Case Study: Williams Sonoma

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Williams Sonoma Case Analysis

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

During the timeframe of the case study, Williams-Sonoma is creating a multi-channel-based business model that lacks the level of integration between online and brock-and-mortar stores to scale profitably. While the sales are increasing quickly for Williams-Sonoma, Pottery Barn and outlet stores, there is little evidence of online buying behavior driving in-store purchases. Worse yet, there is no indication that the high-end stores in their business are enjoying greater sales as a result of their e-comemrce sites. Without a concerted strategy to drive greater upsell and across channels, Williams-Sonoma will eventually end up being two or more companies. This is exactly why the industry they compete in is also following this growth trajectory; the attempts to focus on several segments at the same time is diluting focus on the selling cycle of customers.

Retailers need to realize that the more effectively they manage the selling process both on- and offline as a single, unified strategy, the more profitable over the long-term they will be (King, Sen, Xia, 2004). The case indicates that there are fundamental shifts in how customers are choosing to shop online. The prevalence of social media is a case in point. As customers are increasingly relying on the most trusted sources of information, often their personal networks on Facebook, LinkedIn, Twitter and other social networking sites, to drive their purchasing (Bernoff, J., & Li, 2008). Williams-Sonoma is not taking into account the communitization of their customer base, but rather assuming no interaction between online and offline customers. This is going to drive the company to operate as several different businesses over time.

By better managing the entire purchasing process across both online and offline channels, Williams-Sonoma will gain a significant competitive advantage in the market. Today they are encouraging a bifurcated, fragmented view of their channels. By aligning online and offline strategies to a common objective or goal, the company will be able to better manage costs and predict revenue and profits more effectively. In devising and managing a multichannel strategy that involves online shopping and the potential for offline purchasing, retailers are discovering that the decision processes consumers use are changing quickly and significantly in favor of the Web as a product comparison tool (Reynolds, 2002). Williams-Sonoma will be able to unify their online and offline strategies through the more effective use of social media as well, creating a unique and highly differentiated customer experience in the process (Bernoff, J., & Li, 2008). In five years if these changes are made Williams-Sonoma will be able to challenge Amazon and other larger and more diverse competitors with a highly effective, unified e-commerce strategy that interlinks directly to their retail outlets. If they do nothing they will end up just as fragmented as the market they are competing in today, forced to eventually spin off specific retail divisions or store chains that no longer make sense for how far customers have changed in their decision-making and purchasing criteria. The bottom line is that how, where and who customers trust for information is changing much more rapidly than the Williams-Sonoma existing channel architecture and e-commerce strategies can allow for.

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

First, I would immediately begin a thorough evaluation of just who is shopping on each of the eight e-commerce sites, why, and what their personas looked like. A persona is an aggregate representation of a prospect or customer. Once I had a very good sense of who these prospects and customers are, what forms of information they trusted most and least, and understood their shopping behavior, I would begin to re-architect the entire e-commerce strategy to be better integrated at the shopping, selling and service workflow or process level than has been the case in the past. This customer-driven redefinition of the shopping, selling and service workflows of each customer base would then be reflected in an integrated architecture that would allow for greater agility in the most profitable events each of the stores participate in, which are new product launches. The integrated it architecture of the company would be aligned to these requirements, relying on Web Services to ensure agility and speed of response to market conditions over time (Lin, Huang, Burn, 2007).

Once the it systems and architecture were in place to better align with the way prospects evaluated Williams-Sonoma products and merchandise, I would next begin defining e-commerce strategies deliberately aimed at driving high-end customers into stores. For low-end products that are commodity-like in price and availability, I would concentrate on creating a self-service area of the e-commerce sites that would make transactions easily accomplished. I'd also invest in personalization technologies for these sites to make the purchasing of commodity products so simple, they could be accomplished in literally two clicks in any Web applications. Once this was complete I would create a more expanded up-sell and cross-selling series of systems that interlink catalogs of stores and e-commerce sites, also provide customers with the option to pick up their online purchases in the store. This approach to defining the customer experience in the areas of upsell and cross-sell is consistent with best practices in online retailing and multichannel management (Netessine, Savin, Xiao, 2006).

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

Each of the Williams-Sonoma competitors has a slightly different approach to completing in the fragmented home furnishings and accessories market. Crate & Barrel relies on a highly differentiated, unique strategy of sourcing products that are one-of-a-kind and difficult to find anywhere else. This strategy has been very effective in terms of using their e-commerce sites to drive traffic into their stores. By showing quirky, unique products on their websites Crate & Barrel also creates a highly differentiated customer experience online as well. Restoration Hardware takes a fundamentally different approach, concentrating on larger, more expensive products and replacement items for homeowners and decorators that have a nostalgic taste for items. This is a competitor that does have a very effective strategy for driving traffic from their website to the stores, as many of their items are cost-prohibitive to ship. Restoration Hardware has overcome this limitation of their business model by having many of their largest and most expensive items carried by other retailers under their native brand as well. This has helped to increase the overall share-of-market for this competitor and also led to a higher end of the home furnishings market becoming viable. Competitors Pier 1 Imports and Bombay Company take a significantly different approach to completing as well. Pier 1 concentrates on creating a highly differentiated customer experience in their store, again concentrating on unique products like Crate & Barrel does. Pier 1 however has a more integrated e-commerce programs that has shown potential to be multichannel in their sales prospecting, selling and service strategies (Reynolds, 2002). The competitor most successful at aspirational selling is Bombay Company. Bombay has also mastered the e-commerce strategy of using their e-commerce sites as digital showrooms, inviting customers to shop in stores as well. All of these competitors realize that the future of e-commerce retailing is in creating an effective multichannel strategy that can keep pace with customers as they change their preferences for how and where they learn about new products (Bernoff, J., & Li, 2008). The future of this market is clearly multichannel, with a very tight integration between e-commerce and brick-and-mortar programs and strategies (King, Sen, Xia, 2004).

How is Williams-Sonoma using the Internet as a distribution channel now, and how would you recommend that they use the Internet in the future?

Today their strategy is highly fragmented and… [END OF PREVIEW]

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