WEBVTT 00:00:00.000 --> 00:00:01.860 Okay, I want you to close your eyes for a moment. 00:00:01.919 --> 00:00:03.879 We're going to do a little time travel. Let's 00:00:03.879 --> 00:00:08.160 go back to a Saturday afternoon in, say, 1998 00:00:08.160 --> 00:00:13.119 or maybe 2003. You've just finished lunch at 00:00:13.119 --> 00:00:14.960 a Chili's or an Applebee's and you're walking 00:00:14.960 --> 00:00:17.399 through your local strip mall. Oh, I know this 00:00:17.399 --> 00:00:19.660 walk. You pass the generic department store, 00:00:19.800 --> 00:00:21.839 maybe a Blockbuster, and then you walk through 00:00:21.839 --> 00:00:24.100 a set of double glass doors. And immediately 00:00:24.100 --> 00:00:26.760 the air changes. It does. It hits you instantly. 00:00:26.800 --> 00:00:29.420 It's a wall of scent. Yes. It's heavy on the 00:00:29.420 --> 00:00:31.960 vanilla, maybe some spiced apple, definitely 00:00:31.960 --> 00:00:34.899 some kind of ocean breeze. But underneath that 00:00:34.899 --> 00:00:37.840 perfumed layer, there is this very specific, 00:00:38.060 --> 00:00:42.100 dry, dusty smell. It smells like dried grass 00:00:42.100 --> 00:00:44.420 and wood shavings. That is the smell of rattan 00:00:44.420 --> 00:00:47.060 and wicker baking under halogen lights. Exactly. 00:00:47.100 --> 00:00:50.859 And visually, it's chaos. Absolute sensory overload. 00:00:51.140 --> 00:00:53.119 Total overload. There are bamboo shades hanging 00:00:53.119 --> 00:00:55.259 from the ceiling. There are colorful glass vases 00:00:55.259 --> 00:00:57.420 that look like they were hand -blown by an artisan 00:00:57.420 --> 00:00:59.420 in Venice but were actually mass -produced in 00:00:59.420 --> 00:01:01.840 a factory. There are candles everywhere. And, 00:01:01.880 --> 00:01:05.379 of course, the furniture. Mmm. The furniture. 00:01:05.500 --> 00:01:08.810 Wicker chairs, papazon cushions. Chests that 00:01:08.810 --> 00:01:12.269 look like pirate booty. You are, of course, standing 00:01:12.269 --> 00:01:15.109 in a Pier 1 Imports. A place that was, for a 00:01:15.109 --> 00:01:19.189 very long time, the absolute mecca of eclectic 00:01:19.189 --> 00:01:22.049 suburban home decor. It was a rite of passage. 00:01:22.530 --> 00:01:24.909 I feel like if you were 22 years old, getting 00:01:24.909 --> 00:01:26.670 your first apartment that wasn't a dorm room, 00:01:26.750 --> 00:01:29.129 you were legally required to go to Pier 1. Right. 00:01:29.230 --> 00:01:32.000 You went there to buy a papasan chair. and some 00:01:32.000 --> 00:01:34.879 placemats to prove you were a sophisticated adult 00:01:34.879 --> 00:01:37.260 who knew about the world. It was the definition 00:01:37.260 --> 00:01:39.599 of a category killer for affordable imported 00:01:39.599 --> 00:01:43.120 home goods. At its peak, Pier 1 wasn't just a 00:01:43.120 --> 00:01:45.739 store. It was a cultural signifier for the American 00:01:45.739 --> 00:01:48.599 middle class. What did it signify? It said, I 00:01:48.599 --> 00:01:50.599 have taste, I travel, or at least my furniture 00:01:50.599 --> 00:01:52.680 looks like I do, and I like things to be a little 00:01:52.680 --> 00:01:54.879 bit fun. And that is exactly why we are doing 00:01:54.879 --> 00:01:57.579 this deep dive today. Because if you drive past 00:01:57.579 --> 00:02:00.579 that same strip mall today, right now, That store 00:02:00.579 --> 00:02:03.060 is gone. It's gone. The sign is taken down. Maybe 00:02:03.060 --> 00:02:05.420 it's a Spirit Halloween now or a dialysis center. 00:02:05.659 --> 00:02:09.560 Pier 1, the physical retail giant, has completely 00:02:09.560 --> 00:02:13.060 liquidated. Liquidated, bankrupt, and physically 00:02:13.060 --> 00:02:16.219 vanished from the map. But, and this is the hook, 00:02:16.259 --> 00:02:17.860 the thing that really grabbed me when we started 00:02:17.860 --> 00:02:21.419 looking at the sources, it's not dead. Not entirely. 00:02:21.639 --> 00:02:23.939 No. It has become what some business analysts 00:02:23.939 --> 00:02:26.800 call a zombie brand. That is the technical term 00:02:26.800 --> 00:02:28.719 we're going to explore. It's a fascinating and 00:02:28.719 --> 00:02:32.639 slightly eerie phenomenon. We are looking at 00:02:32.639 --> 00:02:34.780 a company that went from being a Wall Street 00:02:34.780 --> 00:02:39.580 darling, literally posting 100 percent sales 00:02:39.580 --> 00:02:42.479 gains for four years straight. Which is insane. 00:02:42.699 --> 00:02:45.180 It's unbelievable growth. And it went from that 00:02:45.180 --> 00:02:47.860 to a company that sold its own name for parts. 00:02:48.349 --> 00:02:50.530 So we're going to unpack this entire life cycle. 00:02:50.710 --> 00:02:52.669 And the research you brought to the table today 00:02:52.669 --> 00:02:55.710 is honestly wild. I thought I knew this store. 00:02:55.849 --> 00:02:57.909 I thought it was just the place my mom bought 00:02:57.909 --> 00:03:00.969 scented candles. But the origin story involves 00:03:00.969 --> 00:03:04.750 Radio Shack. It involves Radio Shack, a disastrous 00:03:04.750 --> 00:03:07.469 invasion of Japan, a printing company that tried 00:03:07.469 --> 00:03:10.669 to sell furniture, and a NASA scientist. See, 00:03:10.729 --> 00:03:12.870 that sounds like a fever dream. Yeah. But it's 00:03:12.870 --> 00:03:15.009 all in the financial records. It's all there. 00:03:15.150 --> 00:03:17.509 And our mission today is to trace that line. 00:03:18.079 --> 00:03:21.460 How does a company go from a brilliant franchise 00:03:21.460 --> 00:03:26.800 idea in the 60s to a billion dollar empire and 00:03:26.800 --> 00:03:30.240 then to a digital ghost? We're basing this on 00:03:30.240 --> 00:03:32.580 a comprehensive review of the company's history, 00:03:32.800 --> 00:03:35.340 financial reports and corporate filings. OK, 00:03:35.419 --> 00:03:37.139 so let's unpack this. We have to start at the 00:03:37.139 --> 00:03:39.500 beginning, because when I was prepping for this, 00:03:39.560 --> 00:03:41.400 looking through the notes, I had to double check 00:03:41.400 --> 00:03:44.139 the names. Right. I saw Tandy and Henderson. 00:03:44.569 --> 00:03:46.430 Charles D. Tandy and Leifer Henderson. Right. 00:03:46.509 --> 00:03:48.789 Now, to me, and probably to most people listening 00:03:48.789 --> 00:03:51.370 who are of a certain age, Tandy means computers. 00:03:51.550 --> 00:03:54.469 Yeah. It means the TRS -80. It means Radio Shack. 00:03:54.469 --> 00:03:57.189 It means resistors, batteries, soldering irons, 00:03:57.189 --> 00:04:00.689 and weird remote control cars. The absolute kings 00:04:00.689 --> 00:04:03.689 of consumer electronics in the 1960s and 70s. 00:04:03.710 --> 00:04:05.930 So help me understand this. How do the kings 00:04:05.930 --> 00:04:09.469 of electronics end up selling rattan chairs and 00:04:09.469 --> 00:04:11.469 bamboo curtains? That seems like a massive pivot. 00:04:11.590 --> 00:04:13.590 It does seem disconnected, but you have to understand 00:04:13.590 --> 00:04:16.350 the business psychology of the early 1960s. This 00:04:16.350 --> 00:04:18.829 was the era of the conglomerate. The prevailing 00:04:18.829 --> 00:04:21.949 wisdom in business wasn't do one thing really 00:04:21.949 --> 00:04:25.790 well. It was diversify your capital. So it wasn't 00:04:25.790 --> 00:04:29.110 about passion for the product. Not at all. Charles 00:04:29.110 --> 00:04:31.709 Tandy wasn't necessarily in love with resistors 00:04:31.709 --> 00:04:34.829 or capacitors personally. He was in love with 00:04:34.829 --> 00:04:37.629 high margin retail and franchise models. He was 00:04:37.629 --> 00:04:40.110 a numbers guy. He was a numbers guy. He was looking 00:04:40.110 --> 00:04:42.449 for places to park cash that would generate a 00:04:42.449 --> 00:04:44.910 return. OK, so they're sitting in Fort Worth, 00:04:44.990 --> 00:04:47.689 Texas, looking for the next big thing. Essentially. 00:04:47.730 --> 00:04:51.509 In 1962, there was a small chain in San Mateo, 00:04:51.589 --> 00:04:55.870 California called Cost Plus Imports. Cost Plus. 00:04:57.420 --> 00:05:00.220 Not a very glamorous name. No, but it was descriptive. 00:05:00.579 --> 00:05:03.540 Now, import retail is a tough business cash wise. 00:05:03.620 --> 00:05:05.860 You have to pay for the goods months before you 00:05:05.860 --> 00:05:07.600 sell them because they're sitting on a boat coming 00:05:07.600 --> 00:05:09.759 from Asia. Right. Your liquidity is literally 00:05:09.759 --> 00:05:12.319 floating in the Pacific Ocean. Exactly. So Cost 00:05:12.319 --> 00:05:15.180 Plus Imports was struggling with cash flow. They 00:05:15.180 --> 00:05:17.439 needed a lifeline. And Tandy and Henderson see 00:05:17.439 --> 00:05:20.000 an opportunity. They step in. But they didn't 00:05:20.000 --> 00:05:21.699 just write a check out of the kindness of their 00:05:21.699 --> 00:05:23.980 hearts. What was the deal? They provided a loan, 00:05:24.220 --> 00:05:27.319 but the terms were fascinating. In exchange for 00:05:27.319 --> 00:05:29.600 the capital, they secured the rights to franchise 00:05:29.600 --> 00:05:32.740 the concept. Ah. They basically said, we'll float 00:05:32.740 --> 00:05:35.040 you the cash, but if this works, we own the rights 00:05:35.040 --> 00:05:37.800 to expand it. That's a shark move. It's a brilliant 00:05:37.800 --> 00:05:40.579 finance move. And they exercised it quickly. 00:05:41.079 --> 00:05:44.740 By 1966, the Tandy -led franchise had grown to 00:05:44.740 --> 00:05:48.339 16 locations across California and Texas. So 00:05:48.339 --> 00:05:50.459 it's working. The model is working. It's working, 00:05:50.560 --> 00:05:52.899 but they ran into a branding issue. They realized 00:05:52.899 --> 00:05:56.920 Cost Plus sounded, well, cheap. It sounds like 00:05:56.920 --> 00:06:00.319 a grocery store outlet or a discount bin. Cost 00:06:00.319 --> 00:06:03.000 Plus implies you're paying the Cost Plus a little 00:06:03.000 --> 00:06:05.519 bit. It doesn't scream luxury or exotic. Exactly. 00:06:05.519 --> 00:06:08.279 They wanted something that evoked travel. Yeah. 00:06:08.339 --> 00:06:10.980 Adventure. The idea that these goods had just 00:06:10.980 --> 00:06:13.300 arrived from a faraway land and you were discovering 00:06:13.300 --> 00:06:15.680 them. Okay, so they need a rebrand. A major one. 00:06:15.759 --> 00:06:18.819 So they rebranded the stores to Pier 1 Imports. 00:06:18.819 --> 00:06:20.600 Which I have to say is a great name. Pier 1. 00:06:20.779 --> 00:06:22.740 It implies you're getting the goods right at 00:06:22.740 --> 00:06:25.180 the dock. First dibs. Fresh off the boat. It 00:06:25.180 --> 00:06:27.819 creates a narrative for the shopper. You aren't 00:06:27.819 --> 00:06:30.399 just buying a basket. You are participating in 00:06:30.399 --> 00:06:34.439 global trade. And significantly, they moved the 00:06:34.439 --> 00:06:37.379 headquarters. Let me guess. To California, where 00:06:37.379 --> 00:06:40.970 the style was. to be near the ports? No, they 00:06:40.970 --> 00:06:44.029 moved it to Fort Worth, Texas, right next door 00:06:44.029 --> 00:06:46.670 to the Radio Shack HQ. That is such a bizarre 00:06:46.670 --> 00:06:49.490 image to me. On one side of the parking lot, 00:06:49.629 --> 00:06:51.810 they're discussing the future of microchips and 00:06:51.810 --> 00:06:54.670 CB radios. On the other side, they're debating 00:06:54.670 --> 00:06:57.730 the weave pattern of a wicker hamper. It is funny, 00:06:57.769 --> 00:06:59.810 but for Tandy, it was the same conversation. 00:07:00.029 --> 00:07:03.110 It was about logistics, inventory turnover, and 00:07:03.110 --> 00:07:05.410 real estate. You saw it all as widgets. They 00:07:05.410 --> 00:07:07.829 treated wicker baskets exactly like batteries. 00:07:07.949 --> 00:07:10.430 High -margin units that needed to move fast. 00:07:10.750 --> 00:07:13.170 They applied the discipline of electronics retail 00:07:13.170 --> 00:07:16.360 to the chaos of the import bazaar. So physically 00:07:16.360 --> 00:07:18.819 and financially, Kirwan and Radiocheck were siblings. 00:07:19.079 --> 00:07:21.819 They were. And that DNA, that focus on systems 00:07:21.819 --> 00:07:23.819 and expansion, is what allowed them to scale 00:07:23.819 --> 00:07:26.319 so aggressively in the next decade. Let's talk 00:07:26.319 --> 00:07:28.660 about that scale because we move into what we're 00:07:28.660 --> 00:07:31.819 calling the golden era, the late 60s and 70s. 00:07:31.839 --> 00:07:33.899 This was the launch pad. The company went public 00:07:33.899 --> 00:07:36.620 on the American Stock Exchange in 1970. Okay, 00:07:36.680 --> 00:07:38.819 that's a big step. It's a huge milestone for 00:07:38.819 --> 00:07:41.779 any company. But they grew so fast that just 00:07:41.779 --> 00:07:44.959 two years later, in 1972, they jumped to the 00:07:44.959 --> 00:07:48.199 big leagues, the New York Stock Exchange, ticker 00:07:48.199 --> 00:07:51.540 symbol PIR. So now they have access to serious 00:07:51.540 --> 00:07:54.379 capital. Serious capital. And by this time, they 00:07:54.379 --> 00:07:58.300 had grown to 123 stores. And this is where the 00:07:58.300 --> 00:08:00.079 numbers in the notes get kind of staggering. 00:08:00.139 --> 00:08:03.790 You mentioned... 100 % sales gains. Four consecutive 00:08:03.790 --> 00:08:05.870 years. Stop and think about that for a second. 00:08:06.290 --> 00:08:08.589 Doubling your revenue every single year for four 00:08:08.589 --> 00:08:11.850 years. Yeah. That is Silicon Valley growth. That 00:08:11.850 --> 00:08:14.930 is what you expect from a tech startup like Uber 00:08:14.930 --> 00:08:18.050 or Airbnb in their early days. How do you do 00:08:18.050 --> 00:08:20.029 that selling furniture? Well, we need to distinguish 00:08:20.029 --> 00:08:22.730 between two things here. Same store sales and 00:08:22.730 --> 00:08:25.790 total revenue. A lot of this was fueled by aggressive 00:08:25.790 --> 00:08:28.370 store openings. A land grab. A total land grab. 00:08:28.389 --> 00:08:30.829 They were planting flags everywhere. By 1985, 00:08:31.089 --> 00:08:34.269 they were at 265 stores with a stated management 00:08:34.269 --> 00:08:37.330 goal to double that by 1990. This is just pure 00:08:37.330 --> 00:08:41.029 aggressive expansion. But the unit economics? 00:08:41.759 --> 00:08:44.179 The profitability of each individual store were 00:08:44.179 --> 00:08:46.460 also incredible. This wasn't just empty expansion. 00:08:46.779 --> 00:08:50.899 In 1979, they had a single store in Royal Oak, 00:08:50.980 --> 00:08:54.700 Michigan, that hit $1 million in annual sales. 00:08:54.779 --> 00:08:58.960 In 1979 dollars? In 1979 dollars. If you adjust 00:08:58.960 --> 00:09:01.480 that for inflation, that's nearly $4 million 00:09:01.480 --> 00:09:06.320 today. Wow. From one store? From one store. In 00:09:06.320 --> 00:09:08.929 a strip mall. That is massive volume, especially 00:09:08.929 --> 00:09:11.730 considering they weren't selling $5 ,000 sofas. 00:09:11.730 --> 00:09:14.250 They were selling smaller items. Correct. And 00:09:14.250 --> 00:09:16.629 that brings us to the merchandise mix. Because 00:09:16.629 --> 00:09:19.149 unlike a traditional furniture store where you 00:09:19.149 --> 00:09:22.149 might sell a sofa once a week, Pier 1 was selling 00:09:22.149 --> 00:09:25.330 stuff. The sources call it eclectic. which is 00:09:25.330 --> 00:09:27.350 the polite way of saying random stuff from all 00:09:27.350 --> 00:09:28.909 over the world. We call it the treasure hunt 00:09:28.909 --> 00:09:31.149 model. This is really important to understand 00:09:31.149 --> 00:09:33.470 because it's the secret sauce of everyone from 00:09:33.470 --> 00:09:36.149 Tier 1 to TJ Maxx to Costco. How does it work? 00:09:36.330 --> 00:09:38.990 The core idea is eclectic scarcity. If you go 00:09:38.990 --> 00:09:40.970 to a normal furniture store, you see a floor 00:09:40.970 --> 00:09:43.629 model, you order it, and it arrives in six weeks. 00:09:43.830 --> 00:09:46.470 At Pier 1, what you saw on the shelf was what 00:09:46.470 --> 00:09:50.210 they had, and the layout was intentionally cluttered. 00:09:50.409 --> 00:09:53.750 It was a brass elephant next to a Papa San chair 00:09:53.750 --> 00:09:56.909 next to a set of bamboo chopsticks. It forces 00:09:56.909 --> 00:10:00.210 you to buy now. Exactly. It triggers the fear 00:10:00.210 --> 00:10:03.649 of missing out. If I don't buy this vaguely hand 00:10:03.649 --> 00:10:06.370 -blown blue vase today, it won't be here next 00:10:06.370 --> 00:10:09.840 week. FOMO. The original retail FOMO. And because 00:10:09.840 --> 00:10:13.919 the price points were accessible, maybe $15 for 00:10:13.919 --> 00:10:17.059 the vase, $30 for the pillows, it bypassed the 00:10:17.059 --> 00:10:19.539 considered purchase part of the brain. You didn't 00:10:19.539 --> 00:10:21.580 need to consult your spouse to buy a candle or 00:10:21.580 --> 00:10:24.240 a picture frame. No, it was an impulse buy. It's 00:10:24.240 --> 00:10:26.379 impulse buying masquerading as interior design. 00:10:26.559 --> 00:10:28.279 Perfectly put. It made shopping entertainment. 00:10:28.480 --> 00:10:30.559 You went to Pier 1 just to see what they had. 00:10:30.740 --> 00:10:32.720 And we cannot talk about what they had without 00:10:32.720 --> 00:10:35.720 talking about the Papazon chair. The icon. The 00:10:35.720 --> 00:10:38.629 giant bowl. The dish chair. I feel like this 00:10:38.629 --> 00:10:41.529 item alone funded their expansion for a decade. 00:10:41.750 --> 00:10:44.110 The Papasan was the ultimate Pier 1 product. 00:10:44.169 --> 00:10:46.090 Think about it from a business perspective. It 00:10:46.090 --> 00:10:48.330 was relatively cheap to manufacture. It's just 00:10:48.330 --> 00:10:52.009 a rattan and a big tufted cushion. It packs down 00:10:52.009 --> 00:10:54.029 reasonably well for shipping since the bowl separates 00:10:54.029 --> 00:10:56.750 from the base. So good margins, good logistics. 00:10:57.129 --> 00:10:59.970 But in the store, it takes up space. It invites 00:10:59.970 --> 00:11:02.929 you to sit. It signals bohemian. It's an experience. 00:11:03.049 --> 00:11:05.799 It was the dorm room throne. I don't think you 00:11:05.799 --> 00:11:07.480 were legally allowed to be a college student 00:11:07.480 --> 00:11:10.480 in 1995 without one. It was a requirement. But 00:11:10.480 --> 00:11:12.379 it's impossible to get out of gracefully. It 00:11:12.379 --> 00:11:15.600 is a trap, but a comfortable one. It signaled 00:11:15.600 --> 00:11:18.379 a shift in how Americans lived. How so? We were 00:11:18.379 --> 00:11:20.899 moving away from the stiff, formal living rooms 00:11:20.899 --> 00:11:24.360 of the 1950s into the great room. Concept casual, 00:11:24.740 --> 00:11:28.120 lounging, TV watching. Pier one capitalized on 00:11:28.120 --> 00:11:30.200 that casualization better than anyone. But I 00:11:30.200 --> 00:11:32.100 want to push back on the logistics here a little 00:11:32.100 --> 00:11:35.120 bit. It's easy to say import eclectic stuff, 00:11:35.340 --> 00:11:38.100 but actually doing that. I mean, you're not buying 00:11:38.100 --> 00:11:40.759 from a standardized factory in Ohio. No. You're 00:11:40.759 --> 00:11:43.700 dealing with artisans in India, factories in 00:11:43.700 --> 00:11:46.740 Vietnam, weavers in the Philippines. How do you 00:11:46.740 --> 00:11:50.259 manage that at scale? This is where the Tandy 00:11:50.259 --> 00:11:53.580 operational DNA really shined and where the company 00:11:53.580 --> 00:11:56.580 eventually built a massive competitive moat. 00:11:56.600 --> 00:12:00.460 In the early days, buyers literally flew around 00:12:00.460 --> 00:12:03.139 the world with suitcases of cash, buying whatever 00:12:03.139 --> 00:12:05.600 looked cool. I'll take 500 of those baskets. 00:12:05.740 --> 00:12:07.759 Literally. I like that rug. Give me all of them. 00:12:08.419 --> 00:12:12.799 But as they scaled to 300, 500, 800 stores, you 00:12:12.799 --> 00:12:15.019 can't run a business like that. You need consistency. 00:12:15.379 --> 00:12:17.600 You need quality control. You need predictability. 00:12:17.870 --> 00:12:21.529 So they did something very smart. They moved 00:12:21.529 --> 00:12:25.509 from buying what's available to dictating the 00:12:25.509 --> 00:12:27.090 trend. They started designing it themselves. 00:12:27.350 --> 00:12:29.690 They built an in -house trend and product development 00:12:29.690 --> 00:12:33.230 team. They would spot a trend, say, Moroccan 00:12:33.230 --> 00:12:35.490 spice colors. Right. And then they would go to 00:12:35.490 --> 00:12:37.590 their network of suppliers in Southeast Asia 00:12:37.590 --> 00:12:40.809 and say, we need 50 ,000 units of a pillow that 00:12:40.809 --> 00:12:43.870 looks Moroccan but is manufactured to our durability 00:12:43.870 --> 00:12:46.070 standards and fits our shipping container. So 00:12:46.070 --> 00:12:48.169 it looked authentic. But it was mass produced. 00:12:48.409 --> 00:12:50.909 It was curated authenticity. And honestly, for 00:12:50.909 --> 00:12:52.710 a long time, nobody could touch them on this. 00:12:52.889 --> 00:12:55.250 Who was the competition then? There wasn't much, 00:12:55.289 --> 00:12:58.029 not in this specific niche. Target wasn't doing 00:12:58.029 --> 00:13:00.909 this yet. Walmart certainly wasn't. If you wanted 00:13:00.909 --> 00:13:02.509 something that didn't look like it came from 00:13:02.509 --> 00:13:05.129 a Sears catalog, Cure One was the only game in 00:13:05.129 --> 00:13:08.190 town. And they cemented this image with their 00:13:08.190 --> 00:13:09.990 marketing. They weren't just selling chairs. 00:13:10.269 --> 00:13:13.049 They were selling... A lifestyle. A global lifestyle. 00:13:13.490 --> 00:13:15.990 They had the UNICEF partnership, which started 00:13:15.990 --> 00:13:19.330 in 1985. That was a very long -running and successful 00:13:19.330 --> 00:13:22.870 partnership. By 2013, they had generated over 00:13:22.870 --> 00:13:26.970 $42 million for UNICEF. That's a huge number. 00:13:27.070 --> 00:13:29.750 It's massive. They sold greeting cards, did cause 00:13:29.750 --> 00:13:32.409 marketing. It gave the brand a conscience. It 00:13:32.409 --> 00:13:35.210 aligns with that global citizen vibe. I'm buying 00:13:35.210 --> 00:13:37.710 goods from around the world and I'm helping the 00:13:37.710 --> 00:13:40.289 world. Exactly. And then on the pop culture front, 00:13:40.370 --> 00:13:42.250 they brought in the heavy hitters. Kirstie Alley. 00:13:42.309 --> 00:13:44.590 Kirstie Alley from Cheers, which at the time 00:13:44.590 --> 00:13:46.830 was the biggest show on television. Right. And 00:13:46.830 --> 00:13:50.009 later, Tom Felicia from the original Queer Eye 00:13:50.009 --> 00:13:52.450 for the Straight Guy. That partnership was genius. 00:13:53.279 --> 00:13:55.600 Queer Eye was the biggest show on TV at the time, 00:13:55.620 --> 00:13:58.200 and Tom was the design guy. He was the authority. 00:13:58.440 --> 00:14:01.600 If he told you to go to Pier 1, you went to Pier 00:14:01.600 --> 00:14:04.399 1. It validated the brand. It told the consumer, 00:14:04.519 --> 00:14:07.360 this isn't just cheap wicker, this is design. 00:14:07.870 --> 00:14:10.710 It gave permission to upper middle class shoppers 00:14:10.710 --> 00:14:14.269 to mix Pier 1 items with their expensive furniture. 00:14:14.669 --> 00:14:17.429 So they are firing on all cylinders. Stock is 00:14:17.429 --> 00:14:19.909 up. Store count is climbing toward 1 ,000. They 00:14:19.909 --> 00:14:21.889 have the celebrity endorsements. They are the 00:14:21.889 --> 00:14:23.529 kings of the hill. And when you are the king 00:14:23.529 --> 00:14:25.789 of the hill, sometimes you get a little overconfident. 00:14:25.889 --> 00:14:28.149 You start to think that because you are successful 00:14:28.149 --> 00:14:30.769 here, you will be successful everywhere. Hubris. 00:14:31.340 --> 00:14:33.559 And that brings us to the Japan experiment. Oh, 00:14:33.620 --> 00:14:35.639 this is a fascinating chapter. I feel like not 00:14:35.639 --> 00:14:38.460 many people know about this. Pier 1 tried to 00:14:38.460 --> 00:14:40.659 break into the Japanese market. They did. And 00:14:40.659 --> 00:14:43.259 looking back, it's a classic example of the difficulties 00:14:43.259 --> 00:14:46.000 of cross -cultural retail. When was this? The 00:14:46.000 --> 00:14:49.299 timeline runs from April 1996 to early 2002. 00:14:49.980 --> 00:14:52.580 They established a presence in the greater Tokyo 00:14:52.580 --> 00:14:55.139 area. Now, usually when a U .S. brand goes to 00:14:55.139 --> 00:14:58.580 Japan, they partner with a... Big Japanese retail 00:14:58.580 --> 00:15:01.860 conglomerate, like when Starbucks went or 7 -Eleven. 00:15:01.960 --> 00:15:04.240 They find someone who knows the lay of the land. 00:15:04.840 --> 00:15:08.500 Who did Pier 1 partner with? This is the record 00:15:08.500 --> 00:15:11.259 scratch moment. Their franchise stores were operated 00:15:11.259 --> 00:15:15.539 by a company called Akatsuki Printing Co. A printing 00:15:15.539 --> 00:15:17.440 company. Printing company. I'm trying to wrap 00:15:17.440 --> 00:15:19.679 my head around the logic here. Did they have 00:15:19.679 --> 00:15:24.039 a lot of warehouses? Trucks? Why a printing company? 00:15:24.409 --> 00:15:27.429 The sources are a bit vague on the exact boardroom 00:15:27.429 --> 00:15:29.750 logic, but usually in these cases, it's because 00:15:29.750 --> 00:15:33.149 the partner company has cash and wants to diversify, 00:15:33.190 --> 00:15:35.789 or maybe they own real estate. But still. But 00:15:35.789 --> 00:15:38.529 structurally, it made zero sense. Retail logistics 00:15:38.529 --> 00:15:41.029 moving physical goods from a port to a shelf, 00:15:41.129 --> 00:15:44.149 managing inventory turnover, dealing with customer 00:15:44.149 --> 00:15:46.409 returns is a very specific skill set. Right. 00:15:46.490 --> 00:15:48.470 Printing flyers is not that skill set. It is 00:15:48.470 --> 00:15:50.389 not. So they start with a structural handicap. 00:15:51.009 --> 00:15:53.659 But let's talk about the product itself. Pier 00:15:53.659 --> 00:15:57.039 1 sells big, comfy, space -filling furniture. 00:15:57.460 --> 00:15:59.960 Have you ever been in a Tokyo apartment? I have. 00:16:00.080 --> 00:16:02.600 And space -filling is not a virtue there. It's 00:16:02.600 --> 00:16:06.019 a liability. Exactly. A Papa Zen chair, which 00:16:06.019 --> 00:16:08.120 is basically a five -foot -wide circle, would 00:16:08.120 --> 00:16:10.039 take up half the living room. The whole room. 00:16:10.200 --> 00:16:13.100 Where do you put a giant armoire in a 400 -square 00:16:13.100 --> 00:16:15.639 -foot apartment? It's just a fundamental mismatch. 00:16:15.799 --> 00:16:17.639 So they were trying to sell suburban American 00:16:17.639 --> 00:16:21.279 sprawl aesthetic to a compact urban Zen market. 00:16:21.740 --> 00:16:24.679 And they expanded aggressively despite the mismatch. 00:16:24.779 --> 00:16:28.279 They went from five stores in 1997 to a peak 00:16:28.279 --> 00:16:32.919 of 18 stores in fiscal 1999. 18 stores. Wow. 00:16:33.000 --> 00:16:35.299 They were pushing the boulder uphill. And gravity 00:16:35.299 --> 00:16:38.120 won. Gravity always wins. By early 2000, they 00:16:38.120 --> 00:16:40.320 had already shrunk back down to nine stores. 00:16:40.559 --> 00:16:42.679 So they cut their presence in half in a year. 00:16:42.840 --> 00:16:45.620 Yes. And by 2002, they had exited the country 00:16:45.620 --> 00:16:48.159 entirely. It was a complete wash. Six years. 00:16:48.809 --> 00:16:51.070 From entry to exit, what's the lesson there, 00:16:51.129 --> 00:16:53.830 aside from don't partner with a printing company 00:16:53.830 --> 00:16:56.570 to run a store? The lesson is that home decor 00:16:56.570 --> 00:16:59.330 is deeply cultural. It's not like an iPhone. 00:16:59.549 --> 00:17:01.509 Right. An iPhone works the same in Tokyo as it 00:17:01.509 --> 00:17:05.890 does in Topeka, but a dining table, a sofa, those 00:17:05.890 --> 00:17:08.069 are defined by the architecture of the home and 00:17:08.069 --> 00:17:10.009 the lifestyle of the family. You can't just export 00:17:10.009 --> 00:17:13.059 your catalog. PR1 didn't adapt the product. They 00:17:13.059 --> 00:17:15.940 just exported the inventory. They assumed the 00:17:15.940 --> 00:17:17.920 brand was strong enough to change the culture 00:17:17.920 --> 00:17:20.099 rather than the culture changing the brand. Very 00:17:20.099 --> 00:17:22.299 expensive lesson. Right. But hey, if the U .S. 00:17:22.299 --> 00:17:24.380 business is strong, you can shrug off a failed 00:17:24.380 --> 00:17:26.500 experiment in Japan, right? It's a tax write 00:17:26.500 --> 00:17:29.599 -off. Ideally, yes. But as we move into the mid 00:17:29.599 --> 00:17:32.740 -2000s, we start to see cracks forming in the 00:17:32.740 --> 00:17:35.259 foundation back home, too. Okay. We call this 00:17:35.259 --> 00:17:38.440 section of the dive the slow slide. It wasn't 00:17:38.440 --> 00:17:40.779 a cliff, at least not yet. But the warning signs 00:17:40.779 --> 00:17:42.599 were flashing red if you knew where to look. 00:17:42.720 --> 00:17:45.720 Let's look at those signs. One of the first big 00:17:45.720 --> 00:17:48.420 blows to their prestige came in 2006 regarding 00:17:48.420 --> 00:17:51.059 the Stock Market Index. That's right. In December 00:17:51.059 --> 00:17:54.279 2006, Standard & Poor's, the S &P, bumped Pier 00:17:54.279 --> 00:17:58.779 1 imports off the S &P Mid -Cap 400 Index. Ouch. 00:17:58.960 --> 00:18:00.819 That's like getting kicked off the varsity team. 00:18:01.200 --> 00:18:02.799 For people who don't follow the markets, why 00:18:02.799 --> 00:18:04.599 does that matter? It's just a list, right? It's 00:18:04.599 --> 00:18:06.640 a list that determines where billions of dollars 00:18:06.640 --> 00:18:09.599 of passive investment money goes. If you are 00:18:09.599 --> 00:18:12.420 in the index, mutual funds and ETFs have to buy 00:18:12.420 --> 00:18:14.619 your stock. If you get kicked out, they sell 00:18:14.619 --> 00:18:17.420 automatically. So your stock price takes a hit. 00:18:17.519 --> 00:18:20.059 It takes a hit. But symbolically, it was worse. 00:18:20.299 --> 00:18:22.559 Who replaced them? A software company called 00:18:22.559 --> 00:18:26.420 Parametric Technology. Wow. You couldn't write 00:18:26.420 --> 00:18:28.559 a better metaphor. No, you couldn't. Physical 00:18:28.559 --> 00:18:32.609 retail exits. Stage left, software enters stage 00:18:32.609 --> 00:18:35.430 right. It was the economy shifting gears. It 00:18:35.430 --> 00:18:38.589 signaled to investors that Pier 1 was no longer 00:18:38.589 --> 00:18:41.349 considered a growth stock. It was a legacy stock. 00:18:41.450 --> 00:18:44.269 It was losing its relevance. And then a couple 00:18:44.269 --> 00:18:46.930 of years later in 2008, something happened that 00:18:46.930 --> 00:18:49.730 I always think is a bad omen for a company. They 00:18:49.730 --> 00:18:53.730 sold their house. April 2008. Pier 1 sold its 00:18:53.730 --> 00:18:56.630 headquarters building in Fort Worth for $104 00:18:56.630 --> 00:19:00.589 million. The building next to Radio Shack. the 00:19:00.589 --> 00:19:03.150 seat of their power. They sold it. Now, businesses 00:19:03.150 --> 00:19:05.849 do sell real estate. It's called a sale -leaseback. 00:19:06.250 --> 00:19:08.329 You sell the building and then lease it back 00:19:08.329 --> 00:19:10.289 from the new owner. It frees up capital. But 00:19:10.289 --> 00:19:12.349 why did they do it? Why did they need the capital? 00:19:12.470 --> 00:19:14.450 Because they needed the cash. When you start 00:19:14.450 --> 00:19:16.769 selling the furniture, literally the building 00:19:16.769 --> 00:19:19.069 you sit in to pay the bills or to shore up the 00:19:19.069 --> 00:19:21.349 balance sheet, you are entering a danger zone. 00:19:21.569 --> 00:19:23.710 It's a sign of distress. It's like pawning your 00:19:23.710 --> 00:19:26.680 wedding ring to pay the electric bill. It buys 00:19:26.680 --> 00:19:28.799 you a month, but it doesn't fix the underlying 00:19:28.799 --> 00:19:31.980 problem. And what was the problem? Was it just 00:19:31.980 --> 00:19:35.700 the 2008 recession? Or was it competition? It 00:19:35.700 --> 00:19:38.339 was the treasure hunt getting crowded. By 2010, 00:19:38.559 --> 00:19:40.920 2012, who else is doing eclectic home goods? 00:19:41.220 --> 00:19:44.059 Everybody. Target has their designer collaborations. 00:19:44.599 --> 00:19:47.779 Home Goods is expanding like crazy. TJ Maxx. 00:19:47.839 --> 00:19:50.140 World Market. And then Wayfair is starting to 00:19:50.140 --> 00:19:53.279 pop up online. Exactly. Home Goods was the Pier 00:19:53.279 --> 00:19:55.700 1 killer. Because HomeGoods did the treasure 00:19:55.700 --> 00:19:58.359 hunt better and cheaper. And Target did the design 00:19:58.359 --> 00:20:00.480 better and cheaper. And Pier 1 was stuck in the 00:20:00.480 --> 00:20:02.140 middle. They were stuck in the middle. They weren't 00:20:02.140 --> 00:20:03.880 high -end enough to be restoration hardware. 00:20:04.019 --> 00:20:05.920 And they weren't cheap enough to beat HomeGoods. 00:20:05.980 --> 00:20:08.619 The deadly middle. And when you are stuck in 00:20:08.619 --> 00:20:10.740 the middle, you panic. And when companies panic, 00:20:10.920 --> 00:20:14.059 they change the CEO. And this brings us to the 00:20:14.059 --> 00:20:16.480 CEO carousel. Let's look at this timeline because 00:20:16.480 --> 00:20:18.940 it gave me whiplash just reading it. It's chaotic. 00:20:19.359 --> 00:20:22.839 Alex Smith departs in December 2016. Alastair 00:20:22.839 --> 00:20:26.819 James enters in May 2017, and he's gone by December 00:20:26.819 --> 00:20:30.099 2018. That's barely 18 months. That's barely 00:20:30.099 --> 00:20:31.859 enough time to learn where the bathroom is, let 00:20:31.859 --> 00:20:33.539 alone turn around a billion -dollar company. 00:20:33.720 --> 00:20:35.880 Exactly. Then you bring in a veteran, Cheryl 00:20:35.880 --> 00:20:39.180 Batchelder, as interim CEO. She's well -respected, 00:20:39.220 --> 00:20:42.059 but interim means temporary. It's a placeholder. 00:20:42.240 --> 00:20:44.440 Just keeping the lights on. Right. Finally, Robert 00:20:44.440 --> 00:20:47.660 Riesbeck takes over in November 2019. Four leaders 00:20:47.660 --> 00:20:50.160 in three years. And every time you change a CEO, 00:20:50.339 --> 00:20:53.259 the strategy shifts, the priorities shift, the 00:20:53.259 --> 00:20:56.579 company loses focus. It's chaos for the employees. 00:20:56.720 --> 00:20:59.500 It's complete chaos. One CEO says, we need to 00:20:59.500 --> 00:21:01.700 go high end. The next says, we need to discount. 00:21:01.980 --> 00:21:04.440 The next says, focus on e -commerce. The customer 00:21:04.440 --> 00:21:07.220 gets confused. Yeah. The employees get demoralized. 00:21:07.279 --> 00:21:08.859 Meanwhile, the financial picture was getting 00:21:08.859 --> 00:21:12.589 grim. Let's look at the 2019 snapshot. This is 00:21:12.589 --> 00:21:14.269 right before the world changed with the pandemic. 00:21:14.549 --> 00:21:17.789 How bad was it? It was dire. In fiscal year 2019, 00:21:18.089 --> 00:21:22.569 they reported revenue of $1 .53 billion. Now 00:21:22.569 --> 00:21:24.349 that sounds like a lot of money. Billion with 00:21:24.349 --> 00:21:28.049 a B. Yes. But revenue is just the money coming 00:21:28.049 --> 00:21:29.970 in at the register. You have to look at the bottom 00:21:29.970 --> 00:21:34.049 line. Their net income was a loss of $198 .8 00:21:34.049 --> 00:21:37.569 million. They lost almost $200 million in one 00:21:37.569 --> 00:21:40.599 year. in an economy that was arguably doing pretty 00:21:40.599 --> 00:21:43.140 well. Correct. Their operating income was negative 00:21:43.140 --> 00:21:47.420 $188 .1 million. And perhaps most alarming was 00:21:47.420 --> 00:21:50.200 the equities situation. Explain that. They had 00:21:50.200 --> 00:21:53.839 total assets of about $656 million, inventory, 00:21:54.339 --> 00:21:58.880 leases, cash, etc. But their total equity, what 00:21:58.880 --> 00:22:00.720 the company was actually worth after you subtract 00:22:00.720 --> 00:22:05.250 all the debts, was just $89 .5... $3 million. 00:22:05.569 --> 00:22:07.549 So they were leveraged to the hilt. They were 00:22:07.549 --> 00:22:10.769 walking on a tightrope over a canyon in a windstorm, 00:22:10.910 --> 00:22:13.470 one gust of wind, and it was over. And this is 00:22:13.470 --> 00:22:16.750 crucial to understand. Pier 1 was already collapsing 00:22:16.750 --> 00:22:19.609 before anyone had ever heard of COVID -19. That's 00:22:19.609 --> 00:22:21.750 a really important distinction. I think people 00:22:21.750 --> 00:22:23.869 look back and assume the pandemic killed Pier 00:22:23.869 --> 00:22:25.509 1, but you're saying the patient was already 00:22:25.509 --> 00:22:28.640 terminal. The pandemic was the final blow, absolutely. 00:22:29.279 --> 00:22:32.079 But the disease had been progressing for years. 00:22:32.559 --> 00:22:35.240 And we see that clearly in early 2020. Right. 00:22:35.319 --> 00:22:37.619 January 2020. This is before the lockdowns. What 00:22:37.619 --> 00:22:40.619 did they announce? On January 6, 2020, they announced 00:22:40.619 --> 00:22:44.460 they would close up to 450 stores. 450? That 00:22:44.460 --> 00:22:46.420 was nearly half their entire fleet of locations. 00:22:46.819 --> 00:22:49.119 Half? That is a massive retreat. That's admitting 00:22:49.119 --> 00:22:51.799 defeat on a grand scale. They cited a reduction 00:22:51.799 --> 00:22:54.529 in corporate headcount and restructuring. But 00:22:54.529 --> 00:22:56.549 closing half your stores is an act of desperation. 00:22:56.910 --> 00:22:59.589 It's trying to cut off a limb to save the body. 00:22:59.710 --> 00:23:02.250 And it wasn't enough. It wasn't. On February 00:23:02.250 --> 00:23:05.990 17, 2020, again, still largely pre -pandemic 00:23:05.990 --> 00:23:09.029 in the U .S., Consciousness Tier 1 imports and 00:23:09.029 --> 00:23:11.150 seven affiliated companies filed for Chapter 00:23:11.150 --> 00:23:14.250 11 bankruptcy. And for our listeners in Canada, 00:23:14.369 --> 00:23:17.289 this was a particularly brutal day. Yes. As part 00:23:17.289 --> 00:23:18.970 of that February filing, they announced they 00:23:18.970 --> 00:23:21.569 were closing all stores in Canada. Gone. Just 00:23:21.569 --> 00:23:23.369 like that. Completely gone from the Canadian 00:23:23.369 --> 00:23:26.430 market. immediate liquidation. So the plan was 00:23:26.430 --> 00:23:30.910 file Chapter 11, shed the debt, close the unprofitable 00:23:30.910 --> 00:23:33.869 stores and emerge as a smaller, healthier company. 00:23:34.029 --> 00:23:36.670 Right. That's how Chapter 11 is supposed to work. 00:23:36.829 --> 00:23:39.430 They were looking for a buyer to save the remaining 00:23:39.430 --> 00:23:43.440 US stores. But then. March 2020 happens. The 00:23:43.440 --> 00:23:45.660 timing could not have been worse. Just as they 00:23:45.660 --> 00:23:47.799 enter bankruptcy court trying to woo a buyer, 00:23:47.940 --> 00:23:51.380 the entire global retail economy shuts down. 00:23:51.559 --> 00:23:54.660 Malls close. Foot traffic drops to zero. Who 00:23:54.660 --> 00:23:57.319 is going to buy a distressed retailer that relies 00:23:57.319 --> 00:24:00.380 on in -person browsing during a global pandemic? 00:24:00.640 --> 00:24:03.359 Nobody. Precisely. If your business model is 00:24:03.359 --> 00:24:05.720 come in and touch the pillows and nobody's allowed 00:24:05.720 --> 00:24:08.190 to leave their house. You have a problem. A fatal 00:24:08.190 --> 00:24:11.630 problem. So on May 19th, 2020, Pier 1 had to 00:24:11.630 --> 00:24:13.710 go back to the bankruptcy court and ask for permission 00:24:13.710 --> 00:24:16.329 to close all remaining U .S. stores. All of them. 00:24:16.390 --> 00:24:18.390 They explicitly cited the pandemic and their 00:24:18.390 --> 00:24:20.450 failure to find a buyer. The restructuring plan 00:24:20.450 --> 00:24:23.210 had failed. That is heartbreaking in a way. Just 00:24:23.210 --> 00:24:26.549 total liquidation. It was swift. By May 30, they 00:24:26.549 --> 00:24:28.630 got court approval to liquidate. The target was 00:24:28.630 --> 00:24:30.970 to close everything by the end of October 2020. 00:24:31.519 --> 00:24:33.720 I remember seeing those signs you drive by and 00:24:33.720 --> 00:24:35.920 see the bright yellow and red going out of business 00:24:35.920 --> 00:24:39.079 banners. Everything must go. Yeah. Fixtures for 00:24:39.079 --> 00:24:41.440 sale. Yeah. And at its peak, I remember this 00:24:41.440 --> 00:24:45.099 company had over a thousand stores just emptying 00:24:45.099 --> 00:24:48.180 them out one by one. It's a sad imagery. It marked 00:24:48.180 --> 00:24:50.519 the end of Pier 1 as a physical destination. 00:24:51.119 --> 00:24:54.099 The smells, the wicker, the papasans, all packed 00:24:54.099 --> 00:24:56.900 up and sold for pennies on the dollar. But, and 00:24:56.900 --> 00:25:00.119 here's where it gets really interesting. It wasn't 00:25:00.119 --> 00:25:02.440 the end of the name. No. In the modern retail 00:25:02.440 --> 00:25:05.839 world, brands rarely die completely. They just 00:25:05.839 --> 00:25:07.980 change form. They become ghosts. They become 00:25:07.980 --> 00:25:10.920 ghosts. This brings us to the afterlife of Pier 00:25:10.920 --> 00:25:14.299 1. Enter Revy Retail E -Commerce Ventures. In 00:25:14.299 --> 00:25:17.039 June 2020, while the liquidation sales were just 00:25:17.039 --> 00:25:19.619 ramping up, RV acquired the rights to the Pier 00:25:19.619 --> 00:25:23.980 1 brand for $31 million. $31 million. That seems 00:25:23.980 --> 00:25:27.759 cheap. For a brand that literally everyone in 00:25:27.759 --> 00:25:30.339 North America knows. It's a bargain if you can 00:25:30.339 --> 00:25:32.680 monetize it. It's the price of a nice house in 00:25:32.680 --> 00:25:34.400 the Hollywood Hills, basically. And that was 00:25:34.400 --> 00:25:37.680 REV's entire business model. Entirely. REVU was 00:25:37.680 --> 00:25:40.759 founded by two very interesting characters. Alex 00:25:40.759 --> 00:25:43.480 Muir, a former NASA scientist. Wait, back up. 00:25:43.500 --> 00:25:46.059 A NASA scientist? Yes, Alex Muir. Smart guy. 00:25:46.259 --> 00:25:49.160 And his partner was Tai Lopez. Tai Lopez. They 00:25:49.160 --> 00:25:52.029 hear my garage. YouTube guy, the guy with the 00:25:52.029 --> 00:25:54.029 Lamborghinis in the books. That is the one. A 00:25:54.029 --> 00:25:56.450 serial entrepreneur and internet personality. 00:25:56.869 --> 00:25:59.789 That is quite the duo. NASA meets YouTube hustle 00:25:59.789 --> 00:26:02.529 culture. Their strategy was to act as a holding 00:26:02.529 --> 00:26:05.410 company for the dead. They would buy distressed, 00:26:05.450 --> 00:26:08.569 iconic brands. Like Radio Shack Dress Barn. Exactly. 00:26:08.769 --> 00:26:11.269 Companies that everyone knew but had failed as 00:26:11.269 --> 00:26:14.210 physical businesses and revive them as e -commerce 00:26:14.210 --> 00:26:17.569 entities. So the idea is... Strip away the expensive 00:26:17.569 --> 00:26:19.930 rent, the store employees, the electric bills, 00:26:20.049 --> 00:26:22.029 the inventory logistics of physical stores, and 00:26:22.029 --> 00:26:24.069 just keep the logo and the website. Exactly. 00:26:24.190 --> 00:26:26.190 You buy the IP, the intellectual property, you 00:26:26.190 --> 00:26:28.190 buy the customer email list, you buy the domain 00:26:28.190 --> 00:26:31.190 name. So purely digital play. Purely. In October 00:26:31.190 --> 00:26:34.390 2020, as the very last physical Pier 1 store 00:26:34.390 --> 00:26:36.650 locked its doors, the website transferred over 00:26:36.650 --> 00:26:39.769 to Ravie. They created a new entity called Pier 00:26:39.769 --> 00:26:43.250 1 Imports Online, Inc., based in Dallas. So now 00:26:43.250 --> 00:26:48.019 Pier 1 is a website. But I have to ask, does 00:26:48.019 --> 00:26:50.420 that work? That is the multi -million dollar 00:26:50.420 --> 00:26:53.660 question. Pier 1 was so tactile. It was about 00:26:53.660 --> 00:26:55.779 touching the pillows, sitting in the pop -a -thon 00:26:55.779 --> 00:26:58.660 chair, smelling the candles. Can you just take 00:26:58.660 --> 00:27:00.940 the logo and slap it on a website and expect 00:27:00.940 --> 00:27:03.299 the same loyalty? It's an ironic pivot. You're 00:27:03.299 --> 00:27:06.039 taking a brand famous for the treasure hunt, 00:27:06.180 --> 00:27:08.559 the physical act of discovery, and making it 00:27:08.559 --> 00:27:11.769 purely digital. Can the brand equity survive 00:27:11.769 --> 00:27:14.490 without the smell of the candles, without the 00:27:14.490 --> 00:27:16.390 physical store? It feels like buying a ticket 00:27:16.390 --> 00:27:18.309 to a concert and watching it on a Zoom call. 00:27:19.049 --> 00:27:21.569 It's technically the same content. The experience 00:27:21.569 --> 00:27:23.750 is gone. It's a gamble. You're betting that the 00:27:23.750 --> 00:27:26.190 name Pier One still holds enough trust that people 00:27:26.190 --> 00:27:28.329 will click buy on a generic dining table because 00:27:28.329 --> 00:27:30.730 it has the Pier One logo on the Web page. And 00:27:30.730 --> 00:27:32.650 there's a twist in this tale, too. We're recording 00:27:32.650 --> 00:27:34.910 this looking back at the last few years. How 00:27:34.910 --> 00:27:37.609 is the new parent company doing? Because buying 00:27:37.609 --> 00:27:40.410 dead brands sounds risky. It turns out it is 00:27:40.410 --> 00:27:43.349 very risky. On March 2, 2023, reports emerged 00:27:43.349 --> 00:27:46.509 that REV, the parent company itself, was mulling 00:27:46.509 --> 00:27:49.690 a possible bankruptcy filing. Oh my gosh. It's 00:27:49.690 --> 00:27:52.269 a Russian doll of bankruptcies. It really is. 00:27:52.329 --> 00:27:54.029 The company that bought the bankrupt company 00:27:54.029 --> 00:27:56.930 is now facing its own financial trouble. Wow. 00:27:57.130 --> 00:28:00.250 It just shows how volatile the retail sector 00:28:00.250 --> 00:28:03.009 is, whether you are brick and mortar or e -commerce. 00:28:03.210 --> 00:28:05.109 Just because you don't have rent doesn't mean 00:28:05.109 --> 00:28:07.849 you can make a profit. That is wild. So where 00:28:07.849 --> 00:28:10.230 does that leave us? It leaves us with a lot to 00:28:10.230 --> 00:28:14.650 think about. We've traced this arc from a 1960s 00:28:14.650 --> 00:28:17.990 franchise loan by the Radio Shack founders to 00:28:17.990 --> 00:28:21.089 a billion dollar empire that defined the aesthetic 00:28:21.089 --> 00:28:23.470 of the 80s and 90s. We saw the brilliance of 00:28:23.470 --> 00:28:25.950 the early years, the rebranding, the trigger 00:28:25.950 --> 00:28:28.690 hunt model. We saw the danger of overexpansion. 00:28:28.690 --> 00:28:31.329 That Japan trip was a clear warning sign of hubris. 00:28:31.509 --> 00:28:33.890 Yeah. We saw the chaos of leadership instability 00:28:33.890 --> 00:28:37.170 with the CEO carousel. And we saw the fatal blow 00:28:37.170 --> 00:28:39.809 of COVID -19 hitting a company that was already 00:28:39.809 --> 00:28:44.200 in fire. And finally, we're witnessing this modern 00:28:44.200 --> 00:28:48.099 phenomenon of zombie brands that live on as websites 00:28:48.099 --> 00:28:50.359 long after their storefronts are gone. It really 00:28:50.359 --> 00:28:52.759 makes you think about what a brand actually is 00:28:52.759 --> 00:28:55.539 in the 21st century. It does. And that's the 00:28:55.539 --> 00:28:57.200 question I'd leave our listeners with today. 00:28:57.319 --> 00:29:01.680 When you see Pier 1 online today or Radio Shack 00:29:01.680 --> 00:29:05.819 or Toys R Us, what are you actually interacting 00:29:05.819 --> 00:29:09.109 with? Are you buying into a legacy? Are you buying 00:29:09.109 --> 00:29:12.069 into a history and a specific curation of products? 00:29:12.529 --> 00:29:15.730 Or are you just buying from a generic e -commerce 00:29:15.730 --> 00:29:19.089 supply chain that happens to have leased a logo 00:29:19.089 --> 00:29:21.130 you remember from your childhood to gain your 00:29:21.130 --> 00:29:23.349 trust? Is it the soul of the company or just 00:29:23.349 --> 00:29:26.869 a skin suit? A bit graphic, but yes. That's the 00:29:26.869 --> 00:29:29.250 question. The Ship of Theseus paradox applied 00:29:29.250 --> 00:29:31.569 to retail. Explain that. If you change the owner, 00:29:31.690 --> 00:29:33.609 the location, the products, and the business 00:29:33.609 --> 00:29:36.730 model, but keep the name. Is it still Pier 1? 00:29:36.950 --> 00:29:39.490 That is a haunting thought to end on. Well, on 00:29:39.490 --> 00:29:41.170 that slightly existential note, we're going to 00:29:41.170 --> 00:29:43.230 wrap up this Deep Dives. Next time you're online 00:29:43.230 --> 00:29:45.170 shopping and you see a familiar name from the 00:29:45.170 --> 00:29:47.509 past, take a second to look at who is actually 00:29:47.509 --> 00:29:49.869 running the show. It might surprise you. It really 00:29:49.869 --> 00:29:52.490 might. Indeed. Stay curious, everyone. Thanks 00:29:52.490 --> 00:29:54.529 for listening. Check the show notes for all our 00:29:54.529 --> 00:29:57.390 sources and maybe a picture of a vintage Papasan 00:29:57.390 --> 00:30:00.250 chair for nostalgia's sake. We'll see you next 00:30:00.250 --> 00:30:00.509 time.