Maryanne M. Rouse
Williams-Sonoma (WSM) was a specialty retailer of products for the home. The company’s products were sold through two channels: the retail channel and the direct-to-customer channel. The retail segment comprised four retail concepts: Williams-Sonoma, Pottery Barn, Pottery Barn Kids, and Hold Everything. The direct-to-customer segment sold though eight retail catalogs: Williams-Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Bed + Bath, PB Teen, Hold Everything, West Elm, and Williams-Sonoma Home (which incorporated elements from the previously separate Chambers) as well as through four e-commerce sites. The catalogs reached customers throughout the United States, and the four retail businesses operated 522 stores in 42 states and Washington, DC. The retail segment accounted for 58.9% of total sales; the direct-to-customer segment accounted for 41.1% in fiscal 2003.
Charles E. Williams, Director Emeritus of the company in 2003, founded Williams-Sonoma in 1956 to offer high-end culinary and serving equipment in an upscale retail environment. The company entered the direct-to-customer channel in 1972, with the introduction of its flagship catalog, “A Catalog for Cooks,” which marketed the Williams-Sonoma brand. In 1983, the company internally developed the Hold Everything catalog to offer innovative and stylish storage solutions for home and home office. The success of the catalog led to the opening of the first Hold Everything retail store in 1985. In 1986, the company acquired Pottery Barn, at that time a marginally successful retailer and direct-to-customer merchant featuring a large assortment of casual home furnishings and accessories including furniture, lamps and lighting fixtures, rugs, window treatments, linens, dinnerware, and glassware. In 1989, Williams-Sonoma created Chambers, a direct-to-customer merchandiser of high-quality, premium-priced linens, towels, robes, soaps, and accessories for bed and bath.
_____________________________________________________________________ This case was prepared by Professor Maryanne M. Rouse, MBA, CPA, University of South Florida. Copyright © 2005 by Professor Maryanne M. Rouse. This case cannot be reproduced in any form without the written permission of the copyright holder, Maryanne M. Rouse. Reprint permission is solely granted to the publisher, Prentice Hall, for the books, Strategic Management and Business Policy – 10th and 11th Editions (and the International version of this book) and Cases in Strategic Management and Business Policy – 10th Edition by the copyright holder, Maryanne M. Rouse. This case was edited for SMBP and Cases in SMBP – 10th Edition. The copyright holder is solely responsible for case content. Any other publication of the case (translation, any form of electronics or other media) or sold (any form of partnership) to another publisher will be in violation of copyright law, unless Maryanne M. Rouse has granted an additional written reprint permission. In early 1999, the company launched both its Williams-Sonoma Internet wedding and gift registry web site and its Williams-Sonoma e-commerce site. Later that year, the company launched a separate Pottery Barn Kids catalog to offer well-made, stylish children’s furniture and decorative accessories. (Pottery Barn Kids was one of the first concepts to market in what is expected to be a major growth segment during the next decade, as birthrates in the United States. are expected to surpass rates achieved at any time in the past 30 years. Birthrates among older women are soaring, and older moms tend to be wealthier and more willing to splurge on their children.) Pottery Barn Kids stores were opened adjacent to Pottery Barn stores across the United States, and by September 2004, there were 78 stores. Edward Mueller, Williams-Sonoma CEO, expected Pottery Barn Kids to be the primary growth vehicle for the company over...