Case Study on "Williams Sonoma"

Case Study 4 pages (1480 words) Sources: 4

[EXCERPT] . . . .

Williams-Sonoma's market segmentation in the Internet era. Williams-Sonoma must continue to offer a unique, upscale shopping experience online while staying afloat in a shaky economy. It also must secure a more youthful consumer base, keeping its eye on the future.

If the Williams-Sonoma continues with its present strategies and objectives, where will it be in 5 years?

"Through the combination of its 309 retail stores and five mail-order businesses, Williams-Sonoma has emerged as the dominant home-centered specialty retailer in the United States" (Barnett 2011). Williams-Sonoma is currently deploying a strategy which features careful market segmentation, Internet retailing, and a focus on products that embody aspirational living that are sold direct-to-consumer. Williams-Sonoma has emphasized Internet retailing even with items such as furniture that consumers traditionally do not buy sight unseen. However, given the shaky economy, shifting to online venues seems to make sense, given that selling online does not have substantial overhead costs, versus traditional brick-and-mortar stores. Even consumers who patronize retail stores may prefer to shop for deals online. "The company's direct-to-consumer business, such as catalog and online operations, provides a low-cost growth alternative to opening new stores. In the fourth-quarter [of 2010], the company saw such revenues rise more than eight percent, to $398 million. Internet sales rose 15%, to $309 million, or 78% of the total for direct sales. For the full year, direct-to-consumer sales actually fell, but the fourth-quarter advances represents green shoots of growth the retailer wants to nurture" (Duff 2010). The care with which Williams-Sonoma has monitored different consumer's buying trends and demographic profiles can be further refined with Internet tracking of consumers' purchases and even their web-surfing habits (such as Facebook use).

Using catalogs has fallen out of favor for Williams-Sonoma, given that webpages cost far less to maintain. Also, many of the market segments it desires to target, such as teens (in the case of Pottery Barn Teen) do not traditionally shop from catalogues. If Williams-Sonoma continues to pursue its Internet-focused strategy, it seems poised to at least hold its market ground within the next five years and perhaps expand it, depending on the state of the economy (particularly the degree to which the housing market improves).

Q2 If you were the CEO of William-Sonoma, what strategies would you recommend, and why?

One of the quandaries William-Sonoma faces, given the faltering economy, is that while consumers are tightening their belts, it clearly sells a lifestyle that emphasizes elegance and luxury. Discount marketing is unlikely to work for William-Sonoma, given that lower-cost retailers offer cheaper products for the home (albeit without the cache and quality conveyed by William-Sonoma's image).

According to Williams-Sonoma: "Our extensive database allows us to know our customers well by providing a window into their past purchases at both retail and mail order through all five concepts...Our targeted marketing effort is data-driven. We have the ability in house to leverage retail and catalog purchasing behavior for target marketing purposes" (Barnett 2011). Market segmentation must continue to bolster the brand. Consumers less impacted by the recession or who are willing to use their disposable income to buy items that are not strict necessities, like teen consumers or the very wealthy, should be marketed to in a manner designed to draw attention to their perceived needs. However, with sufficient market segmentation, William-Sonoma can also offer sales and slightly more down-market strategies through its brands that are less invested with a 'lifestyle' image. The Internet enables more targeted advertising that is demographic-specific -- one reason that William-Sonoma may be besting its rival. "Williams-Sonoma says online sales of home furnishings will grow by $2.5 billion in the U.S. over the next five years, and [CEO] Alber wants a big chunk of that growth. Her company dominates home furnishings online, with $943 million in Web sales last year, more than triple that of its nearest rival, Crate & Barrel" (Timberlake 2010). Williams-Sonoma can even conceal its sale items discretely on its webpages, or select more budget-minded consumers to receive emails about deals, versus consumers that might be turned off by such an emphasis. Market segmentation must develop the brand while still remaining true to the brand.

Q3. Describe the competitive strategies used by each of Williams-Sonoma's competitors. Which of these strategies are the most effective? Support your answer.

Williams-Sonoma operates a far more diversified strategy than any of its major competitors. As well as kitchen supplies and goods for the home at its flagship… READ MORE

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