Pier 1 Grows Kids Chain

"What we want to do is look at how we can leverage the two," Paul Mihick, president of Pier 1 kids, tells GSR. Name identity is just the beginning.

"We don't necessarily have to be next to or near a Pier 1," Mihick says, "but now that we've changed our name that will play into a location." Right now, only seven Pier 1 kids' stores are in the same center as their parent. The brand doubling could generate breaks on lease rates and create a shared advertising playing field plus deliver first-time customers to Pier 1 kids' doorsteps from the parent's repeat base as shoppers explore stores for children and grandchildren alike.

Mihick says the Pier 1 kids' store count will be measured growth, with 250 to 300 stores most likely in place by the end of the decade. Last year, 10 stores were added and another 10 to 15 will come on line this year. The stores predominately are situated in the Southeast US, but he says this year the line will stretch north, possibly into a New Jersey metro. "We feel we'll be ready to expand in other parts of the country starting in 2007 and more so in 2008," he says.

The switch to Pier 1 kids got under way last October when vendors started putting the private label on all new merchandise, Mihick notes. He expects it will take until midyear for stores to cycle out Cargokids' inventory and be fully stocked with the Pier 1 kids' label.

Along with the label switch will come a store personality change. The format will stay the same, 4,500 sf to 5,000 sf, but the SKU balance, averaging 1,500, will continue to shift until it's 60% furniture and 40% accessories. Today, it's a 70-30% ratio versus the 95-5% when the chain was bought. Last year, Pier 1 kids added window panels, rods and finials. In the spring, the brand gets a bath line. "There are some incredible opportunities out there to expand," Mihick says, citing strong holiday success with this year's introduction of classic wooden toys and ornaments.

As the brand grows so will its focus. Right now, the stores' biggest revenue generator is "the first big bed" as parents transition two- to four-year-olds from cribs and toddler beds. "We're finding a real strong sign in the eight- to 10-year-olds," Mihick says, "and we think we can expect to take that further to the 'tweens' and teens."

The specialty arena pits Pier 1 kids against Rooms to Go for Kids and Bombay Kids, although the industry's teeming with names across all spectrums from Ethan Allen and Pottery Barn to Target and Wal-Mart. "It's been three years now and we really feel good about where we are...and making it a national chain," Mihick says. "The last couple of months have been fabulous for us."