During summer and winter breaks from college, I used to work in a Williams-Sonoma, Inc (NYSE: WSM) store in my local mall. As a moderately eloquent speaker and the only guy in the joint, I managed to make quite a few sales, particularly among the key "25-40 year old, vaguely unsatisfied married female" demographic that made up most of the store's customers. One day, as my father waited for me to get off work, he watched me talk a wealthy, sour-faced housewife into buying a $49 grape drainer. Shaking his head at my salesmanship, he wondered aloud how I could convince someone to shell out a pocketful of cash for what was essentially a porcelain bowl with holes in the bottom. I couldn't really answer him and, to this day, I wonder how Williams-Sonoma manages to market its wares, many of which are amazingly useless.

In the fourth quarter of 2007, Williams-Sonoma's profit rose almost 3%, but its first-quarter same-store 2008 profits are expected to fall by between 6% and 8.5%. The store is blaming its flagging sales on the real-estate slump. While it seems reasonable to expect that people would be disinclined to buy home goods when they're having a hard time covering their mortgage payments, Williams-Sonoma is missing the big picture. In addition to its position as a major player in the home decor market, W-S is also a luxury brand store and a narrow-focus mall retailer. Both of these types of stores are facing serious problems in the current economy, one for its inflated prices and the other for its lack of diversity. Consumers looking for kitchen implements are probably inclined to go to Lechters, which is a lot cheaper, or Wal-Mart and Target, both of which have a much wider selection of merchandise. If Williams-Sonoma wants to weather this storm, it should probably follow the lead of its Pottery Barn subsidiary and start cutting its prices. In the current economy, it's hard to imagine someone shelling out $49 for a grape drainer!