Williams-Sonoma
PEST & Industry Analysis
B Y: J A M E S M U R R AY
William-Sonoma Inc and W/S Division Overview
 Company- 5 Divisions





Williams-Sonoma
Williams-Sonoma Home
Pottery Barn
Pottery Barn Kids
West Elm
 Kitchen Retail Division
 Specialty retailer of products
for the kitchen established in
1956
 Total sales of $787 million
(2009)
 Over 250 stores in USA(All 5
Brands)
 16 in Canada,
 2Puerto Rico,(Pottery
Barn/West Elm)
 6Middle East(Pottery
Barn/Kids)
 Williams-Sonoma makes 42%
of the sales in retail
 All stores in US
Pest Analysis
Political/Legal
Trends
Explanation
Minimum wage legislation
Higher employee turnover, lower
profits
Healthcare Bill
Increase costs, lower profits
Political instability in Middle East
Hurt future opens of new store
Economic
Trends
Explanation
Economic recession in USA since 2008
Lower Disposable Income
Change in food Distribution in USA
Higher percent spent on groceries could
create rise for better utensils/ pots &
pans
Higher Oil Prices
Higher Distribution Costs
Higher Product Costs
Commodity prices increase
Higher price for materials
Rise in food costs
Could increase make it yourself (bread
machines, pasta machines)
Social/Cultural
Trends
Explanation
On the move society
Easier to buy food than make it
Rise in Cooking shows on tv (Food
Network, Cooking Channel)
Encourages home cooking
Use of better cooking equiptment
Technological
Trends
Explanation
E-commerce
Online sales
Mobile Shopping
Compare prices on your phone
PEST Summary
Factor
Trend
Evaluation
Impact
(1=low,5=high)
Rank of
importance
Political
Healthcare bill
Minimum Wage
Middle East Politics
T
T
T
2
3
4
4
Economic
Recession
High Oil Prices
Food Costs
Commodity Prices
Distribution of Food
T/O
T
O
T
T/O
3
3
4
3
4
1
Social
On the move society
TV Networks
T
O
2
4
3
O/T
T/O
4
4
2
Technology E-commerce
Mobile Shopping
Industry Analysis
•R E L E V A N T I N D U S T R Y
•P O R T E R ’ S F I V E F O R C E S
Defining the Relevant Industry
 Any company that does business dealing with the
specialty products that are used in kitchens at home
or at restaurants.
 Competition grows depending on the geographic
region based on prestige of location. (ex. New York)
Threat of New Entrants
Nature of Barrier
1. Supply-side economies of scale
Medium
2. Demand-side benefits of scale
High
3. Capital requirements
High
4. Incumbency advantages independent
of size
Medium
5. Customer-switching costs
Low
6. Unequal access to distribution
channels
Low
7. Restrictive Government Policy
Low
Power of Suppliers
 Weak supplier power because of many vendors
 Vendors offer very differentiated products
 Forward integration possibly but not likely due to
accessibility and exposure
Power of Buyers
 Weak buyers power
 Many vendors with strong differentiation
 Low volume of purchase due to high price of stocking
fee
 Buyers can be price sensitive
Threat of Substitutes
Down payment on a car
Video game console
Rent
HDTV/3D tv
Date night
Clothes
Vacation
Gas
Intensity of Rivalry
 Black Friday Sales/Cyber Monday
 Warranties are available
 Product variation
Industry Analysis Summary
Factor
Evaluation
Threat of New Entrants
Medium Force
Suppliers Power
Benign
Buyers Power
Medium Force
Threat of Substitutes
Strong Force
Intensity of Rivalry
Medium Force
Conclusions
 Becoming more focused on technology trends
 Try an focus on getting a partner to help promote
healthy lifestyle
 Predict cost of government regulations
Conclusions
 Limit the number of suppliers
 Try and create niche market
 Keep an eye on what is going on in the Middle East
Williams-Sonoma
Competitor & Market Analysis
B Y: J A M E S M U R R AY
Key Competitors
Sales(in
Net Income Generic
millions) (in millions) Strategy
Brands
$3,102.7
$77.4
Differentiation
Bed Bath & $7,828.8
Beyond
$600
Differentiation
/Low Cost
Pier 1
$1,290.9
$86.8
Differentiation
Kitchen Aid,
Cuisinart, All Clad,
Calphalon,
Demeyere, Le
Creuset, Mauviel,
Nordic Ware,
Ruffoni, Staub,
Fiberware, Bialetti,
Anolon, Martha
Stewart
Macy’s
$23,489
$350
Differentiation
WilliamsSonoma
Brands
Premier
All Clad(ws,bbb,m), Demeyere(ws), Le
Creuset(ws,bbb,m), Mauviel(ws)
Average
Cuisinart(bbb,m), Calphalon(ws,bbb,m),
Ruffoni(ws), Staub(ws), Anolon(bbb),
Farberware(bbb)
Cheap
Kitchen Aid(m), Nordic Ware(ws,bbb),
Bialetti(bbb), Circulon(bbb,m) Martha
Stewart(m)
Strategy
 W-S: Continue to grow both in the US market and
internationally
 BBB: Customer service, variety of products,
infrastructure, new products
 Pier 1: have a unique buying experience as if you
were in the country of the product
 Macy’s: Assortment, Value, Shopping Environment,
Marketing
Assumptions
 People will always want to have nice things in their
kitchens
 People will spend money
 Retail market will continue to be a huge part of this
economy
Objectives
 W-S: figure out which way they want to enter the
international market, continue to grow e-commerce
business
 BBB: continue to be the market leader and how to
stay ahead of the competition
 Pier 1: product extension, being able to stop the
bleeding
 Macy’s: continue to grow the Macy’s name and also
the Bloomingdale’s brand name
Resources
 BBB: product variety, entrepreneurial ways
 Pier 1: Red floors, only authentic global importer of
home furnishings
 Macy’s: Well known department store nationally and
internationally , been around for over a hundred
years, big events like the Thanksgiving day parade.
Strategy Business Groups
I-Internet
Large
I
WS
Size of business
UDS
MO
GSMS
SIR
Small
General
Target
WS-WilliamsSomona
MO- Mail
Order
UDSDepartment
Store
GSMSGeneral
Supermarket
Stores
SIR-Solely
Independent
Retailers
Specific
Competitors Compete
 Warranties on products mostly appliances
 Knowledge of the sales person with the products
 Variety of products
Scope & Core Competences
 Product scope: Cookware, Cutlery, Electrics,
Bakeware, Accessories (low-high end)
 Geography scope: W-S in high end malls, BBB and
Pier 1 in strip malls, plazas
 Core Competences: Having knowledge people who
understand what the products do and how to use
them.
Performance
 W/S- Growing, they have been able to refine their
distribution channels and cut cost from this, also the
expansion into Middle East.
 Pier 1- Declining, having a hard time adjusting to the
bad economy, having to close stores.
 BBB- Unchanged, have been able to make it through
bad market and have a lean process so they didn’t
need to do much changing with company.
 Macy’s-Company growing, Kitchen division
unchanged because they usually get their money
during peak wedding season.
Market Analysis
Market Size
 Market size for the retail business in 2009 was $4.13
trillion
Key Trends
 Retail market is on a decline
 “Green” products and business
Growth and Size
 Net revenues Declined in 2009 by 8%
 Retail market declined by 2.5% in 2009
Target Market
 Ages 25-40
 Income between $35,000 – $70,000
 Men and Women
Market Segmentation
 Divided target market into three groups
 Beginners
 Everyday Cooks/Party Planners
 Chefs
Social Media
 Facebook page has good interaction between
customers and Williams-Sonoma
 Offer recipes
 Customers are the ones posting things about the
products in the stores
Conclusion
 Have a better understanding of the E-commerce
business and social media compared to its
competitors and are in-touch with their online
customers
 Have more premier cookware and less of the cheap
stuff
 Are following trends of more online than traditional
retail even though traditional makes up most of their
sales.
Conclusion
 Continue the pursuit of becoming international
 Continue to gain market share from Bed Bath and
Beyond while continuing to cut costs and raise the
bottom line
Williams-Sonoma
Internal Analysis
BY: JAMES MURRAY
Business Model
 Specialty retailer of products for the kitchen.
 Offer both direct-mail and direct-to-consumer
segments
 Offer restaurant quality products for the home cook
5 Year Performance
2007
2008
2009
2010
2011
Net Revenues
3.72 B
3.94 B
3.36 B
3.10 B
3.5 B
Net Earnings
208,868
195,757
30,024
77,442
200,227
# of Stores
254
256
264
259
260
Distribution
 Mainly in the US
 Have franchise agreement but no locations were
reported for the Williams-Sonoma Division
International Markets
 Have a franchise agreement with M. H. Alshaya, a
Leading Retail with ties to the Middle East, Turkey,
North Africa, Cyprus, Russia, Poland, Slovakia,
Czech Republic
 This is a recent agreement but they have not opened
any Williams-Sonoma stores yet. They are testing
these markets with their Pottery Barn and Pottery
Barn Kids brands
Key Asset
 I believe one of the key assets to this company is the fact
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



they take the selling of the kitchen products to the next
level by offering cooking classes for all ranges. This is
something that the competitors are not doing.
Trademarks
Copyrights
Trade dress rights
Domain names
Patents
Value Chain Analysis
 Primary Activities: Marketing and Sale, Service
 Marketing is done mostly by targeting a niche
 Sales is where the most value is created because the sales
person can tell you what you most need to know about the
products and better fit with what you are looking for
 Service is also up here because after you purchase your
product, then you have the opportunity to attend W/S cooking
classes to get used to using your new product
 Supporting Activities: Procurement
 Giving the purchaser the best possible total cost of ownership
for the best possible value that the consumer is looking for
Ansoff’s Matrix
Current
Products
New
Products
 Main focus should be on
market penetration
Current
Market
Market
Penetration
New
Market

Market
Development
Product
Development

Diversification
In US retail market, have
franchise agreement to go
into the Middle East
Trying to expand current
products international
 International

Future focus will be more
about market
development in Middle
East
BCG Matrix
Stars
Question Marks
High
Market
Growth
Rate
Low
Cash Cows
High
Dogs
Low
Relative Market Share
Williams-Sonoma is
second in market share
behind Bed, Bath,
Beyond. Growth is this
industry is small but
with this recent bad
economy more market
share has become
available
Generic Strategy
Broad
Narrow
Competitive Scope
Competitive Advantage
Low Cost
Higher Cost
Overall Cost
Leadership
Differentiation
Cost Focus
Differentiation
Focus
•Higher Cost Competitive
Advantage:
•Offer high quality products
for the kitchen
•Broad Competitive Scope
•Even though they only sell
kitchen products, the
company as a whole sells to
many different areas. This is
just on area of focus for the
Williams-Sonoma Inc.
Strategy Clock
High
Differentiation
Hybrid
Perceived
Service
Benefits
Low
Price
No Frills
Low
Price
Focus on
Focused
Differentiation differentiation
and have a higher
price value then
then its
competitors. Not
focused on
focused
differentiation
even though that
is closer to the
higher price point
which is where
W/S is
Strategies
Destined for
Failure
High
SWOT
Strengths
Weakness
•Offer Cooking Classes
•Knowledgeable Staff
•Offer higher Quality Products than
Competitors
•Divided Brands to give better selection
of products
•Offer catalogs for customers who are
not up to date on technology
•Since stores are divided may require
driving to other store to get what you
need
•Catalogs increase paper costs which in
the green era is looked down on
SWOT
Opportunity
•Food Costs-make it yourself instead of
buying it
•TV Networks
•E-Commerce-Continue to build up
online shopping in hopes of reducing
mail catalog
Threat
•Healthcare bill-Higher Costs
•Middle East Politics-Franchise
Agreement
•High Oil Prices-Higher distribution
and product costs
•Commodity Prices-higher product
costs
•On Move Society-little time for home
cooking
Conclusion
 Sales in the last five years have been up and down
 Are trying to go international with franchise
agreement but with the instability of the Middle East
is slowing the process of growth of the WilliamsSonoma brand
 Add value to company because they are the only one
who offers cooking class to better influence the
buyers process
Conclusion
 Growth opportunities are going to come from
alliances, mergers, and acquisitions
 Focus on market penetration in both US market and
international
 Continued focus on differentiation strategy