When Tai Lopez was ready to bid on Pier 1 Imports, he was compelled to go to auction against juggernaut Sycamore with its $15 billion fund. Yet, despite Sycamore’s massive leverage, Lopez and a small group of investors managed to secure the rights to purchase Pier 1. As a highly underrated business professional, Lopez routinely cites the likes of Sun Tzu – The Art of War – in terms of preferring to fly under the radar, and remain underestimated in business.
The original offer to purchase Pier 1 was for $20 million, but Tai Lopez paid the premium of $11 million to secure the rights to own the Pier 1 brand. In a tell-all Facebook live video, Lopez revealed some fascinating insights, motivations, and ideas behind why he does what he does. He alluded to having met the late, great, Kobe Bryant several years ago who advised him as follows: ‘…Don’t try to recreate greatness. Go where greatness existed before.’ This is applicable insofar as Lopez believes that brands with high market penetration, high awareness, and favorable public perception are worth their weight in gold.
No Need to Create a Popular Brand: Pier 1 Already has Brand Recognition
Rather than having to recreate a brand from scratch, which is capital intensive, marketing intensive, labor-intensive, energy intensive, and is never guaranteed, Lopez believes that it’s better to take an existing brand and re-engineer it to achieve greatness again. Pier1 Imports filed for bankruptcy, and ultimately began the process of liquidating many of its 936 stores. The decades-old brand (founded in 1962) captured the hearts of Americans across the nation by showcasing an eclectic selection of products from all over the world, and selling them at cut-rate prices.
The brand is instantly recognizable, and the quality is unsurpassed. Unfortunately, this thriving business fell on hard times. It was unable to compete with other businesses, particularly those who were sourcing similar home décor products and scaling production to outpace that of Pier 1. Arguably the biggest bugbear for this brand was the paradigm shift from bricks and mortar locations to e-commerce. For Pier 1 Imports and many other struggling land-based retailers, the problem is one of adaptation to changing realities. As it turned out Pier 1 was unable to make the switch from cost-intensive bricks and mortar retail outlets with plunging footfall traffic to e-commerce operations.
The likes of Amazon, eBay, Etsy, Wayfair, and other hugely successful online retailers effectively put paid to the notion that land-based operations would remain a staple of the American landscape. In recent years, the world has witnessed the spectacular decline of shopping centers, and strip malls, in favor of online retail operations. The fact of the matter is that Pier 1 was ‘hopelessly lost at sea’ in terms of crafting a workable e-commerce strategy to stay afloat.
Once Great U.S. Company Finds New Life and New Home Online
Evidence of the company’s executive failures is easily seen in the stock price, which dropped almost 100% of its value that it was trading at on 1 May 2013. At that time, shares were priced at $485 a piece, but it became a penny stock after its bankruptcy and liquidation proceedings. Despite their best intentions, the executive leadership at Pier 1 failed to turn around the company’s fortunes. That’s when guys like Tai Lopez and business partner Alex Mehr stepped in. Their combined experience in leveraging the power of social media, marketing, and the Internet of things was precisely the tincture needed by Pier 1 Imports to turn things around.
Prior to its acquisition by Tai Lopez and his company REV (Retail E-Commerce Ventures), Pier 1 Imports was generating $1.5 billion in revenue in 2019. When Lopez acquired the company and transformed it into a web-based operation, costs rapidly declined and revenues started rising. While the price paid was listed at $20 million, a premium of $11 million was paid to outbid Sycamore and secure the rights to this distressed company’s assets. In a fortunate turn of events, the tragedy of the coronavirus hastened Pier 1’s urgency to accept Lopez’s offer, ultimately allowing Pier 1 back into the homes and hearts of American consumers – this time through e-commerce.