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Digital-first, but not digital-only - Williams Sonoma's omni-channel retail execution looks robust

Stuart Lauchlan Profile picture for user slauchlan March 17, 2023
Summary:
It's getting tougher in the home furnishings retail sector, but Williams Sonoma CEO Laura Alber is upbeat about her firm's omni-channel strategy.

Williams-Sonoma store Interior

While the likes of Wayfair and Bed, Bath & Beyond have been in decline, Williams Sonoma appears to be defying concerns around the state of the home retail sector in the Vaccine Economy. 

Home furnishings, along with DIY, had a pandemic bump as people under effective house arrest during lockdowns looked around them and decided it was time to upgrade their environment if they were going to be staying inside all day. But as the crisis has eased off, there’s been an inevitable re-balancing of demand in this space. 

Williams Sonoma has seen some signs of this - its Q4 numbers saw revenues slip slightly year-on-year from $2.5 billion to $2.45 billion - but compared to what others in the same retail sector have experienced, it’s outperforming.

A digital first mindset is key, according to CEO Laura Alber, with e-commerce revenue up 4.5% year-on-year and now accounting for two-thirds of overall revenue: 

We continue to distinguish ourselves as the world's largest digital-first, design-led sustainable home retailer. And what are these things that distinguish us? No other home furnishings company offers our in-house design capabilities and vertically integrated sourcing organization. It allows us to deliver high-quality, sustainable products, at the best value to market, that cannot be found anywhere else. No other home furnishings company offers our digital-first, but not digital-only channel strategy that's transforming the customer experience. 

With our proprietary e-commerce platform, we are one of the largest e-commerce players in the United States. Our in-house CRM and data analytic teams optimize our digital spend and customer connections. And our great stores not only deliver an outstanding customer experience, but also in 2022, we expanded our services with ship to store as we transition our stores to also service design centers in omni-fulfillment hubs.

On e-commerce, she adds:

You see people with large e-commerce businesses, but no stores. You see people who have enormous stores, but they really don't invest much in e-commerce. We know that the multi-channel shopper shops more, and it's experience they're looking for - they can research online and go sit in the sofa in the store. We're expanding what we do in these stores and using them differently. And this is a big advantage for us. We're actually able to better turn our inventory because we can ship it from the stores and people can pick it up in store.

B2B

The firm’s extension into B2B, with an estimated total addressable market value of $80 billion, is also contributing to success, she adds: 

Our largest cross-brand growth driver is business-to-business. Williams-Sonoma, Inc. is no longer just a home furnishings company. We furnish our customers everywhere, from restaurants to hotels, from football stadiums to office spaces. We set the ambitious goal this year to reach $1 billion in demand in our B2B business, and we came very close, driving 27% year-over-year growth and 166% on a two-year basis. And we continue to win B2B accounts due to our design capabilities and a wide range of products offered in our multi-brand portfolio.

Customer wins to date include outfitting Carl's Jr.'s corporate office and Google's Midpoint office, furnishing the Golden Guardians esports facility in Los Angeles, and a number of hotel projects with Marriott SpringHill.

All that said, the home furnishing retail sector is a different beast in the Vaccine Economy, particularly given the current cost-of-living crisis. There’s room for opportunity here, argues Alber: 

I know housing's top of mind for all of us and [we] know that home sales have decreased 37%, but home values have increased 40%. For most of our customers, home is their greatest asset. People love their homes. They learned how to cook in the pandemic. And now as they continue to cut back spending elsewhere, they realize that going out to dinner is really expensive. So, the dinner party is back in full force, and it's an area that we're really focusing on. The other dynamic just to remind everybody is, if you can't move, what do you do? Eventually, you remodel. When you remodel, you buy new furniture. 

Alber concludes: 

We're one of the best positioned companies to weather any storm and come out stronger, and we've proven this time and time again.

My take

Looking ahead, we recognize that with the weak housing market, layoffs and a possible recession, there's a lot of uncertainty with the consumer. Nevertheless, we remain confident. 

For now at least, there’s good reason for that confidence. Williams Sonoma has pulled off a robust and compelling omni-channel strategy, growing its e-commerce strengths while using its stores as a billboard for the brand.  

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