Williams Sonoma Strategic Audit
Dr. Guclu Atinc
MGT 527
Texas A& M University, Commerce, TX
Shernay Wormley
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Table of Contents
I. Introduction to The Organization……………………………………..1
History of the Company & Current Status –……………………………………………4-8
A. When, Why and By Whom Was The Organization Founded…………………………8
B. A Privately or Publicly Held Organization…......9
C. Top Executives, Experience, & Service Length………………………………………8- 13
D. Business Model……………………………………………………………………….13-14
E. Impact of Globalization on This Organization….....14
F. Other Information…...14
II. Identification of The Industry & The Competitors –…………………...14-15
III. Analysis of The Industry……………………………………………………….15
A. Strategic Groups in Which The Company Exists & Competitors In It…………………16
B. Intensity of Rivalry Among Existing Competitors……………………………................16
C .Threat of New Competitors Entering The Industry………………………………….......17
D. Threat of Substitute Products or Services………………………………………….........17
E. Bargaining Power of Buyers …………………………………………………………….17
F. Bargaining Power of Suppliers…………………………………………………………..18
G. Potential Profitability of The Industry ……………………………………………........18
H. Critical Success Factors for The Industry…………………………………………........19
IV. Analysis of The Macro-Environment………………………………......20
A. Political/Legal Forces Affecting The Industry………………………………….............20
B. Economic Forces Affecting The Industry……………………………………………….21
C. Social Forces Affecting The Industry…………………………………………………...21
D. Technological forces Affecting The Industry..................................................................23
E. Threats & Opportunities Facing The Organization...........................................................24
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V. The Organization’s Measurement & Control
System…………………………………………………………………….24
A. Current Financial
Position………………………………………………………………………………….25
B. Compare With Competitors & Standards…………………………………………….26
C. Financial Analysis…………………………………………………………………….26
D. The Organization’s Key Performance Indicators (KPI’s)…………………………….27
VI. Analysis of The Organization …………………………………………27
B. The Vision of The Organization………………………………………………………28
C. The Organizations Core Values & Operating Guidelines…………………………….28
D. The Organization’s Core Competencies………………………………………………29
E. The organization’s Broad & Specific Goals…………………………………………...30
VII. Analysis of The Organization/ Organization-Level and Business
Unit Strategies………………………………………………………………30
A. The Current Organization-Level Strategies…………………………………………..30
B. The Strategies Aligned With The Goals………………………………………………30
C. This Organization’s Strategies Compared With Those of Competitors……………….31
D. SWOT Analysis and Gap Analysis To Suggest Strategies……………………………31
E. Evaluate strategies ……………......................................................................................32
F. Key performance indicators (KPI’s)……………………………………………………33
VIII. Analysis of The Organization /Functional
Strategies…………………………………………………………………….33
A. Marketing – Finance – Operations – Purchasing – Human Resources –
Information Systems……………………………………………………………………34
B. Evaluating How Functional Strategies Aligned…………………………………………34
IX. Analyze Organization’s Improvement/
Change Initiatives…………………………………………………………… 35
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A. Previous & Current Impact/Success of Improvement Initiatives………………………...35
B. Alignment of Improvement Initiatives & Integration Into Strategic Management of The
Organization…………………………………………………………………………………35
C. Improvement Initiatives With Other Organizations Within & Outside The
Industry………………………………………………………………………………………36
X. Conclusion & Future
of Organization…………………………………………………………………………..36- 38
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I. Introduction to The Organization
History of the Company & Current Status
Williams-Sonoma Inc. (WSM) is a multi-channel premier specialty retailer that focuses
on home furnishings and gourmet cooking accessories in the United States. The company sells
hundreds of products through various market channels, such as retail stores, catalogs and the e-
commerce websites. The company has more than 250 stores nationwide and has globally
expanded company operations in: Canada, Puerto Rico, Australia, and the UK. The brand
operates through two segments: retail and direct-to-customer (DTC).
Williams Sonoma Inc.’s direct-mail business distributes millions of catalogs a year, and their
highly successful e –commerce website helps the company generate additional profit. . In 1956,
the company was established in Sonoma, California and they are currently headquartered in San
Francisco, California. Williams Sonoma has over 28,100 employees as of February
2, 2014. They have 20,300 part time employees and over 7, 800 full time employees.
In their financial fiscal year ending in January 2014, (FY2014), The company recorded revenues
of $4,387.9 million. Their sales were increased over 8.5% from FY2013 (Financial year in 2013)
in sales. Over 10.5% in FY2014 (Financial year in 2014) over FY2013. The net profit was
$278.9 million in FY2014. Currently the company’s operating profit is over $452.1 million.
In 1986, Williams-Sonoma acquired Pottery Barn, a retailer of casual home furnishings,
from The Gap. The following year, they launched the first Pottery Barn catalog.
In 1989, Williams Sonoma launched a mail-order merchandiser of linens, towels, robes, soaps
and accessories for the bed and bath called Chambers.
In 1990 they purchased California Closets, an operator of franchises who design and
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build custom closets. In 1994, Williams-Sonoma sold California Closets to a management
in addition, investor group. They also had a Gardener’s Eden catalog, which they later sold to
their business to retailer Brookstone in 1999.In addition to their first Pottery Barn; Williams-
Sonoma launched a special Pottery Barn catalog for children featuring linens and furniture. They
also began to start selling merchandise on their e- commerce site through its online websites:
wswedding.com bridal registry and through williams-sonoma.com.
In 2000, The first Pottery Barns Kids store was opened and a year later their website was
created In 2001, Williams Sonoma, established five new retail stores, including two Williams-
Sonoma stores, two Pottery Barn stores and one expansion store outside of the US, Pottery Barn
Kids in Toronto, Canada. In 2001, they launched their first Pottery Barn online gift registries.
One bridal registry and a Pottery Barn Kids online gift registry. In 2002, the company launched
another catalog, their West Elm catalog, offering a broad range of home furnishing categories,
including furniture, textiles, decorative accessories, lighting and tabletop items. After the
catalog’s success the West Elm e-commerce website and their first retail store was launched.
Williams Sonoma begin to increase their offerings even more with adding a PBteen catalog,
which featured items exclusive collections of home furnishings and decorative accessories,
specifically designed for teenagers. With the different acquisitions that the company acquired,
some adjustments were made to their previous companies. They discontinued many of their
catalogs and opted to market towards the internet instead. In 2004, the Chambers catalog was
discontinued and was replaced with Williams-Sonoma Home. Williams-Sonoma closed all its
Hold Everything retail stores and their e-commerce website in 2006. The Hold Everything
catalog was also discontinued and William Sonoma decided to launch www.wshome.com, an
online catalog for their Home brand.
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Williams-Sonoma also opened its first Home retail store in West Hollywood, California in
2005. After 2007, the company increased their business expansion with opening 28 new stores
and remodeled or expanded an additional 28 more stores in the same year.
Business continued to grow and Williams Sonoma launched its first outdoor collection and its
first Williams-Sonoma gourmet cookware store in Vancouver. A Pottery Barn outlet was also
added in Vancouver. In 2008, the company entered in a multi-year franchise agreement with
M.H. Alshaya Company, an international franchise operator that allowed them to launch the
company's portfolio of brands in the Middle East.
With the company’s major expansion, their fast growths begin to cause some problems and
some of their products were recalled.
In 2010, Williams Sonoma recalled several of their products due to safety concerns for
children. Around 11,000 Beaba Express steam bottle warmers were recalled because they posed
a risk of burns. Pottery Barn’s Madeline bunk beds had to be repaired due to entrapment hazard,
because of the end structure of how the bed was made.
The company also recalled about 5,900 PBteen Sleep and Study Loft Beds in 2010, because the
side rail on the bed, posed a fall and injury hazard to users.
Williams Sonoma received several reports on this bed being defective, and was informed on an
incident with a child injuring himself from climbing the ladder on the side of the bed.
These problems caused Williams Sonoma to evaluate their products more efficiently and
focus on providing better quality of their products and services to their clients.
In, 2011, 2012, 2013, the company expanded again locally and globally. They completed a
new acquisition of Rejuvenation, another US-based manufacturing company dealing with
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lighting, architectural hardware and house parts four of its stores. This acquisition helped them
reach their business target market in Portland, Oregon: Seattle Washington and Los Angeles
California., by selling products DTC through their catalog, or websites.
In 2012, Williams Sonoma leased a retail space that opened up its four stores including
Williams-Sonoma, Pottery Barn, Pottery Barn Kids, and West Elm, in Sydney, Australia.
This new direction in the company, begun its first expansion opportunity outside of North
America through company-owned stores. Since 2013, William Sonoma has launched several of
its Pottery Barn and West Elm stores globally. West Elm also signed two lease agreements to
open its stores in the UK and Australia. In addition to their global expansion, the company
announced plans to enter the Philippines market through a multi-year agreement with Stores
Specialists (a freestanding specialty retailer).William Sonoma’s Pottery Barn and Pottery Barn
Kids would be the first brands to open in the Philippines.
Williams Sonoma’s Global expansion strategy and it utilization of supportive marketing
channels continues to give the company a strong competitive advantage locally and globally.
In 2014, they have announced to launch its home furnishings brands to the Mexican
market through a franchise agreement with Distribuidora Liverpool. This agreement will be
another positive move for the company, which will give them access to both store, and e-
commerce rights in Mexico for the Williams-Sonoma, Williams-Sonoma Home,
Pottery Barn, Pottery Barn Kids, PBteen, and West Elm brands. These stores are scheduled to
open in 2015.
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A. When, Why and By Whom Was The Organization Founded
Charles E. Williams founded Williams Sonoma in 1956.His first William Sonoma store was
established in Sonoma, California. In 1972, The company began its DTC (Direct to consumer
business) by launching its flagship catalog “A Catalog for Cooks”. This catalog was marketed
under Williams-Sonoma brand and sold a small array of cookware imported from France.
B. A Privately or Publicly Held Organization
Williams Sonoma Inc. is a publicly held company since 1983. Their first Hold Everything
retail store opened in 1985.
C. Top Executives, Experience, & Service Length
The Williams Sonoma company is comprised of Board Directors, Senior Managers in
specialty areas, and Non Board Directors. The company has 14 top executives that are
specialized in operations throughout their top performing brands.
Their top executives are Laura J. Alber, Patrick J. Connolly, Charles E. Williams, Sandra
Stangl, Julie P. Whalen, Janet Hayes, John F. Strain, Dean A. Miller, Linda Lewis, David King,
Vicki D. Mcwilliams, Bud Cope, Marta Benson, and Ron Young.
Ms. Alber has been the President at Williams-Sonoma since 2006 and is the Chief
Executive Officer since 2010. Ms. Alber ‘s experience consists of serving as the President of
Pottery Barn Brands from 2002 to 2006 and as an Executive Vice President of Pottery Barn form
2000 to 2002. She was also the Senior Vice President of Pottery Barn Catalog and Pottery Barn
Kids Retail from 1999 to 2000. In addition to her high credentials, Ms. Alber has also been a
Director at RealD since 2013.
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Patrick J. Connolly is the current Executive Vice President and Chief Strategy and
Business Development Officer for William Sonoma since 2014. He started with the company
in1983 as a Director for the company. Mr. Connolly experience consists of being the Executive
Vice President and the Chief Marketing Officer at the company from 2000. Mr. Connolly also
was an Executive Vice President and the General Manager of Catalog from 1995 to 2000.
In addition to his different Senior Managements positions, Mr. Connolly has also been a
Director at CafePress.com since 2007.
Charles E. Williams is the founder of William Sonoma and served as Director from 1973
to 2003. He has acted as Director Emeritus since 2003.
Sandra Stangl holds the position as President of Pottery Barn, pottery barn kids and
PBteen. She has been with the company since 2002 and she oversees merchandising, product
development, inventory management, creative services, visual merchandising, brand finance, and
operations for all three brands. She graduated from the University of California, Los Angeles
with a Bachelor’s degree of Fine Arts.
Julie Whalen holds the position as Chief Financial Officer and Executive Vice President
for Williams-Sonoma, Inc. she has been with the company since 2001 and oversees all global
financial departments including controllership, corporate financial planning, analysis, tax,
treasury, investor relations, risk management, or internal audit. She has 19 years of financial
experience and she shares accountability of the brand finance functions. Ms. Whalen is a
Certified Public Accountant and has both a B.S. and a law degree from the Pepperdine
University.
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Janet Hayes holds the position as President of the Williams-Sonoma brand. She has been
with the company since 2007 and is responsible for merchandising, product development,
inventory management, creative services, visual merchandising, brand finances, as well as
operations. She has over 20 years of experience in the retail industry, working with numerous
high-profile consumer brands including Macy's, and American Eagle Outfitters.
Ms. Hayes graduated from California State University, Chico and has a bachelor's degree.
John Strain is the Executive Vice President and Chief Digital Technology Officer for
Williams-Sonoma, Inc. (WSI). He has been with the company since 2006 and he is responsible
for technology-solutions delivery. He also overseers operations support for all of William
Sonoma’s brands and functions including marketing, merchandising, stores, care centers,
distribution centers, e-commerce, inventory management, desktop in addition to data centers.
His previous experience included being the VP and CIO for Gap Inc.'s online division. He
graduated with a B.S. in Finance from Santa Clara University and is a graduate of the Retail
Management Institute. He participates in charitable organizations and currently sits on the board
of two charitable organizations.
Dean Miller is the Executive Vice President and Chief Operating Officer for Williams-
Sonoma, Inc. (WSI). He has been with the company since 2000 and oversees the company's
Distribution, Logistics, and Manufacturing functions, in addition to its Customer Care Centers.
He previously held the positions of Senior Vice President, Global Logistics and Sourcing, and
Chief Supply Chain Officer prior to ascending to his current role. Mr. Miller graduated from
Otterbein College in Westerville, Ohio and has bachelor’s degrees in Business Administration
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and Political Science. He also has a M.B.A. in Marketing and Operations/Logistics from Ohio
State University.
Linda Lewis is the Executive Vice President and Chief Talent Officer at
Williams-Sonoma, Inc. She has been with the company since 1995 and is responsible for
directing all human resources functions for all brands, stores, shared services, compensation, or
benefits. She has over 25 years with HR and management information systems. She specializes
in talent acquisition and talent development.
David King is the Senior Vice President, General Counsel at Williams-Sonoma, Inc. He
has been with the company since 2004, and is responsible for all of the company's corporate
governance, litigation, intellectual property, employment, regulatory, marketing, or contract
matters. King also in charge of managing the legal components of the company's global and
business-development growth initiatives. King graduated from Yale University with a bachelor’s
degree. He also has received his J.D from University of California Berkeley. In his experience,
he served as an editor for the California Law Review.
Vicki D. Mcwilliams is the Executive Vice President of Retail and Business Sales at
Williams-Sonoma, Inc. She has been with the company since 2007 and is responsible for the
leadership of the Pottery Barn, pottery barn kids, PBteen, west elm and Williams-Sonoma stores,
and the Business Sales team. McWilliams graduated from Washington State University with a
bachelor's degree in Clothing and Textiles with a minor in Finance.
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Bud Cope is the Senior Vice President of Store Development for Williams-Sonoma, Inc.
He has been with the company since 1987 and is responsible for the design and construction of
all WSI retail stores. He also overseers the store concepts for all brands across continents and he
started in the company as Construction Manager, and then later was promoted to his current role
in 2003.
Marta Benson is the Senior Vice President and General Manager of the Rejuvenation and
Mark and Graham brands at Williams-Sonoma, Inc. (WSI).She has been with the company since
2011, and has more than 25 years of experience in specialty retail and direct marketing. She was
the CEO of Gumps before coming to William Sonoma and her expertise is DTC marketing. She
graduated from Wesleyan University with a bachelor’s degree in Philosophy.
Ron Young is the Senior Vice President of Global for Williams–Sonoma, Inc. (WSI). He
has been with the company since 2014. He has over 20 years in working with global markets and
oversees the development and implementation of the company's global expansion. He graduated
from Oregon State University with a bachelor's degree in Business Administration.
D. Business Model
Williams Sonoma’s Business model focuses on the multi-channel marketing approach.
They use Omnichannel retailing, which allows them to use a variety of channels in a customer's
shopping experience including research before they make a purchase. Their omnichannel
execution has resulted in their strong sales and profitability growth. Most of their revenue comes
from their direct channels, such as DTC (Direct to Consumer) then that business helps provide
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business in their retail markets and their e – commerce sites help support those different
channels.
E. Impact of Globalization on This Organization
Williams Sonoma’s decision to “Go Global” and expand their business development
strategies is derived from their original business model. Their global expansion strategy makes
them more attractive to other countries and businesses that want to collaborate with the
company. Although this may be a great competitive advantage for Williams Sonoma locally and
globally, their global presence makes, them even more of a triple threat to known or unknown
competitors. Williams Sonoma’s global operations are in Australia, United Kingdom, Mexico,
Middle East, and now the Philippines. They have expanded their global business opportunities
by collaborating with different franchising partners. They have entered into the International
market with company-owned stores and fully enabled e-commerce and distribution capabilities.
Their other new business acquisitions, Rejuvenation and Mark and Graham, continue to develop,
and bring in new customers for the company.
F. Others
Williams Sonoma has also been strategic on how they capitalize on consumer’s data.
This strategy is not very commonly used in the retail sector, but their data analytics infuse-and
enhance all areas of their business especially in decisions both big and small. In relation to
Williams Sonoma’s e –commerce business, each brand's website is designed to have
personalized content based on what the company knows about their customers visiting it:
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Current promotions and discounts are featured at the top of the home page, based on a
customer’s previous purchases. They utilize this data to provide customers with an enhanced
customer experience through their different marketing sales channels. Their goal is always to
enhance the customer experience and relevance is our guiding principle.
II. Identification of The Industry & The Competitors
Williams-Sonoma is a premium US-based specialty retailer of home furnishing and cooking
ware products. Their product offerings include the following:
Culinary or serving equipment (cookware, tools, electrics, cutlery, tabletop, bar, outdoor and
cookbooks), in addition to Home furnishings Furniture for all age groups. They also offer apparel
products for men and women as well as jewelry. Under the William Sonoma Brand ,the company
owns several other brands; Pottery Barn, Pottery Barn Kids, West Elm, PBteen, Rejuvenation ,
Williams-Sonoma Home, Mark and Graham. Williams Sonoma competes in the home
furnishings and exclusive cooking ware market. Their direct competitors are; Bed Bath &
Beyond Inc., Wal-Mart Stores, Inc., Kirkland's Inc., Ashley Furniture Industries, Inc., Pier 1
Imports, Inc., The Home Depot, Inc., Target Corporation, J.C. Penney Company, Inc., Kmart
Corporation, Ikea, Tuesday Morning Corporation, Lowe’s Companies, Inc. and Crate & Barrel.
These competitors sell similar products as William Sonoma or have product differentiations in
the same retail market.
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III. Analysis of the Industry
A. Strategic Groups in Which The Company Exists & Competitors In It
Williams Sonoma exists in the home goods retailer strategic group. This group is
emphasizes on the similar strategic dimensions that William Sonoma categorizes with. The
company specializes in home furnishings and high-end cooking ware and their products
complement this group. The other competitors in the same group are Target, Walmart, Crate &
Barrel, Pier 1, Bed Bath and Beyond and other companies that sell similar products.
B. Intensity of Rivalry Among Existing Competitors
The intensity between these different competitors against the Williams Sonoma company
changes how the market traditionally competes. Most of the competitors in the Home
Furnishings industry compete mainly through their physical locations or direct mail advertising.
With Williams Sonoma’s tiered business, strategy that uses multiple channels of selling in their
different is leading more home retail goods companies to adapt the same model. Pier 1 now
focuses on building their online presence as well as their store presence with consumers, because
of Williams Sonoma’s online success. More retailers are using the web not only as a supportive
media, but also as their main media, since consumer trends are leaning towards online shopping.
This is also very important during holidays, where retailers depend on creating marketing
campaigns that drive customer business for Black Friday and Holiday shopping. The competition
is highly intense during this time and most retailers increase their marketing initiatives, product
introduction, and budget during this time. Williams Sonoma and their competitors will focus
majority of their efforts on increasing people in their stores, online, their online gift registries and
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by their advertising catalogs. Intense rivalry could cause competitors to study each other more
closer than before , copy some of their sales strategies as a foundation for their own and even
worse corporate espionage.
C .Threat of New Competitors Entering The Industry
With the new launching of Ikea a corporation, that sells modern style home furnishings,
furniture, and cooking ware for a reasonable price has become a new threat to Williams Sonoma.
Ikea is a popular company that most single or married Gen X and Gen Y target audiences are
choosing to shop at for their home essentials. Ikea carries a variety of minimalist inspired
furniture pieces that fit perfectly in smaller spaces or dorm living that is cost efficient. Their
competitive advantage is their cost advantage strategy, to provide quality, trendy functional
products for a low price. This strategy distinguishes them from other competitors in this strategic
group including Williams Sonoma. With Ikea entering the market this, this challenges Williams
Sonoma to construct a competitor analysis to see how their goals compare with their new
competitor’s goals.
D. Threat of Substitute Products or Services
The threat of substitute products or services can harm Williams Sonoma’s competitive
structure. Their current structure is to use their multi-channel retail channel from direct sales
through their catalog to their E –commerce site. to provide customers with the best quality
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products for their home. Williams Sonoma produces products that are high end, in the price point
of 300.00 and up. The threat of substitute products will interfere with their constant revenue
growth through their different marketing channels and cause consumers to compare price over
quality. This is a risk factor for the company and can reduce the demand for their exclusive
products if a substitute is available.
E. Bargaining Power of Buyers
The bargaining power of the buyers in this industry is high. Williams Sonoma’s buying
power belongs to the customers and the corporation. The demand continues to grow due to an
increase product offering that meets the customer’s needs. This also continues to grow with the
companies, global expansion initiatives. Other factors that contribute to the bargaining power of
buyers are the current state of the economy. Buyers may prefer to purchase or use services of
necessity than out of luxury when the economy is down. When the economy is up then buying
power changes again for more quality products than cost effectiveness. With the current
economy state, businesses have been able to drive business to their products again and better
products that are more efficient for customers looking for the best product benefits.
F. Bargaining Power of Suppliers
Bargaining power of suppliers is also high. The bargaining power of suppliers of Williams
Sonoma is very powerful and poses a definite threat if there is forward integration. William
Sonoma’s produces most of their products in the U. S but also uses outsourcing to meet the needs
of their distribution channels globally. Suppliers in this industry are very valuable, because they
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are significant to the industries business. Williams Sonoma works with supplier who meets their
integrity and safety standards Exclusive product availability help companies like Williams Sonoma
serve many different customers more effectively. Their products are not easily to imitate, higher
quality materials are what Williams Sonoma, and other Home good retailers are centered on.
Suppliers and supply chain management help increase sales volume for Williams Sonoma and
strengthen growth profit margin for their suppliers in addition to the company.
G. Potential Profitability of The Industry
The Home goods or Home furnishing industry is very profitable. It dominates the industry in a
major way. A company’s product offerings can influence its stock price and market share
Market share is what measures a company’s profitability. Product differentiation helps
companies such as Williams Sonoma charge a price premium and focus on creating quality
products to strengthen perceived value. This industry is also unique because it focuses on various
demographic segments and varied customer needs that provide a stronger competitive advantage.
This industry’s competitive advantage makes them very attractive to other buyers, investors, the
global economy, and franchise developments. Most business has a high success rate in this
industry and continues to sustain their growth, because consumer is high demand for home
goods.
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H. Critical Success Factors for The Industry
The critical success factors for this business is driving the business strategically, product
availability, innovation in technological advances, focusing on the companies competitive
advantages and strengthening multi-channel retail channels that provide customers with more
efficient, better quality , and price effective products. These success factors will be beneficial for
the customer, the supplier and in addition to the company. External factors play a major role in
how different companies are affected in this industry. These factors affect Williams Sonoma
directly and when there are changes in their market, the company has to adapt immediately to
remain successful.
IV. Analysis of the Macro-Environment
The home furnishings market is identified as sells through any retail channel, of
Furniture, carpets, other floor coverings along with household textiles and soft
Furnishings. The global market for this industry is considered to be the US, Europe, Asia-Pacific,
Canada, Argentina, Brazil, Chile, Colombia, Mexico, Venezuela, Algeria, Egypt, Israel, Saudi
Arabia and South Africa. It dominates the market with a share of 62.4%. In addition, The US
accounts for 21.6% of the global home furnishings market.
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While this may remain a very profitable market for William Sonoma, several external factors
influence this industry. Those factors include, political, legal, economic, social, and
technological that poses threats for home furnishing company’s macro environment.
A. Political/Legal Forces Affecting The Industry
The political and legal forces that highly affect the home furnishings industry are
Outsourcing laws, Privacy rights, business ethics, and health and safety issues.
With new social and environmental concerns, business ethics have become very important in
furnishing companies and to avoid ethical dilemmas, many businesses have aligned themselves
to be more ethically sound. Ethic dilemmas can occur with violation of privacy rights and
customer data confidentiality. The more a company depends on a customer’s data for generating
business strategies, the more privacy rights have to be protected. Also with price distribution
becoming another competitive strategy, companies have to abide by outsourcing laws globally
that they may not have needed to locally because of different international laws for
manufacturing. Health and Safety laws are extremely important for the home furnishings
industry, if a product is not reported safe then that can hurt effect the business and consumer
future purchases. When this happens, companies have to recall products, invest in more R&D to
fix the problem with a better and safer alternative to meet with Health and Safety compliances.
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B. Economic Forces Affecting The Industry
The downturn in the US economy throughout the last period caused many businesses to
merge with other business to build better sustainability, or become irrelevant in a competitive
market.
The Home furnishings market was actually able to sustain relatively strong levels of growth and
increase their earnings. Due to economic stressors and natural uncontrollable factors, many
consumers changed their purchasing behaviors. Instead of buying out of luxury, more consumers
started only buying out of necessity. The size of households are decreasing, due to the fact
people are getting married older instead of younger. In addition, the different shifts in the
economic market have caused many consumers to consider other home leasing options instead of
buying. .These factors strongly also increase economic threatening factors that can decrease
retail spending and purchasing of home furnishing products.
C. Social Forces Affecting The Industry
With larger competitors entering the market, this can affect those who are traditional
providers of home furnishing products. Consumers and potential consumers with open access to
several websites and other retailers have more options in shopping. They can shop online, shop
by apps or shop at a brick and mortar store. This causes a threat to traditional businesses, but new
opportunities for omnichannel retailers. Retailers will have to change how they compete in this
market if they still want to stay relevant in meeting customer’s needs and expectations.
In addition, the change of consumer attitudes, buying behavior, buyer’s age, earned income,
extra income and reach can be a social factor that strongly influences this industry. Buying trends
are changing and the primary target audience is changing for home furnishing products. The
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primary target was Baby Boomers with ages ranging from 49 to 68. Now with the advancement
of technology and more Generation X’s having families there has been an increase on home
furnishings in this group. In addition, majority of Millennials are now getting more stability in
their careers and are becoming furniture buyers.
D. Technological forces Affecting The Industry
New technology advancements have been an advantage as well as a disadvantage to most
companies. More and more companies are realizing the importance of websites and are changing
their sale methods to focus on their supply chain management strategies. Seeing that the internet
is a great marketing tool for greater reach to connect with consumers, more companies are now
adapting this channel into their business model. Most consumers prefer the shop online to
personal selling at brick and mortars. The internet allows consumers to multi task; research other
brands before purchasing decisions and make shopping convenient for their different needs. With
technological factors, companies also have to incorporate social media and other nontraditional
channels to build relationships with consumers who have made modern technology an essential
to their lifestyle. Innovation has become what differentiates a company’s capabilities of survival
from their competitors.
E. Threats & Opportunities Facing The Organization
With the different changes in the home furnishing industry, the value chain collaboration
is critical for ensuring the long-term profitability of suppliers and retailers. The different external
controllable or uncontrollable factors that Williams Sonoma faces are new larger competitors
entering the market, a shift of buying behavior in their primary target market, legal factors, and
more companies utilizing the internet to reach out to consumers. Furniture Brands are another
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threat to the Williams Sonoma and the home furnishings companies. Furniture manufactures
market across a broad spectrum of price categories and distributes its products through a system
of independently owned national, regional, and local retailers, similar to Williams Sonoma.
William Sonoma may have to make sure their product offerings are current and not dated,
because of a shift in their age group. Different age groups level of demand can also force retail
companies such as Williams Sonoma to shorten product development cycles. Which may cause
product concerns. While the company may face these threats, it also has different opportunities
that they can target that will help strengthen their market penetration tactics. . Some of those
opportunities are price management, new sustainable product development, researching other
distribution channels for faster ROI, marketing through other nontraditional channels, and
targeting more European countries for global expansion , since Europe dominates 44% of the
home furnishings industry.
V. The Organization’s Measurement & Control System
A. Current Financial Position
Williams Sonoma’s financial report shows that for their 2nd quarter 2015 results, their
net revenues grew 8.5 percent to $1.127 billion versus $1.039 billion in Q2 14. Their comparable
brand revenue growth is 6.3 percent. In Q2 15, the company’s operating margin was 7.4 percent
versus 8.2 percent in Q2 14. Their Q2 15 diluted earnings per share (EPS") was $0.58 versus
$0.53 in Q2 14.
Stockholders cash returned totaled $104.5 million, comprising of $72.4 million in stock
repurchases and $32.1 million in stock dividends. Laura Alber, the President, and Chief
Executive Officer are pleased with William Sonoma’s performance to deliver another solid
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quarter. Williams Sonoma Inc. (WSM) remains financially solid and is trading at $67.30 per
stock. Their solid performance continues to demonstrate their competitive advantage from their
multi-brand, multi-channel, business model. As anticipated, Also during the Q2 15 quarter
incremental supply chain costs restored their in-stock inventory levels, allowing the company to
provide superior long-term customer service. Currently William Sonoma is focused on
disciplined execution against their strategic growth initiatives." Their E-commerce net revenues
in Q2 15 increased 9.1 percent compared to $570 million from their results of $523 million in Q2
14. Net revenues in E-commerce generated 51 percent of total company net revenues in Q2 15
for the company, compared to only 50 percent in Q2 14.
Williams Sonoma with their other strong portfolio brands brought in additional revenue
for the company. Pottery Barn generated 6.4 percent, 4.4 percent for Williams-Sonoma, 3.4
percent for West Elm, 16.7 for percent Pottery Barn Kids, 5.6 percent for PBteens. 3.9 percent
These filings for the company’s comparable brand revenue growth show a consistent sales
increase in their other brands as well. Manage effectiveness had 13.45 percent return on assets
and was at a 26.76 percent return on equity.
B. Compare With Competitors & Standards
With Pier 1 being one of William Sonoma’s top competitors, their Q2 15 results are as
follows; their total sales increased 5.3 percent this quarter relatively staying on a constant
currency basis of past results. Their company comparable sales rose 4.7 percent in comparison to
its 5.2 percent on a constant currency basis. Pier 1’s E-Commerce sales represented 11 percent of
their total sales; and they had a Gross profit of $749.7 million, or 40.2 percent of total sales;
Merchandise margin of $1.081 billion, or 58.0 percent of total sales. They also had a Net income
of $75.2 million: EBITDA of $176.3 million, or 9.5 percent of total sales. Operating income
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consisted of $127.3 million, or 6.8 percent of total sales. The stock share is sold at $6.36 per
stock, which is $ 60. 94 less than Williams Sonoma. Their performance shows areas of
inconsistency in sales and implies changes that are affecting the company. Their financial status
is not as sound as Williams Sonoma and their CEO is changing the company’s initiatives to
focus more on their online business. Alex W. Smith, President, and Chief Executive Officer was
not disappointed with the results and their current omnichannel and online strategies are in effect
to help with brand strength. in addition, customer-facing perspective we could not be more
pleased with the results. Pier 1 Imports is now focusing on their strengths of their Pier 1 Imports
brand and their investments for improving their profitability.
C. Financial Analysis
Penny Stock insiders show Williams Sonoma’s results for the second quarter of fiscal
2015 year as another factor that makes it one of the most attractive stocks. The company reported
its net revenues of US$874 million, which were up 7.3% from their US$815 million a year
earlier. Their diluted earnings per share continue to rise and their current percentage rose 16% to
US$0.43 in the latest quarter, compared to their US$0.37 per diluted share in the prior-year
quarter. At the end of Wednesday's stock trading, Williams Sonoma shares gained 11.64%. This
made a new 52-week high for the company of $89.38 per share. The company’s stock traded
7.82 million shares in the last trading session, which was well above its daily average of 1.22
million shares. The Williams Sonoma Inc. brand has an overall market capitalization of US$4.24
billion. With their stock staying constantly positive above other retailer stocks, stockholders
continue to see huge profits in this company.
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D. The Organization’s Key Performance Indicators (KPI’s)
Williams Sonoma’s summary reports that the company has rebounded strongly in 2015 with
sales trends improving their stock levels .Williams Sonoma’s growth strategies, consistent
execution, and operational discipline have put the company’s productivity on track to deliver
another record year. 2. The company believes that with innovations and product introductions in
collaborations in all brands it will increase its profitability. Williams Sonoma’s key provider
indicators are their supply chain initiatives, technology initiatives, and their multi-channel
strategy. These initiatives will improve customer order visibility, further differentiate service,
and continue to generate an increase of net revenue that lead to Williams Sonoma’s competitive
advantage. The company also continues to work on a better strategy for inventory optimization.
In 2015, Williams Sonoma is continuing to extend reach of their brands globally and consider
other merging opportunities. Making operational improvements, reducing costs, analyzing single
brand for multi retail channels are also components in seeing better margins for the company.
VI. Analysis of The Organization
A. Mission of the Organization
The Mission of Williams Sonoma is to enhance the quality of their customer’s lives at
home by putting the customer first. The customer is at the center of what the companies does
every day. Staying congruent to the company’s values guides the company’s actions and
decisions. The mission remains the same as the initial mission that the company was founded on
by Mr. Charles Williams in 1956.
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B. The Vision of The Organization
Williams Sonoma’s Vision is to offer quality products and outstanding to their
consumers. The vision has carried with the company, since the first Williams Sonoma opened in
1956.This tradition shapes the company’s goals, initiatives and strategies this is the tradition of
Williams Sonoma, these are the core values the company builds on people first, customers,
quality, shareholders, integrity, corporate responsibility
C. The Organizations Core Values & Operating Guidelines
Williams Sonoma’s core values are to please the customers, higher staff that has high
performance that complement the company’s strategic goals, implement quality standards
throughout the company and in addition to creating the best shopping experience for consumers.
Premium pricing can conflict with the company’s core values and business ethics. The
company’s business presence puts them in the forefront for possible ethic issues, so the company
has to make sure the right business practices are being performed. Also pricing can cause another
conflict, and pricing factors can interfere with a companies continue revenue growth and their
produce offerings. Other competitor may offer a similar product as Williams Sonoma and
because the price is cheaper, consumers will go that retailer instead.
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D. The Organization’s Core Competencies
Williams Sonoma’s core competencies are its supply chain strategies, IT infrastructure,
and its business model as components for success of the company. They are unique because
their supply chain management strategies help the company to be effective in reducing costs,
reducing waste in inventory management, and elevating the consumer is shopping experience.
Their IT infrastructure works in correlation with its business model to help the brand expand
globally faster. With their omnichannel retail support system, the brand is able to profit from all
its other brands individually and collaboratively.
E. The organization’s Broad & Specific Goals
The company constantly works on achieving their business goals while improving
through social and environmental performance. Williams Sonoma “secret sauce” is how their
teams work together in remarkable alignment with each other to develop and execute strategic or
tactical priorities. Innovation is highly encouraged and the company blends art with science,
ideas with data, and instinct with analysis to achieve specific goals.
VII. Analysis of The Organization/ Organization-Level and
Business Strategies
A. The Current Organization-Level Strategies
Williams Sonoma’s process for their strategies is the same for nearly every decision that they
make, from brand introductions to ad buys, website and catalog design. This is also increasingly
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found in their supplier relationships. Their process is to use a creative idea, test it, prove that it
works, and then roll it out into the market. The company’s discipline has allowed them to build
the Williams-Sonoma brand as America’s preeminent home retailer. With their seven brands,
their annual revenue approaches $5 billion. The company also has a staff of board directors with
extensive senior management experience and specialty retail areas that enhance the company’s
performance. Their organization strategy of promoting within and utilizing employees past
related experiences and success rates to grow the business is another powerful strategy at
Williams Sonoma.
B. The Strategies Aligned With The Goals
Williams Sonoma’s strategies align with their goals, by providing enhanced shopping
experiences for their consumers and building integrated multi-channel platforms that drive
customer traffic. The company structure is their business around their consumer and meeting
their diverse home needs. Even though Williams Sonoma faces intense competition from local,
regional, and national retailers, there core values keep them as a top competitor against other
competitors.
C. This Organization’s Strategies Compared With Those of Competitors
Williams Sonoma depends on their total revenue to come from their different retail
channels, brands while their competitor Bed Bath, and Beyond focuses on one channel. Bed Bath
and Beyond depends primarily on in-store purchases and consumer’s online sales account to
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build their total revenue. Williams Sonoma strategy has been an effective alternative to increase
revenue for the company in different opportunities in case one of their brands does not perform
as they expected. Bed Bath and Beyond may not have the same advantage as Williams Sonoma
with this model, but the way they compete with their certain product lines creates a bigger
impact for the company. Williams Sonoma focuses more on Niche marketing of specialty items,
while Bed Bath and beyond has more of a broad approach.
D. SWOT Analysis and Gap Analysis To Suggest Strategies
Williams Sonoma’s strengths are their products offerings through their different
channels, retail stores, catalogs, and e-commerce sites. The company currently operates 581
retail doors, ships more than 260 million catalogs annually to its consumers, and has the most
top-ranked home furnishings and accessories websites online. The brand was ranked among
the top 25 e-retailers in the top 500 e-retailers in the US 2013. Their multi-channel approach
creates a strong competitive advantage for the company and exposes them to a large audience in
addition to enabling the company to cater to the varying diverse needs of customers. The
company’s strategy in their supply chain management is also another strength. Their supply
chain management allows them to optimize their inventory management and produce made to
order products for their consumers. This helps the company in being more efficient with
production.
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E. Evaluate Strategies
Williams Sonoma’s Global expansion strategy has been effective for helping the
company gain more access to other markets, but also still needs to be perfected to produce more
substantial results. With this strategy, the company also faces disadvantages of conducting
Concentration on a particular region. This could have a disappointing effect on the company's
revenues if the economy or the company's sales in that region do not grow as expected. The
company’s concentrated operations also can limit its reach to a larger potential customer base,
when compared to its competitors who have wider geographic presence. Excessive dependence
on the US can hinder the company's growth prospects in other countries. Multi retail channels
can continue to increase Williams Sonoma and decrease by too much saturation in the market.
Too much saturation may overwhelm the customer and work against the company instead of
support it correctly.
F. Key performance indicators (KPI’s)
Williams Sonoma’s key performance indicators are their web leadership and integration of
its catalog, online, and retail presence. Inputing their consumer’s data into these different
channels helps the company continue to benefit on consumer purchasing behaviours. These
behaviors have changed from consumers shopping at retail stores to consumers choosing to shop
online for convenience. Online channels are becoming greater tools to reach more consumers and
Williams Sonoma is creating marketing initiatives based on this.
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VIII. Analysis of The Organization/ Functional Strategies
A. Marketing – Finance – Operations – Purchasing – Human Resources – Information
Systems
Williams Sonoma has recently undergo some organizational changes with a new CEO of
Williams Sonoma, Laura Alber and new Chief Digital and Technology Officer,John Strain.
Who’s past experiences as CIO of the Gap Online division has contributed to the companies
new attributes. Their current success with its functional strategies in digital integration has
accounted for its increase in net revenues. Also internally, the company has kept the same
Talent manager, Executive Finance officer, and Construction that helps with development
throughout all the companies’ brands. Continuing bringing brand awareness is another
functional strategy that the focuses its efforts on to keep offline influence on consumer’s
minds.
B. Evaluating How Functional Strategies Aligned
The functional strategies are aligned well according to the needs of the company and the
consumer’s needs. They stay flexible because of the constant changes that may occur in
management or consumer shopping trends. For instance, when retail profitability began to be
influenced more by digital presence, or e – commerce sites, Williams Sonoma reacted to this
shift with more websites to compliment their brands.
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IX. Analyze Organization’s Improvement/Change Initiatives
A. Previous & Current Impact/Success Of Improvement Initiatives
Williams Sonoma improvement initiatives have slightly changed from its original
design, but it still aligns with the company’s mission. Their focus strategies are not only in
creating exclusive products for their customer’s needs but their product offerings have
increase. Williams Sonoma carries an array of products from home furnishings for adults and
children to apparel for women as well as men.Their focus strategies have changed to
incorporate more of an online presence than just their DTC catalog business. More demand
in product offerings, has positioned the company to operate with more high performance
work teams. Create more retail locations in the U.S in addition to Global ventures.
B. Alignment of Improvement Initiatives & Integration into Strategic Management of The
Organization
The company’s initiative strategies align with Williams Sonoma’s long-term goals to be
one of the top providers of home furnishing and cooking ware products. With their global
expansion and franchise developments, Williams Sonoma’s reputation is becoming a well-
recognized name in households. Integrating new additional strategies, such as a factory-to-
customer model enables the company to offer handcrafted, high quality, made-to-order
upholstered furniture at exceptional value to their consumer or potential consumers. These new
initiative strategies are resulting in potential growth opportunities, which allow them to hire more
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employees and create more departments internally for a stronger competitive structure. The
company also plans to distribute support personnel in all three of their facilities to increase
(TQM) Total Quality Management. Their Total Quality Management strategy now includes
hiring Senior managers over specialty areas of the company , instead of managers that handle the
business operations as a whole.
C. Improvement Initiatives with Other Organizations Within & Outside The Industry
Williams Sonoma standard of integrity and people first is carried inside the organization culture
and externally with its suppliers or franchises. Their differentiated features are integrated in the
company’s products, their several owned brands such as West Elm and Pottery Barn.
Everything the company does is centered around it‘s commitment to people’s needs if product
doesn’t meet that goal, its removed, improved and tested before it hits the market.
X. Conclusion & Future of Organization
Williams Sonoma being one of the top retail providers in home furnishings industry has
been a top seller in home furnishing and exclusive cooking ware product. The company has been
established since 1956 and they have been able to sustain their growth in ever changing market
and unpredictable economy. Many external factors have been crucial components of the
company’s business developments, but their quick responsive strategies have shown their strong
competitive advantages. Williams Sonoma’s’ core competencies which consists of strong
leadership, a strong supportive organizational culture, a profitable business model, a strong
marketing mix, global expansion strategies and innovation strategies that meet their target
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market better keep them above their competitors. The organizations critical success depend on
staying in tune with sales trends of their consumers and continuation development of better ways
to manage supply chain management, maximizing their different brand’s potentials and product
differentiation. With the widespread of direct competitors using the same business model
approach to multi sell to their consumers or reach out to potential consumers this is now
becoming a concern for Williams Sonoma. To strengthen their brand presence in a dominating
market the brand will have to stay innovative and unique in their approaches to reach consumers,
collect data as well as build brand loyalty. Some of those approaches for reaching their different
demographics are using nontraditional marketing channels, such as collaborating with nonprofit
organizations that support national causes. This approach is becoming very popular with
companies and it shows their compassion for people and how they want to make a difference in
the community. Williams Sonoma can use this direction to help promote their brand and increase
their exposure between their different brands to meet the needs of their consumer or potential
consumer better. An example for the company is they could collaborate with Habitat for
Humanity and provide décor for people’s home through contest or chosen registration forms. The
company can invest more into R& D with their different brands and provide more product
offerings based on demand and safety. Staying in compliance with health and safety regulations
for their product design is very crucial for Williams Sonoma’s business. The company should
make sure all their products meet those health and safety requirements required by various laws
in addition to strengthen their quality control and Other research methods can be conducted
besides online data collection, such as surveys, test marketing, sampling, and mobile marketing
with a consumers consent. Providing a more innovative IT infrastructure for their catalogs and E-
commerce sites in other languages for reaching out to their local and global customers. The last
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suggestion for external factors are for the company to create an even more personal but modern
shopping experience for consumers, with virtual catalogs that show the quality of the product
before the consumer buys it. Creating a shopping experience customizable to the consumer
would also give Williams Sonoma another advantage above their competitors. For internal
factors, Williams Sonoma could diversify their organizational culture with hiring more diverse
employees in culture, ethnicity, and age.
Most of their employees range from the age 45 and up, which is good for targeting
consumers in their age group, but not for the younger generation. The company should consider
employing younger employees, Gen Y and Millennials who can connect to various target
markets, who use the products and provide innovation strategies for better market penetration. In
addition to hiring younger employees, also hiring more employees who have an educational
background in culinary, textiles, retail management, marketing, computer design, interior design,
and many other creative degrees that will complement the company’s strategic goals. Even
though the organization has been very successful with their current initiatives, incorporating
these strategies and implementing more diversity in the company can help them achieve more
sustainable growth. They can achieve their short term as well as long-term goals by building onto
their initiatives, making improvement to areas that require it, and strengthening their perceived
value while remaining profitable.
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