Although it is satisfied with its experiment in regional franchising, Williams-Sonoma has decided to focus on global expansion programs based on subsidiaries, Rob Bogan, vice president, international systems, revealed yesterday at the Online Retailer Conference in Sydney.
Williams-Sonoma was founded in 1956 by Chuck Williams who, with a passion for cooking and eating, sought to bring the cooking equipment he had seen on his European travels to the US market.
Today it has eight different brands, 581 stores in the US, products shipped to 75 countries and last year made US$4.4 billion in revenue.
In 2013, Williams-Sonoma opened five stores in Australia, its flagship outlet in Bondi Junction (incorporating Williams-Sonoma, Pottery Barn, Pottery Barn Kids and West Elm) and home furnishing store West Elm in Melbourne. Earlier this year, it revealed plans to open a further eight stores in Sydney and Melbourne, though it was unclear if this meant eight separate locations or two locations incorporating the retailer's four distinct brands.
Williams-Sonoma’s first foray into the global market was under a franchisee model with the Alshaya family in the Middle East and as 'unaffiliated franchisees' they operate 27 stores in the Middle East.
Bogan said this experience spurred the company on to continue its global expansion, but under a company-owned model, rather than a franchisee model.
“The brand has always felt that while they [the Alshaya family] are doing a fantastic job it’s not the way we would 100 per cent do it.
“There was a real sense of 'this is great', but I think it really whet the appetite as far as: we need to go company-owned, we need to have company-owned stores and websites all over the world,” he said.
Bogan said when choosing which markets to launch in, they looked at international shipping destinations and international IP addresses to find out where its customers where coming from. They also spoke to store employees in popular tourist areas to find out which travelers were paying Williams-Sonoma a visit during their trips.
Other considerations included English-speaking, macro-economic conditions and shopping and gift-giving cultures. As a result, Australia and the United Kingdom ranked as the first and second target destinations.
Four of Williams-Sonoma’s eight brands were launched in Australia.
“We felt that these were the brands that would work in this market. I think part of it was the first location we found in Bondi Junction was kind of a department store structure where we could fit four brands into it,” Bogan said.
Each brand has its own ecommerce website, which were built in just 100 days to launch at the same time as the first physical stores opened in Bondi Junction.
“We did it, less than 100 days from signing the contract to bring up the stores and the websites to have it all in play was massive. In fact the day we were supposed to open we were ready two days early because we hadn't actually factored in the time difference,” Bogan said.
Approximately 50 per cent of Williams-Sonoma Inc revenue comes from its eCommerce business. That figure also includes purchases made from the catalogue, which is an important element of its business model.
Williams-Sonoma also has 25 stores in Canada and one store in the United Kingdom which operate under the company-owned model.