Urban Outfitters, Aeropostale, Gain From ‘Frugal Fatigue’

Discussion
May 06, 2010
George Anderson

By George Anderson

A wide variety of specialty apparel retailers have seen improvements in same-store
sales (share prices too) as consumers have seemingly grown tired of not spending.
Even high unemployment levels and underemployment have not stopped consumers
from spending at higher levels than many expected so far this year.

Marshal
Cohen, an analyst with The NPD Group, told BusinessWeek that
consumers are shopping now, in part, because they are experiencing "frugal
fatigue."

According to Mr. Cohen, "[Consumers] are starting to get tired of having
to only shop at the lowest-priced retail outlets, particularly in apparel, which
arguably had the worst performance during the recession." 

Consumers are still looking for deals, he said, but the perception of value
has moved beyond price as the sole focus to take quality and durability more
into account.

Among the retailers that have come out of the economic downturn in strong
shape are Aeropostale and Urban Outfitters.

NPD’s Cohen is a fan of Aeropostale.
 He told BusinessWeek the chain
delivers the right blend of price, value and style for its younger consumer
base. Beyond that, the chain is viewed more favorably by parents, who see it
as more family-friendly than some competitors who have blaring music and couches
positioned in dark corners within the store.

"If Mom comes in and sees
that, she says, ‘I’m not letting my kid come in here,’" said Mr. Cohen.

Aeropostale’s co-CEO Cindy Meads recently told CNBC, "We are
promotional every day, and we continue to improve upon our product. We sit
on the intersection between fashion and value, and it truly is a powerful place."

Urban Outfitters, according to Deutsche Bank, is "one of the premier
growth stories in all of retail." The retailer has benefited with growth
in its online business and expansion into foreign markets that promise higher
margins on sales. The chain is also expanding into new categories, such as
bridal, as it seeks to build on its current momentum.

Barbara Rozsas, chief sourcing officer for Urban Outfitters, recently told The
Temple News 
the company’s success is due to "smart merchants,
a strong design team, effective internal and external supply chains and great
sourcing teams."

Discussion Questions: What are successful chains such as
Aeropostale and Urban Outfitters doing that others are not? Would other chains
do well to position themsel
ves "on the intersection between
fashion and value"?

Please practice The RetailWire Golden Rule when submitting your comments.

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8 Comments on "Urban Outfitters, Aeropostale, Gain From ‘Frugal Fatigue’"


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Paula Rosenblum
Guest
10 years 11 months ago

Apart from my frustration that a phrase I coined, “Frugality Fatigue” in mid-2009 (those of you who’ve heard me speak know this is true) has been completely co-opted by others without attribution, I obviously agree.

This was the primary reason I expected holiday sales to rise in 2009 – the savings rate was unnaturally high. While the number of people unemployed is tragic, 85% of people are/were still working. Americans, in particular, love to consume. I think we’ll do whatever we have to do to sustain that compulsion.

I expected specialty retail to come back FIRST. I was surprised to see Consumer Electronics leading the charge. Now we’re about where I thought we’d be 6 months ago.

And absent another catastrophic event, I expect this to continue. Frugality is boring. It’s true.

Marge Laney
Guest
10 years 11 months ago

Both Urban Outfitters and Aeropostale are successful because, in addition to on-point fashion, they sell the sizzle. At one end of the spectrum you can always find a deal at Aero. Whether it be BOGO or 50% Off, their customer is fashion forward, value motivated, and never disappointed.

On the other end is Urban Outfitters and their appeal is great fashion and a great experience. Their quirky stores and attentive staff reveal who they are the moment you walk through the door.

Both these brands have done very well through the recession because they know who they are and who their customer is, and they never forget it.

Sid Raisch
Guest
Sid Raisch
10 years 11 months ago

These stores focus primarily on clothing and accessories that are “fashion consumable.” Sooner or later the wardrobe needs freshening up because the clothing either wears out or new fashion and style replaces it, or both. When it is both, it makes for a pretty compelling need to shop. The question is, “will the need for being in current style and fashion return?” Answer–probably. But current events as we have learned have more to do with this than we can influence.

Gene Detroyer
Guest
10 years 11 months ago
Every retailer that has “smart merchants, a strong design team, effective internal and external supply chains and great sourcing teams” is going to be successful. It doesn’t matter if it is Wal-Mart, Urban Outfitters or Tiffany’s. Historically, the death of retailers has revolved around the lack of those attributes, no matter what the economic conditions. Many would boast that people are tired of being frugal as they predict that shoppers will again return to the high flying days of the last 20-30 years as people spent more than they had. That is an empty wish. Retailing never goes ‘back to’. Retailing is changing forever. On one hand, people have found that they can live very well without the next pair of shoes, gadget or furniture update. They have also realized the cost of spending beyond their disposable means. On the other hand, shoppers have learned, via the internet that they can find what they need at the best price without stepping in a retail store. Who would have believed that Macy’s, of all retailers, would… Read more »
Ed Rosenbaum
Guest
10 years 11 months ago
Retailing as we knew it is gone and only a memory now. So much has changed and still is changing. The consumer is not so quick to jump in the car on a whim to go look for that new pair of shoes or a sport shirt. They will wait until they need it or maybe until they have other errands in the same general location. Retailers have taken many steps to reduce costs; most of them unnoticed to the buying public. I work with many Retail Facilities Department Directors or VPs. They are doing such things as changing lighting to longer lasting “green” savings items. They are not sending a maintenance person out to repair one or two small items. They wait until the list is three or more to send someone. That saves a minimum of two or more trip charges of at least $75.00 each. Every little bit helps. That is a savings of at least $150.00 for one store. Multiply that by a low average of 300 locations and the savings… Read more »
Don Delzell
Guest
Don Delzell
10 years 11 months ago
I think the most intriguing question is “what makes these two chains different” than others in similar positions. Certainly Aeropostale and Urban Outfitters are not alone in the specialty apparel arena, and neither are the sole choices for “consumable fashion.” In fact, it could be argued, there are others, such as H&M and Zara that are even more closely aligned with that strategy. The “mom friendly” aspect of Aeropostale is relevant, particularly since Aero has been able to sustain this without becoming irrelevant to its core demo. Without exception, “mom friendly” would be avoided like the plague unless “mom friendly” is simply an unstated reality, not a positioning. Make sense? I have two 14 year olds, and while data points of two are dangerous, they and their friends are “OK” with Aero. Not enthusiastic, mind you, but OK. So when their mom shops there for them, they are fine with the stuff. From a marketing perspective, Aero has been able to remain relevant to the core demo, while still NOT becoming overly associated with any… Read more »
Herb Sorensen
Guest
10 years 11 months ago

“…the perception of value has moved beyond price as the sole focus to take quality and durability more into account.”

Thinking of the entire population as under economic distress has always been absurd, other than as sympathy with the 20% who really took the hit. It’s like terrorism, the primary purpose of which is not brute impact, but messing with our heads. So my take is that price has NEVER been the sole focus, other than among the press and commentariat, who contribute to the messing with peoples heads.

The good times are ALWAYS now … if only we can see it for ourselves, whatever the circumstances. As someone said, “I’m not doing bad, under the circumstances.” And someone else asked, “What are you doing under there?” It doesn’t make it easy for anyone, whether in the 80 or 20 percent. But society will continue to rise (has for thousands of years) and you can either be in the van, or float with the detritus.

Ted Hurlbut
Guest
Ted Hurlbut
10 years 11 months ago

Aeropostale and Urban Outfitters both market to a young consumer for whom fashion is hardly thought of as discretionary. This is must-have stuff. Both companies have done an excellent job of offering great value in addition to great styling, but the styling is the driver. If it’s not right and it’s not current, then price is irrelevant.

So I don’t see this as a ‘frugal fatigue’ story. These two retailers did better throughout the depth of the recession than did their competitors and they are continuing to out-perform. Across the specialty spectrum, other retailers continue to lag. True discretionary spending continues to be pretty soft.

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