high-touch, multi-channel, multi-brand platform, differentiated product offer and lifestyle merchandising.
OK. So with that in mind, how is the US kitchen and home furnishings firm doing? Well it’s a mixed bag. In its most recent quarter, retail net revenue only grew 0.2% year-on-year. But e-commerce revenue grew 8.2% year-on-year, to $747 million and now accounts for 55% of total sales.
It’s validation of investment in the “digital shopping experience”, says Alber, pointing to initiative such as last month’s customer-facing launch of Design Crew Room Planner. This is intended to tackle the problem for customers in-store of trying to imagine how that sofa that looks good there would look in the living room back home. The tool is powered by Outward, a three-dimensional imaging and augmented reality platform Williams-Sonoma acquired in 2017. Alber says:
This launch was met with overwhelmingly positive feedback from our in-store cross-brand Design Crew associates, who've been actively using the application in our Pottery Barn, West Elm and Williams-Sonoma stores. Since its initial launch [internally] in August, over 15,000 rooms have been created by the Room Planner, with thousands of users engaging in design activities weekly. We believe this application will become an integral part of the home design and shopping experience, and we'll continue to add more features and functionalities to enhance this experience for our customers.
There’s also been more effort put into more prosaic aspects of a digitally-enabled retail experience, such as the cross-brand loyalty program, The Key, which now boasts 3x the number of members as this time last year. A fresh goal now is to introduce a ‘no click option’ for online customers which will extend across the various Williams-Sonoma brands, including Pottery Barn. Elsewhere, says Alber:
We expanded our cross-channel shopping capabilities to offer customers more choice and convenience in time for the Holidays. We introduced Buy Online, Pick-Up In Store for Pottery Barn and West Elm brands. We are seeing strong engagement and sales through this channel, particularly with items that are out of stock in e-commerce, and seasonal and gift items that customers shop for at the last minute. We are taking advantage of our multi-channel platform and testing more shipping options to meet our customers' growing expectations for more choice in the way they shop.
As for the stores themselves, in common with with so many retailers, there is a drive to create the mythic ‘store of the future’. Such remodelling takes time of course, but where it’s been put into practice it is delivering results, insists Alber:
Our new stores continue to perform better than the fleet with West Elm stores outperforming their first year of performance sales by 25% on average…To further transform our retail fleet and expand profitability, we impaired one underperforming store this quarter and plan to close another 21 stores upon lease expiration in Q4 as part of our planned closures for the year. This will bring our total closures for the year to 33 stores in total.
In our global operations, we continue to expand our presence with the introduction of Pottery Barn Kids in the U.K. by e-commerce and three new John Lewis locations. And as we announced earlier today, we have successfully entered into a partnership with a franchise partner in India, Reliance Brands, where we plan to enter in early 2020. We look forward to partnering with Reliance and introducing our distinctive brands and excellent service to our customers in India. In addition to this exciting new development, we are also actively pursuing other opportunities to further expand our global business.
With the US Holiday season kicking off in earnest this week, Alber maintains that the firm is in a good place:
Our teams are focused on executing the fundamental flawlessly and delivering outstanding service at every touch point to give our customers the great Holiday experience that they expect from our company.
As we’ve noted before, Williams-Sonoma has made some interesting investments in digital tech, such as Augmented Reality and Virtual Reality. The nature of the firm’s business means that stores are always going to play a crucial role - anyone who buys a sofa online, sight unseen, is asking for trouble in my book! So getting that ‘store of the future’ angle right is going to be crucial moving forward. Whether Alber ever gets to her desired state of buzzword perfection remains to be seen.