Urban Outfitters’ physical supports its virtual

Discussion
Aug 06, 2015

Through a special arrangement, what follows is an excerpt of an article from WayfinD, a quarterly e-magazine filled with insights, trends and predictions from the retail and foodservice experts at WD Partners.

Urban Outfitters went out of its way late last year to tell analysts that its direct-to-consumer channel was strongly outperforming its stores.

If direct-to-consumer is outperforming, why is Urban Outfitters opening 32 stores this year?

While struggling to resurrect comp-store sales from once enviable heights, Urban Outfitters has still managed to grow its direct-to-consumer business. That’s something the company never would have been able to achieve if it didn’t maintain cultural relevance in the marketplace with physical stores.

In fact, Urban Outfitters is an ideal case for studying how store brands can keep physical stores alive and relevant, while still navigating solid investments in online growth.

Space 98 storefront=

Photo: Urban Outfitters

1. Investing in stores isn’t a zero-sum game.

In our study of "Third Wave" retail brands, we discovered that brands emphasizing in-store innovation also experienced growth in direct-to-consumer channels. Urban Outfitters’ officials recently outlined a series of innovative initiatives to rejuvenate the in-store experience at its flagship chain:

The initiatives included:

  • Space Ninety 8 in Williamsburg, Brooklyn, which has a community minded emphasis and its own local marketplace;
  • Herald Square in Manhattan, its largest store to date, which now includes a hair salon and eatery;
  • Without Walls, its own active lifestyle brand that has developed a community of athletic advocates.

The lesson: Brands can’t stand still. In-store innovations can often lead to direct-to-consumer growth.

2. Loyal direct-to-consumer customers are found with meaningful in-store experiences.

Urban Outfitters became the brand known for street style by appealing first to the senses, including wide-open doors that literally lead right out into the streets. Without millions of consumers embarking on Saturday morning walks downtown after leisurely brunches, and without the tactile experience of wandering up and down open staircases inside these emporiums of ephemeral trends, they would never have been able to launch a successful direct-to-consumer business. You can’t peddle hipsterdom to the masses if you aren’t in key urban centers.

The Lesson: Unless a store brand has built a concrete and tangible in-store experience, it will be difficult to drive direct-to-consumer sales.

3. A single store brand banner is too limiting.

Founded in 1970, Urban Outfitters now operates five separate brands across over 400 locations, including its namesake stores, Anthropologie, Free People and newer concept stores such as the BHLDN bridal store. Terrain, with only two locations, offers an in-store restaurant with a local, organic/farm-to-plate theme. Space Ninety 8 was recently described by The New York Times as "a preservationist gesture, a middle-class beachhead against creeping luxury at every turn."

The Lesson: Don’t be monolithic. Retailers must constantly adapt with new assortments to appeal to emerging demographics and generational change.

What are the most meaningful lessons offered by Urban Outfitters offer around keeping physical stores “alive and relevant” while supporting online businesses? What other retailers do an admiral job supporting virtual with their physical locations?

Braintrust
"As a retailer, I want loyal customers. They are my most profitable customers. They are the least expensive to generate new sales. I don’t care if they buy online as long as they continue to buy from me, and that online purchase is considerably more profitable than the one that is generated in the store."
"Good case example that reminds us again that when looking at online and brick and mortar, it’s not either/or, it’s both."

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7 Comments on "Urban Outfitters’ physical supports its virtual"

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Ian Percy
Guest
2 years 4 months ago

One of the most insightful articles I’ve read in a long time. These Urban Outfitters folks have moved to a quantum understanding of how energy works. The secret is not in the parts as Newton thought, it’s in the alignment of the parts as Einstein taught us. It’s all ONE thing, a principle still to be accepted by most of society. It’s the sum of the whole.

To become unassailable in retail you need to see your highest possibilities (not just what you deem reasonably “doable”) and then align ALL your energies (people, inventory, supply chain, pricing, online and physical channels) and laser-focus them on that higher purpose.

The mistake we continue to make, because it’s how most of us were trained, is we keep trying to fix individual parts. From all appearances Urban Outfitters is the poster child for how to do it right.

Adrian Weidmann
Guest
2 years 4 months ago

Investing in the in-store experience that is valued by shoppers will drive both online sales and develop (as well as maintain) an ongoing shopper/brand relationship. The store is a physical location in which you have an opportunity to create a community of happy, surprised and delighted brand citizens if you offer them an experience that they value and appreciate. Don’t create a solution just to win an award or accolades from the industry.

Listen, observe and respect your shoppers first, then create and activate solutions that they value. All too often solutions are implemented that are merely tactile and cool implementations in desperate search of a meaningful strategy.

Be true to your brand and your customer.

Ryan Mathews
Guest
2 years 4 months ago

Let’s take the second question first since it is the easiest.

We have tech examples including, of course, Apple Stores and maybe even Microsoft Stores if I’m in a generous mood. And, among less tech-oriented stores we have candidates like Bass Pro Shop and Paradise Pens.

Now to the tougher question. At the risk of being provocative here I’d say Urban Outfitters isn’t offering us anything new except for its interpretation of a classic retailing theme: adopt to your environment, know your customer, give her/him what hey want the way they want it.

Urban Outfitters has formed a business around these principles and that business works in both digital and physical locations. Too many retailers today can’t correctly apply those principles in either space.

The separation between digital and physical retailing is in the heads of retailers, not their customers and the sooner everyone learns that, the more successful everyone will be.

Gene Detroyer
Guest
2 years 4 months ago

This is a projection of what retail stores of the future will be. They will be used to attract customers who ultimately go online to continue to buy their products. Call it showrooming if you will.

As a retailer, I want loyal customers. They are my most profitable customers. They are the least expensive to generate new sales. I don’t care if they buy online as long as they continue to buy from me, and that online purchase is considerably more profitable than the one that is generated in the store.

Use the store to showcase your brand and to communicate what you stand for, then have those customers go home and buy, buy, buy, buy!

Gordon Arnold
Guest
2 years 4 months ago

What a great article with a good peek at how 21st century retail is best planned and executed in a market depression. Staying tuned into the local market(s) and owning a real-time understanding of what it wants and where it is wanted is a lot of work. A lot of work is fun when what you are working for is a chance to win and realizing the benefits of those efforts. If retailers want to thrive and grow in the here and now this corporate strategy might be well worth looking into.

Martin Mehalchin
Guest
2 years 4 months ago

Good case example that reminds us again that when looking at online and brick and mortar, it’s not either/or, it’s both. Urban Outfitters does a really good job of building community around their stores and appealing to their target demographic. It’s this foundation that enables their online business to grow. With “born online” brands like Warby Parker, Bonobos and Nasty Gal flocking to open stores it seems clear that omnichannel will be the prevalent model going forward and only a select few retailers will remain pure plays in one channel or the other.

Vahe Katros
Guest
2 years 4 months ago

“My apologies for not being that person that’s like, “Wah wah waaaah. There’s an Urban Outfitters in Williamsburg.” (Yelp)

Nice article. Thanks for the heads-up. Check out the Yelp reviews for more color on this.

Regarding the question:”If direct-to-consumer is outperforming, why is Urban Outfitters opening 32 stores this year?”

Maybe they hope the new stores will fix this problem: with a demographic of 18 to 30 year olds, it makes sense that online is working better and older stores are not.

The meaningful lesson here is that Urban Outfitters has created a lab to study how 18-30 year olds interact with a store. If that’s your demographic, I suppose I would hang out there.

wpDiscuz
Braintrust
"As a retailer, I want loyal customers. They are my most profitable customers. They are the least expensive to generate new sales. I don’t care if they buy online as long as they continue to buy from me, and that online purchase is considerably more profitable than the one that is generated in the store."
"Good case example that reminds us again that when looking at online and brick and mortar, it’s not either/or, it’s both."

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