Williams-Sonoma’s e-commerce growth drives a digital marketing shift

August 29, 2016 11:09 AM

Online sales account for most of Williams-Sonoma Inc.’s growth, and as a result, the home goods retailer says it is focusing more of its marketing efforts on digital channels.

E-commerce sales increased 5.2% in the fiscal second quarter for Williams-Sonoma, No. 21 in the Internet Retailer 2016 Top 500 Guide. Sales were $599.7 million in the three months ended July 31 compared with $569.9 million last year, and e-commerce accounted for 51.7% of revenue.

“Our e-commerce business in Williams-Sonoma has been the principal driver of brand growth,” CEO Laura Alber told analysts during the retailer’s fiscal second quarter earnings call Wednesday, according to a Seeking Alpha transcript. The retailer is directing more of its marketing budget to digital channels and that shift has led the company “to surgically cut our catalog circulations to rebalance and to optimize our investments into digital channels as they continue to evolve,” she said.

Digital marketing is the company’s largest investment channel, outpacing catalog and store-based marketing spending, Albers said, though she did not specify percentages or dollar figures.

Williams-Sonoma’s marketing approaches will become more targeted and personalized across its brands, which include Mark and Graham, Pottery Barn, Pottery Barn Kids, PBteen, Rejuvenation, West Elm, Williams-Sonoma Home and Williams-Sonoma. “Our proprietary modeling, based on customer profiles and interactions, drives our ability to target audiences more effectively and profitably,” she said. Relevant marketing drives engagement, and targeted consumers convert at three times the rate of nontargeted ones, at half the cost, she said.

“The breadth, depth and detail in our house file provide us with a material advantage, and we are partnering with great companies to help to advance and take advantage of emerging personalization capabilities for custom segmentation and targeting,” Alber told analysts.

The marketing mix within the Pottery Barn brand is shifting to focus on new customer acquisition and will increasingly leverage such platforms as Instagram, Pinterest, Facebook and YouTube, she said.

Mobile traffic and conversion has increased “significantly” across all brands, though Alber did not give a percentage. Given the mobile surge, the company is focused on improving its’ mobile sites, specifically tied to checkout, registry and furniture buying, she said.

Revenue across brands varied, with Q2 sales at Williams-Sonoma and Pottery Barn Kids flat. Revenue declined 4.8% at Pottery Barn and 5.2% at PBteen. The bright spot of the quarter was home furnishings brand West Elm, where sales increased 15.8% year over year.

For fiscal Q2 2016 ended July 31, Williams-Sonoma also reported:

  • Online sales increased 5.2% to $599.7 million from $569.9 million in the year-ago period.
  • Net sales increased 2.7% to $1.16 billion from $1.13 billion.
  • Store sales increased 0.4% to $559.3 million from $557.1 million.
  • Net earnings of $51.8 million compared with $53.7 million.

For the first six months of fiscal 2016, the retailer reported:

  • Online sales increased 7.3% to $1.18 billion from $1.10 billion in the year-ago period.
  • Net sales increased 6.6% to $2.26 billion from $2.12 billion.
  • Store sales increased 1.9% to $1.08 billion from $1.06 billion.
  • Net earnings of $91.4 million compared with $98.5 million.

More information about home goods sales online can be found in “At Home on the Web,” a 25-page downloadable PDF report that provides an in-depth look at the housewares and furnishings e-commerce market. Click here for more information or to purchase the report.




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