Pier 1 Kids plays up decor accessories for boys, girls

DSN Retailing Today, Nov 7, 2005 by Debbie Howell

FORT WORTH, TEXAS -- One look at the hot pink faux-fur pillows and leopard-print bedding on display at Pier 1 Kids proves that this store is anything but an ordinary children's furnishings store. In fact, this division of Pier 1 Imports goes to the extreme to make sure its assortments are unique, exclusive, fashion-forward and relevant to a child's dreams.

Though the chain purchased by Pier 1 in 2001 is still quite small at 46 stores, its transformation over the past four years has been staggering. And the division's efforts are starting to pay off big time, with comparable-store sales up more than 30% fiscal year-to-date.

"We're excited about the future," Pier 1 Kids president and ceo Paul Mihic told DSN Retailing Today in a recent interview. "We feel like we can carve out a great segment of the market because of the product that we offer and the price that we sell our product at."

With an eye toward eventually operating 300 stores in the United States, Pier 1 Kids has spent the past four years tweaking the concept. The current Pier 1 Kids in fact bears little resemblance to the former Cargo Furniture chain, which sold home furnishings of all types in a showroom setting and did not emphasize accessories such as bedding and room decor.

Under Pier 1's direction, the concept's focus was narrowed to children's furnishings, with the assortment expanded dramatically in coordinating fashionable accessories. About 95% of bedding designs are proprietary, with a new style added monthly. Reliance on furniture sales has gone down with the addition of accessories, resulting in a shift in the sales mix ratio from 95% furniture under Cargo to 65% furniture now.

"You're not always in the market for a bed, but top of bed or accessories are really what keep the excitement going and set the tone for the store. That's where we've really put our focus," said Peter Fowler, director of merchandising and marketing.

Targeting an age range from toddlers to teens, Pier 1 Kids initially focused on bedding styles that were sure to be winners, such as airplanes for boys. But merchants found that preteen girls in particular were becoming quite fashion-savvy, interested in emulating styles of older teens. As a result, Pier 1 Kids began to study fashion trends, noting success with bedding styles such as denim and camouflage for boys and bohemian for girls.

Along with beds, desks and bedding sets, Pier 1 Kids expanded its assortment to provide kids with everything needed to outfit a bedroom, from toy chests to rugs. Impulse items were also added to the mix, such as old-world wooden toys merchandised on tiered tables

Among some of the newest offerings are a bathroom accessory line launched this past spring and a recently added monogramming program for towels, pillows and bedding.

As opposed to a bland showroom-style setting under Cargo, visual merchandising by room vignette sets the stage, inspiring customers and their children to want to buy more. Many of the accessories can be mixed and matched among different bedding styles.

"It's more colorful and I think it's very easy to shop. You can see how things work together. When I go into a store and hear kids saying, 'That's cool,' that makes me feel like we're doing our job," Fowler said.

Mihic said the concept seems to work best in urban or suburban high-traffic shopping centers in an average box size of 4,500 square feet. While several stores are located adjacent to Pier 1 Imports stores, so far the company has kept the two formats separate.

The children's furnishings market in the United States, estimated at between $9 billion and $14 billion, grew about 8% this past year, Mihic said. The industry outlook is quite bright despite soft sales this past year in the general home furnishings market and for Pier 1 Imports.

"We feel really good about the rest of the year and what we can do, even when we're up against comp-store gains from last year," Mihic said.

Competition has certainly heated up in recent years in the children's furniture business, with formats launched such as Bombay Kids, Pottery Barn Kids and Land of Nod. Mihic sees the competitive advantages at Pier 1 Kids as unique designs and better values.

"We offer good quality merchandise at very affordable prices that run 30% to 40% lower than competitors," Mihic said.

A sampling of items sold at Pier 1 Kids includes its top-selling bed--the $399 ladder-end bunk bed available in three finishes--S59 child-size wicker rocker, $20 sports-themed bath towels, $139 hallerina comforter, $49 twin inseparable sheet set and $10 wall plaques.

Pier 1 Kids offers delivery and setup for furniture purchases for a small fee. Most furniture items not in stock are available for delivery in two to four weeks, Mihic said. And while the retailer's Web site, www.pierlkids.com, does not sell goods online, customers can order from a toll-free phone number and have items delivered anywhere in the United States.

Sales at Pier 1 Kids grew 33% to $25.7 million last year, representing less than 2% of corporate revenue at Pier 1 Imports. Still, the small chain has significant expansion opportunity. Concentrated currently in the Southeast, Pier 1 Kids will eventually move westward, potentially opening a dozen new stores in 2006 in existing and contiguous markets.