Is Williams Sonoma the best home furnishing retailer in the country today? It would be hard to argue otherwise.
In perhaps every single area of retailing performance – in-store experience, online market penetration, distinctive merchandise offerings, channel segmentation, services, backroom operations – the retailer is leading the pack. And its financial performance isn’t too shabby either. While RH gets points for its upscale transformation and the Home Goods unit of TJX has redefined the entire home furnishings shopping channel (to its advantage), no other retailer is doing it all the way Sonoma is.
Consider these achievements:
- Seamless Online Transition
While other retailers struggle with the in-store/online equation, WS has nailed it, accomplishing a near perfect 50/50 ratio of sales from its 620 stores and e-commerce websites across multiple nameplates. Very few other retailers can claim similar sales breakouts.
Chalk up much of this to the company’s roots as a direct seller through print catalogs and telephone sales which it transitioned smoothly onto the web. It gave Sonoma a distinct advantage over its competitors, although it was nonetheless not a given that it would make it work. Consider such catalog sellers as Spiegel and Fingerhut – not to mention Sears, Penney and, dare we say, Montgomery Ward – that failed to make this transition.
- Many Brands, Same Results
It has spread its business across multiple brands, each one a success onto itself. Right now, West Elm is the corporate darling, growing faster than any other unit and providing the most merchandising sizzle. It is also growing close to twice as quickly as the overall company.
But the namesake Williams Sonoma kitchen brand remains the foundation for the company, a steady presence on both the retailing scene and the balance sheet. Founded by the legendary Chuck Williams as a boutique kitchen cookware and gadget store in – yes – Sonoma, CA it has staked out a position as the go-to source for anything to do with cooking. That has allowed it to transcend generational shifts in its customer demographics.
Pottery Barn has been both the star and black sheep of the family, struggling at times to find its merchandising niche as its original Baby Boomer target audience began to age out. More recently, it seems to have righted itself and while its growth lags behind other units, it is in positive territory once again. Pottery Barn has also spawned Teen and Kids spin-offs which too have hit some speed bumps along the way though they too now appear to be moving ahead nicely again.
- Innovation Incubator
In addition to the PB sub-brands, Sonoma is carefully nurturing two other names still in the incubation stage. Rejuvenation is an imaginative mash-up of lighting, vintage one-of-a-kind and assorted home décor products that would seem to be inventing its own marketing niche. And Mark and Graham is the company’s first real attempt to get into the fashion business, with accessories and gift items pegged around a personalization story.
- Artisan Marketplace
The one-of-a-kind offerings are being played out at more than just the Rejuvenation nameplate. At West Elm, there is a dedicated program to bring in crafts and handmade products from local artisans and across other brands there are limited edition and vintage items from time to time. These are all focused on bringing shoppers into the stores, creating the experiential moments that all the experts say are the keys to in-store success today.
- At Your Service
Sonoma has also been in the forefront of the movement to offer more than just goods in its stores, layering on services and other initiatives that will ultimately be profit centers onto themselves. At West Elm, they are gathered up under the Design Crew umbrella, featuring design services and installation in addition to more traditional registries. That program has now been rolled out across all brands.
At the kitchen stores, cooking classes and demos have always been a cornerstone of the merchandising plan and those efforts continue, particularly as more and more food is offered at these locations.
Sonoma has been an aggressive promoter, both online and in its print catalogs, offering a myriad of sales and events to drive business. Its latest initiative is its Key Holder program that cuts across all its divisions, offering discounts and other incentives as well as introducing single-brand customers to the company’s full roster of stores.
- Streamlined Distribution
In the backroom, WS is rapidly going to a “one inventory” system that allows it to maintain a single distribution system regardless of whether orders are placed online or purchased in a store. While other retailers struggle with their distribution systems, Sonoma seems to be well on its way to operating a lower-cost, more efficient system.
It’s What’s Cooking
Put it all together and it shows why Williams Sonoma stock is trading at levels not seen in some time, up nearly 50 percent this year alone. It is a compelling story, one that traces its roots back to Chuck William’s early passion for the category, former CEO Howard Lester’s ability to understand the mathematical science of retailing and Gary Friedman’s merchandising savvy that put Pottery Bard on the map in the first place. But much credit is also due to the current management team led by CEO Laura Albers. Onto that strong foundation, she continues to pace the company ahead of the curve in virtually every criterion. And oh, a few years back, the company reopened Chuck Williams’ original 1956 store in Sonoma, CA. Williams Sonoma may have its eye squarely set on the future but it never forgets where it came from. Clearly a recipe for success.
Warren Shoulberg is a business journalist who admits he can’t get out of a Williams Sonoma store without buying some sort of a kitchen gadget…and he doesn’t even cook.