Devoted to online marketing, viral marketing, and web marketing

Saying it's a move to cut costs, Pier 1 Imports (PIR) has announced it's closing it e-commerce business, the second major retailer to make the decision over the last couple years. TJX Companies Inc. did in in October 2005. The store will close the online business down by August 31. They'll retain the site as a marketing vehicle.

“We are exiting all non-Pier 1 stores activities,” Pier 1 president and CEO Alex W. Smith told Wall Street analysts on the company’s first-quarter conference call. “We are exiting the e-commerce and catalog business.”

I can't help thinking this is a huge mistake that is being made at the risk of focusing on salvaging its past way of doing business. Now if you're familiar with Pier 1 Imports at all, you know they've been struggling for years.

To take their resources away from where their future growth will come from, for the purpose of cutting operational costs alone, is a bad move, no matter how we look at it. Smith says the cuts will save cost of about $150 million.

The e-commerce site for Pier 1 has actually been growing at a good rate, increasing from $15.3 million in revenue last year to $18.9 million this year. That's a little over 20 percent growth.

Other moves the company is making is to cut back on the number physical stores by around 100, which will include their clearance and children's stores. The sole focus according to Smith will be on its Pier 1 Imports stores.

I could understand cutbacks and possibly limiting some of what they're doing online, but to shutter it altogether doesn't make sense.

For example, when Smith says he's going to focus solely on the Pier 1 Imports stores, that's not a bad strategy, but why don't they transform the Website to reflect those realities as well? I don't see how any retailer can go forward without having an Internet strategy in place - too many people want it.
  
They may get some short-term benefits out of this, but they are basically saying they're going to rely on same-store sales as the sole basis for their growth. While that is a healthy measure for retail, I think it's misunderstanding the power and benefit of the Internet with consumers to think that this is a dichotomy of some sort.

In other words, having the Internet website shouldn't interfere with their strategy of focusing on their "Import" stores. They should complement one another, not be considered a distraction.

The site was also very popular with Pier 1 customers as it was drawing 5.7 million visits a month, according to the company. It was also starting to be wisely used for in-store promotions and coupons that could be redeemed in the physical stores.

I think once this the smoke clears, this is going to be looked back upon as a bad move.