Many conversations at the World Economic Forum are centered around AI and how it will permeate into a wide range of businesses going forward. Williams-Sonoma (WSM) is one such company that plans to use it to focus on customer experience, for example, working with Salesforce (CRM) to implement AI into its email marketing to better focus on customer experience.
Alber uses how she navigates pricing during turbulent times: "The right price, the first time, that's better than your competition, is the answer. If you do up-and-down pricing, you're actually competing with yourself." She continues, "During the pandemic, when all bets were off in the very beginning when we didn't know what was going to happen, we looked at each other and said 'how do we want to run our business? What are our values?' We didn't know if we'd be in business a year later because they were shutting down everything... We made the decision to stop the discounting then. It took us a little while to gain our courage, but now it's the way we run the business. We do take markdowns, so if there's something we buy too much of or it doesn't work, just like you would expect, we take a markdown. "
One of the people doing that is Laura Alber. She is the CEO of Williams-Sonoma. And there is so much to take in, Laura, and obviously your business is one that you don't immediately think geopolitics, for example, when you think about Williams-Sonoma and its various businesses, but obviously you get a lot out of being here. So talk to us about what you're hearing this year and what's interesting to you.
LAURA ALBER: Yeah, you nailed it. I mean, there's the dichotomy between all the very difficult news, the uncertainty, the fear, and then the optimism around the new technologies and how they could really change everything that we do in a good way. So there's those two things, and then there's all these other conversations that are quite interesting.
And I think it's great to come here and not just go to the things that you're scheduled to do but to wander around, meet new people, and go to sessions that are unexpected and see what you can learn.
JULIE HYMAN: Yeah, serendipity is a big part of Davos for sure.
BRIAN SOZZI: Laura, there is a lot of AI talk here. It's all over the place. What will or what do you think could be applied in terms of AI to your business? Is it the buying experience that I go into your store, that will change, or is it more backend system stuff?
LAURA ALBER: There's a bunch of different things that you might be surprised to hear. I mean, the most obvious is tailoring our marketing messages to you, so making it more relevant using patterns to do that. And that's something we're doing with email marketing with Salesforce that's exciting.
In addition to that, you know, we're seeing great benefit on the supply-chain side. So decisions about shipping and where to ship from and together or separate from store, all those things that we used to make decisions on as individuals are now being optimized. And we can optimize it for time or we can optimize it for cost, and that's super cool. It's just yet another example.
And then there's the obvious things like, you know, using it as a copilot for customer service to help the person who's on the phones handle, you know, any service issues that might come through to give them-- and we're in the nascent stage of that but to give them more information about how to better serve the customer. And I think that will be a big piece in the future.
And then, of course, you know, copywriting on the website, whether it's natural search or other copy that we can really leverage the AI for.
JULIE HYMAN: And since you mentioned logistics and supply chain just briefly, that reminds me of what's going on in the Red Sea and some of the difficulties there. Is that affecting your business at all?
LAURA ALBER: Yeah, of course. I mean, it affects most people who are shipping. And there's alternatives, but, you know, you've got to be on top of it and talking to your carriers to make sure that you're getting your goods. We have let our customers proactively know. We changed our lead-time dates. There are some customers who got a delay, right, who had already ordered and thought they had a date, and we pushed it a little bit. But what we're doing now is if you go to order a sofa, you're going to get the padded date so that you're not disappointed.
JULIE HYMAN: Is it raising your costs?
LAURA ALBER: We'll see.
JULIE HYMAN: Yeah. And are people more understanding of those delays postpandemic because the delays were so extreme during the pandemic?
BRIAN SOZZI: Well, you still get your stuff, right?
JULIE HYMAN: Oh, I finally did. It finally took me like nine months to get a couch but not from you guys.
LAURA ALBER: Well, why isn't it from us?
JULIE HYMAN: Sorry. Oh yeah, we'll talk about that-- we'll talk about that after. We'll talk about that after.
LAURA ALBER: I could ask you a few questions.
JULIE HYMAN: We'll talk about that after. But, you know, so are your customers now more-- because it's all relative, right? Are they--
LAURA ALBER: I mean, people--
JULIE HYMAN: --a little more understanding?
LAURA ALBER: People want their goods, and, you know, they think we have the magic button to get it to them on time. And so we do our best.
BRIAN SOZZI: Laura, one thing I've been reminded about, what, four or five days we've been here, there's a new generation of homeowners, new generation of people living in ways that didn't live like they lived 25, 30 years ago. What are they shopping for in your stores?
LAURA ALBER: Like give me an example of what you mean by they're not living the way they used to.
BRIAN SOZZI: Well, we just talked to the CEO of Suntory, and he was talking about Gen Z consumers not consuming as much alcohol as their parents for health reasons, which was like, yeah, I guess that maybe applies to me.
LAURA ALBER: That might be what they're saying.
BRIAN SOZZI: Yeah. Are you seeing like a different shopper come to your store, and how are you designing things differently?
LAURA ALBER: You know, I don't know that I think it's that different. You know, people are people. Right now, everyone cares so much about health and wellness. You know, that's, I think, what's on everyone's mind, and so we're so lucky that we have so many products that address that in different ways.
And we all know that eating at home is the healthiest thing you can do. When you make your own food, you know what's going into it-- less salt, less sugar, less fat. And, you know, so it's exciting to see all the products that support that.
One of them that, you know, we love talking about our favorite products every year that is so good is the Tucci pan. I don't know if you've seen the Stanley--
JULIE HYMAN: Yeah, I don't know this one.
LAURA ALBER: So we did a collaboration.
JULIE HYMAN: Like Stanley Tucci?
LAURA ALBER: Stanley Tucci. We did an excellent collaboration with him this year, beautiful product with GreenPan, and go to the stores and take a look. It's a wonderful, big collection. I love the multipot colors, modern design, and high-performance clean cooking.
JULIE HYMAN: I like to envision your kitchen whenever we talk to you. Laura, one of the things that you've done strategically that I find really fascinating versus some of your competitors is you've held the line on price pretty much, right? In other words, when we were seeing rampant discounting, that's not really something that you did across your different lines, and it's helped you marginswise, even though saleswise it hasn't necessarily helped. But investors have liked it. How did you make that decision to do that?
LAURA ALBER: Yeah, so, you know, I mean, the right price the first time that's better than your competition is the answer. And if you do up-and-down pricing, you're actually competing with yourself because furniture is different than other things. You don't really know how much this table should cost, right? I mean, you could come up with probably five different answers, any one of which could be correct. But if this table used to be a different price and we then discount it, you do remember that.
So, you know, as a good shopper, it was really obvious to me that this was a problem, but yet it was the way the industry was going. So during the pandemic when all bets were off in the very beginning where we didn't know what was going to happen, we looked at each other and said, how do we want to run this business? What are our values?
And we didn't know if we'd be in business a year later because they were shutting down everything, right? And so we made the decision to stop the discounting then. And it took us a little while to gain our courage, but now it's the way we run the business.
We do take markdowns. So if there's something we buy too much of or it doesn't work just like, you know, you would expect, we take a markdown.
BRIAN SOZZI: Do you think this could be a pretty big year for the home-furnishings industry? I mean, we-- a lot of the comments that we've talked to, Julie, maybe have rallied around a consensus of three rate cuts. Maybe that might mean more people buying homes. Do you-- how do you talk about that internally?
LAURA ALBER: Yeah, so I hope that's true. You know, there's also a negative version of that conversation.
I don't ever plan our business based on the macro. The only way I can think about it and that we think about it as a team is as if it were the same as it is today. And so we're not relying on the macro to either drive it up or take it down and to say what is the innovation? What are the efficiencies that we have that will make customers come to us versus everyone else?
JULIE HYMAN: Laura Alber, thanks so much. Really appreciate your time.
LAURA ALBER: Thank you. Thank you.