16% year-over-year.
Capital expenditures totaled $12 million in the fourth quarter and $52 million for the full year. For the full year, just under half of Pier 1's capital investment was in support of IT, which included sizable investments in support of the company's customer data excellence initiative. The remainder was split between investment in stores and supply chain.
In fiscal 2017, Pier 1 is planning for capital spend of approximately $55 million, which will be directed towards the same three key targets as fiscal 2016, IT, including upgrades to pier1.com, investments in stores and also investments in the supply chain.
The company rebuilt its legacy customer database and added new CRM functionality in fiscal 2016, so that its marketing, customer relations and store teams have access to information about how and when Pier 1 customers spend.
"The database and CRM project is the most ambitious and complex IT work that we’ve undertaken and its impact will be felt enterprise wide," said Alexander Smith, president and CEO.
The new database provides Pier 1 with a platform to develop an extension to its Pier 1 rewards credit card loyalty program. This new entry level non-tender loyalty program is currently being piloted in three states and the company plans to roll it out nationwide later this year. Pier 1 also plans to roll out a gift registry option for customers online this year, and expects to add the functionality to brick-and-mortar stores later.
"The combination of the new database and expanded loyalty program and our new customer relations functionality should translate to higher spend from known customers and increase the number of new customers coming into the Pier 1 family," said Smith.
In fiscal 2016, known customers accounted for greater than 70% of sales, while repeat customers accounted for approximately 60% of sales. The company hopes to push these rates higher in fiscal 2017 as more customers enter its database.
"I’m very excited to see how our use of data and advanced analytics are changing the company for the better on many fronts," said Smith. "They will help to find cost efficiencies across the organization and help make us better decisions around promotional activity, media spend and real estate. Our use of data is expanding our understanding of how customers behave in the omnichannel world, so we can talk to her the right way and drive our attention and frequency rates even higher beyond the all-time highs we achieved in fiscal 2016."
Smith further explained that the company's CRM capabilities are allowing it to segment its database a lot more effectively in terms of what customers are spending on, which merchandise categories, and the frequency of their spend so Pier 1 can do its targeting for reactivation and frequency building.
While Pier 1's total sales and company comp sales in fiscal 2016 registered low single digit increases on a constant currency basis, the company did achieve strong double digit growth in e-commerce sales, which reached 18% of total revenue. E-commerce sales penetration was approximately 15% in the fourth quarter 2016, up from 12.6% in the fourth quarter of last year, representing e-commerce growth of about 16% year-over-year.
Capital expenditures totaled $12 million in the fourth quarter and $52 million for the full year. For the full year, just under half of Pier 1's capital investment was in support of IT, which included sizable investments in support of the company's customer data excellence initiative. The remainder was split between investment in stores and supply chain.
In fiscal 2017, Pier 1 is planning for capital spend of approximately $55 million, which will be directed towards the same three key targets as fiscal 2016, IT, including upgrades to pier1.com, investments in stores and also investments in the supply chain.
The company rebuilt its legacy customer database and added new CRM functionality in fiscal 2016, so that its marketing, customer relations and store teams have access to information about how and when Pier 1 customers spend.
"The database and CRM project is the most ambitious and complex IT work that we’ve undertaken and its impact will be felt enterprise wide," said Alexander Smith, president and CEO.
The new database provides Pier 1 with a platform to develop an extension to its Pier 1 rewards credit card loyalty program. This new entry level non-tender loyalty program is currently being piloted in three states and the company plans to roll it out nationwide later this year. Pier 1 also plans to roll out a gift registry option for customers online this year, and expects to add the functionality to brick-and-mortar stores later.
"The combination of the new database and expanded loyalty program and our new customer relations functionality should translate to higher spend from known customers and increase the number of new customers coming into the Pier 1 family," said Smith.
In fiscal 2016, known customers accounted for greater than 70% of sales, while repeat customers accounted for approximately 60% of sales. The company hopes to push these rates higher in fiscal 2017 as more customers enter its database.
"I’m very excited to see how our use of data and advanced analytics are changing the company for the better on many fronts," said Smith. "They will help to find cost efficiencies across the organization and help make us better decisions around promotional activity, media spend and real estate. Our use of data is expanding our understanding of how customers behave in the omnichannel world, so we can talk to her the right way and drive our attention and frequency rates even higher beyond the all-time highs we achieved in fiscal 2016."
Smith further explained that the company's CRM capabilities are allowing it to segment its database a lot more effectively in terms of what customers are spending on, which merchandise categories, and the frequency of their spend so Pier 1 can do its targeting for reactivation and frequency building.