Pottery Barn–Inspire beautiful decorating for every room
Pottery Barn offers unique products and free design services to “inspire beautiful decorating for every room”.
- Did you choose the company as an example of effectiveness or ineffectiveness? Why?
Pottery Barn is a home furnishings company that drives value for consumers by offering high quality, comfortable, and stylish products at reasonable prices. Pottery Barn deploys a highly trained workforce that aligns and supports their business goal to “inspire beautiful decorating for every room”1. Their ability to support an incredible customer experience with a valued product is clearly effective as evidenced by their high number of repeat customers, long history (established in 1949), and consistent store growth to a current level of 199 stores in the United States and abroad.3
- Describe the company’s business and operating models. What is interesting about them?
Business Model
Pottery Barn is a portfolio company of Williams-Sonoma, Inc. and targets the middle-class consumer situated between West Elm, Williams-Sonoma’s economical furniture brand and Williams-Sonoma Home, their luxury furniture brand. The strategy is to offer classic furnishings that give the company lasting appeal blended with trendier items that generate excitement for new product lines. Over 95% of Pottery Barn home furnishings are created by in-house designers and sold through their in-store, catalogue, online, and over the phone channels.2 One of the most interesting aspects of the Pottery Barn business model is their offering of free design services to customers and very generous designer program where they offer significant discounts to independent interior designers who meet minimum purchase thresholds from the company. All Pottery Barn revenue comes from home furnishing sales.
Operating Model
The Pottery Barn operating model functions in two key segments: design and sales. The former focuses on creating product, while the latter focuses on creating a memorable customer experience and lasting loyalty.
People
As a result of these two key functions, Pottery Barn’s human capital focuses on two key groups—designers and sales associates. The designers are encouraged to be influenced by their home lives, designing products they would use personally or gift to friends.4 Sales associates are hired for personality and cross-trained to provide design expertise to customers. Pottery Barn also deploys a highly flexible work force, of which only one-third are full-time, and a significant portion of whom are only employed for the holiday ‘high-season’.3 This flexibility enables them to offer an engaged consumer experience commensurate with consumer demand.
Process
The design team at Pottery Barn is a completely separate division both in its organizational structure and in its location, three miles away from the Corporate offices. The team is vertically integrated and controls every part of the design process: the product design, production approval, sourcing, and manufacturing oversight.
In the store, sales associates welcome customers, and for interested customers, will work with them as interior designers to create their ideal home display. Sales associates are encouraged to create relationships with customers and generate maximum loyalty. Further, sales associates work closely with external, independent interior designers which augments the reach of Pottery Barn beyond only the individuals that walk into their stores or read their magazines.
- Do the models align and support each other? How? What specific features of the operating model are designed to create and sustain competitive advantage? What features of the business model leverage unique capabilities of its operating model? What are the implications for performance?
The key to the alignment for Pottery Barn starts with the in-house designers who create a great product available exclusively through Pottery Barn stores. This exclusive offering is key to engaging consumers and when supported by Pottery Barn’s free design services creates a high value offering. Consumers respond with intense lifetime loyalty, which directly translates into higher sales and a higher share of a customer’s home furnishing purchases.
Resources:
- http://www.potterybarn.com/about-us/?cm_type=gnav
- https://hbr.org/2014/09/the-ceo-of-williams-sonoma-on-blending-instinct-with-analysis
- http://www.williams-sonomainc.com/corpimgs/i/201527/0001/images/pdf/annual-reports/WS_14AR.pdf
- http://www.fastcompany.com/46714/how-pottery-barn-wins-style
Interesting to learn about the design-focus of Pottery Barn. Clearly a differentiating factor to be forward-thinking and collaborative with customers and trends as opposed to simply putting things on shelves for the customers to imagine. Seems akin to a real estate agent staging a home for sale. I do wonder how they are able to convey a consistent experience when it seems such a huge percentage of their workforce is rotating. It’s apparent that the sales associate is a significant factor in the customer experience, but given they are not hired for design expertise, and might be new on the job, how does Pottery Barn ensure they have the appropriate expertise and engagement to work with customers? Is this through consistent processes, training, or do they have a highly defined talent pipeline to more accurately identify good fits?
Hi Sierra,
I would be the last person to know a thing or two about home decorations, but given my Field 3 project is very much related to this, I myself actually went to a Pottery Barn store during dash day and interviewed customers – of course after the approval from the store manager. A couple of interesting insights from my limited experience:
1. Most people shopped at Pottery Barn during the sale period, which typically happens close to the major holidays or the end of year.
2. The product variety does not change over time. A sofa you may like today, would most likely be available in the warehouse even after a year.
3. All in-store displays are managed centrally by the corporate office. Every tiny detail on the store layout is mapped to enhance the customer experience.
4. With online sales possible, people prefer to visit stores to just get a feel for the product and tend to mostly go back and order online from home.
I would like to know if 1&2 should somehow be incorporated in the business model to improve the overall sales? Perhaps lower prices and more variety…….also what do you think if Pottery Barn becomes a display center with no inventory? People just coming in to browse and eventually shop online – an operating model to keep costs low for inventory and staff salaries.