e-comm

Williams-Sonoma to Reduce Brick and Mortar Footprint, Invest in E-Comm

The company aims to expand its manufacturing and fulfillment capacity 20% to 30% with two new distribution centers.
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Francis Scialabba

· less than 3 min read

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Elaborate WFH setups and the pandemic sourdough bread craze helped Williams-Sonoma bigly in 2020. Now, the Pottery Barn and West Elm owner plans to shave its physical footprint in favor of its more profitable e-comm biz.

Digital first: Online accounts for 70+% of Williams-Sonoma’s revenue, but the company is no newbie to the e-comm game. In 2019, e-comm made up 55% of the brand’s sales, and the pandemic put its online strategy into hyperdrive.

  • By next year, the company aims to expand its manufacturing and fulfillment capacity 20% to 30% with two new distribution centers.
  • Williams-Sonoma’s $2.29 billion Q4 revenue surpassed a $2.18 billion projection.

To reduce brick and mortar costs, William-Sonoma plans to renegotiate some of its leases and allow about 25% of them to expire. But the retailer is likely thinking more strategically about where it wants a physical presence—not completely pivoting away, Neil Saunders, managing director at GlobalData Retail, told Retail Brew.

  • In June, the company will open a Pottery Barn and relocate a Williams-Sonoma store in Plano, Texas.
  • This week, Williams-Sonoma opened its first UAE location.

“They are closing stores but they’re actually opening new ones in a better location,” Saunders said. “There’s a logic to it.”

Home is where the money is

The homeware industry benefited from consumers’ pandemic purchasing habits. Take textiles, housewares, home environment, kitchen electronics, and personal care: Over the last year, those five segments grew by $14 billion—or 24%—to reach $72 billion, according to Joe Derochowski, home industry advisor at the NPD Group.

  • Online small appliance sales now represent 50+% of total sales, and housewares and textiles reached 40+%.

A raised bar: In the short term, for both e-comm and brick and mortar, it might be difficult for the homeware segment to match its recent growth, Derochowski told Retail Brew. But he believes the persistence of WFH and a demographic shift from cities to suburbs could keep sales high over the next decade.

Zoom out: Although Williams-Sonoma is downsizing, retail openings are outpacing closures in 2021. Since January, 3,199 store openings have been announced compared with 2,548 closures, per Coresight Research.

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