Urban Outfitters                             group,                             A new way of thinking Brand Retail?Helixa1...
Why Urban Outfitters group?             2
Outstanding business results for many years	 facing the double challenge:		 - Gloomy Fashion Retail Industry		 - Saturated...
Outstanding business results for many years	 facing the double challenge:		 - Gloomy Fashion Retail Industry		 - Saturated...
As an introduction:Urban Outfitters group at a glance                  5
1970            Richard Hayne opened The Free                                    People Store, located on the             ...
1st Free People store opened in Paramus, targeting young                                   2002        contemporary women ...
$b 2.5    +15% CAGR       430                     SALES     (2006-2011)   STORES                              Urban urban ...
Urban Outfitters, the historic pillar of the group                  vision            Unique concept, funky mix of merchan...
Anthropologie,the precious gem of the group                vision          “Inspire the imagination”              mission ...
Free People,     the rising star       vision          Nurture the young people who are looking for a                     ...
Terrain,the future growth opportunity                vision          Transform the local garden center into a celebration ...
BHLDN,the brand new concept         vision         A voice and inspiration that celebrates a woman’s                      ...
Top business results in a gloomy market:Is Urban Outfitters group the new rising star             of Fashion Retail?      ...
Urban Outfitters group,exceptional results in a very challenging market       Urban Outfitters group has increased sales b...
Top sales productivitycompared to its peers                                URBN sales per square foot compared to other sp...
The highest operatingmargins in its peer group                         Urbn Operating Margin compared to other women’s spe...
Ahead in online business     URBN sales breakdown by chanel, 2011e                                                        ...
A sustainably more efficient business model: Is Urban Outfitters group the next Inditex?                     19
Highly attractive customer value proposition…With an efficient cost structure…   And a multi-profit formula               ...
Identify                                                       the next Products				                                      ...
Assortment: constantly renewed collectionsUrban relies on small but frequent inventory flows 														Broad versus De...
Assortment: beyond apparel and accessoriesUrban Outfitters and Anthropologie sources and sells products matching their cli...
Stores                      Differenciated and                      experience-enriched    “We want                       ...
A well-fitted Pricing Strategy 								Each brand covers a distinct price category    49,95 €       54,00 €        59,00€ ...
A peculiar Value PropositionHybrid between luxury and massmarket                                        URBN              ...
Highly attractive customer value proposition…With an efficient cost structure…   And a multi-profit formula               ...
Few storesUnited StatesUnited KingdomCanadaBelgiumDenmarkGermanyIrelandScotlandSwedenbutinternationaldeliveries           ...
Encouraging impulsive   higher         lessshopping through a      product                        appeal                  ...
Less markdowns thanks to                                                     “At Urban, we have                           ...
An outstanding                                                                             Urbn inventory turnover        ...
No spend on marketing and advertising   “We spend the money that other companies Richard          spend on marketing and a...
A highly flexible assortmentthanks to third parties       Urban Outfitters is uniquely positioned           thanks to its ...
An highly attractive customer value proposition…With an efficient cost structure…   And a multi-profit formula            ...
Urban Outfitters group revenues: a multi-profit formula                   Own                    Exclusive                ...
Is Urban Outfitters group the next Inditex?                            Give to a customer segment           Give to a cust...
From product focus to      customer-driven approach:A new way of thinking Brand Retail?                  37
“In my experience, retailers          A differentiatedspend most of their time looking atthings from the company’s        ...
Urban Outfittersgroup key pillar:Customer ExpertiseCreate a relationship and that                          Richardrelation...
More thanjust brands…“lifestyle symbols” !        URBN success relies on having                             brands so stro...
With more than                         “I envisioned Urban                  as being a team of peers                     l...
The ability to build and managebrands independently...                         own executive team                         ...
... that allows Urban Outfitters groupto innovate consistently                           What’s next ?                    ...
From pushing products to adapting to cus- tomers, a new way of thinking Brand Retail                                   USU...
To conclude     45
Urban Outfitters group has deeply reshaped brand retail.	 It has opened the way for new modelling and operating  The very ...
Strategic Innovation to reinvent businessesIn a constantly changing world, companies      To build such strategies, Helixa...
For more information,       contact us:      16, rue Brey      Paris 17èmedevelopment@helixa.com   (+33)1 45 72 55 89 This...
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Urban Outfitters group, A new way of thinking Brand Retail ?

  1. 1. Urban Outfitters group, A new way of thinking Brand Retail?Helixa16, rue Brey - 75017 ParisCreative Commons License July 2012
  2. 2. Why Urban Outfitters group? 2
  3. 3. Outstanding business results for many years facing the double challenge: - Gloomy Fashion Retail Industry - Saturated western markets But Urban Outfitters group sales keep on growing +23% of CAGR over the past 10 years Urban Outfitters group not only succeeds in increasing its sales it keeps on improving its operating margin (18,2% in 2010) 3
  4. 4. Outstanding business results for many years facing the double challenge: - Gloomy Fashion Retail Industry - Saturated western markets But Urban Outfitters group sales keep on growing +23% of CAGR over the past 10 years Urban Outfitters group not only succeeds in increasing its sales it keeps on improving its operating margin (18,2% in 2010)What is the secret of Urban Outfitters group? 4
  5. 5. As an introduction:Urban Outfitters group at a glance 5
  6. 6. 1970 Richard Hayne opened The Free People Store, located on the Upenn’s campus in Philadelphia focusing on «funky» fashion and household productsThe Free People Store became Urban Outfitters 1976 1992 Anthropologie was founded by a small group of innovators with a common goal: “inspire the imagination” 6
  7. 7. 1st Free People store opened in Paramus, targeting young 2002 contemporary women 2008 1st Terrain garden center in Glen Mills, a sophisticated outdoor living and gardening concept 1st BHLDN store opened in  Houston, with a curated 2011 collection for weeding 7
  8. 8. $b 2.5 +15% CAGR 430 SALES (2006-2011) STORES Urban urban Outfitters BHLDNoutfitters $b 1.2 group NC (2011 launch) 1 store [test phase] 197 stores 2011 anthropologie terrain $b 1 ~ $m 15 168 stores 2 stores [test phase] free people $m 250 62 stores 8
  9. 9. Urban Outfitters, the historic pillar of the group vision Unique concept, funky mix of merchandise for both home and wardrobe mission Not only a shop but a place to live target - Young adults from 18 to 28, men & women - “Metropolitan hipsters”, creative and tech-savvy - With a funky and unique sense of style stores & 840 m² (in average) located in large metropolitan areas, 2011 : 187 stores - 161 North America, 26 Europe - Target: 350 stores - 300 North America, 50 Europe – internet Internet: US, UK, France and Germany, worldwide deli- veries 9
  10. 10. Anthropologie,the precious gem of the group vision “Inspire the imagination” mission High end luxury casual, unique assortment ranging from women’s apparel and accessories to home goods target Sophisticated & contemporary women aged 28 to 45 stores & 670 m² (in average) located in upscale street locations 2011: 164 stores - 161 North America, 3 Europe - internet Target: 350 stores - 300 North America, 50 Europe – Internet: US, UK and Germany, worldwide deliveries 10
  11. 11. Free People, the rising star vision Nurture the young people who are looking for a little of their own freedom in the clothes they wore. mission Offer a line of clothing for young women that catered to their intelligence, creativity and individuality, target Women aged 25 to 30, creative, confident, free and adventurous. Likes to push life to its limits, with traveling and hanging out and everything in between stores & 130 m² (in average) located in upscale street locations 2011: 62 stores (North America) internet Target: 200 stores (North America) Internet: US 11
  12. 12. Terrain,the future growth opportunity vision Transform the local garden center into a celebration of nature and create an experience for the senses, mission Curated assortment for the home and garden in a compelling shopping environment inspired by the greenhouse. target Men and women Interested in a creative, sophisticated outdoor living and gardening experience stores & 1860 m² of enclosed selling space 8000 m² of outdoor seasonal selling space internet 2011: 1 store (North America) Internet: US 12
  13. 13. BHLDN,the brand new concept vision A voice and inspiration that celebrates a woman’s most anticipated milestones, her wedding, and that gives tradition a twist. mission Offer a curated collection of heirloom wedding gowns, bridesmaid frocks, dresses, jewelry, headpieces, footwear, lingerie and decorations target Bride that are looking to create an event that reflects her own unique perspective stores & 340 m² of selling space Located in a specialty retail center internet 2012: 2 stores (Houston and Chicago) Internet: US, worldwide deliveries 13
  14. 14. Top business results in a gloomy market:Is Urban Outfitters group the new rising star of Fashion Retail? 14
  15. 15. Urban Outfitters group,exceptional results in a very challenging market Urban Outfitters group has increased sales by 8x compared to Women’s index over the past 10 years98 URBN76 Market sales growth: CAGR:5 +23% +1% of CAGR [2000 – 2010]43 CAGR:2 +1% women’s Exceptional growth rate1 index in a gloomy market0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Women’s index : ANN: Ann, Inc EXPR: Express, Inc KWD: Kellwood Company BEBE: Bebe Stores, Inc. GES: Guess, Inc TLB: The Talbots, Inc CHS: Chico’s FAS, Inc JCG: JCrew Group, Inc CWTR: Coldwater Creek, Inc JNY: Jones Group, Inc LIZ: Liz Claiborne, Inc 15 Source: Company data, Credit Suisse estimates
  16. 16. Top sales productivitycompared to its peers URBN sales per square foot compared to other specialty retailers, 2011e 1200 $ 1000 1000 $ 800 $ 612 600 $ 537 400 $ An original model: 200 $ few stores but high attractivity 0$ LULU L LTD URBN ARO ANF AEO ANN EXPR GPS PLCE LULU: Lululemon Athletica, Inc. ANF: Abercrombie & Fitch Co. EXPR: Express, Inc LTD: Limited Brands, Inc. AEO: American Eagle Outfitters GPS: Gap, Inc ARO: Aeropostale, Inc ANN: Ann, Inc PLCE: Children’s Place Retail Stores 16 Source: Wells Fargo Securities estimates, December 2011
  17. 17. The highest operatingmargins in its peer group Urbn Operating Margin compared to other women’s specialty retailers, 2010 20% 15% 10% 5% A more responsive and 0% well-fitted approach to Fashion -5% URBN ITX GES JCG CHS ANF JNY TLB ANN CWTR LIZ ITX: Inditex. SA CHS: Chico’s FAS, Inc TLB: The Talbots, Inc GES: Guess, Inc. ANF: Abercrombie & Fitch Co. ANN: Ann, Inc JCG: JCrew Group, Inc JNY: The Jones Group, Inc CWTR: Coldwater Creek, Inc LIZ: Liz Claiborne, Inc 17 Source: Company data, Credit Suisse estimates, December 2010
  18. 18. Ahead in online business URBN sales breakdown by chanel, 2011e e-commerce 80% 5% catalogs 20% 21% Wholesale Direct-to-consumer 74% Retail stores Online business � 17 % in turnover 18 Source: Wells Fargo Securities estimates, December 2011, Helixa estimates
  19. 19. A sustainably more efficient business model: Is Urban Outfitters group the next Inditex? 19
  20. 20. Highly attractive customer value proposition…With an efficient cost structure… And a multi-profit formula 20
  21. 21. Identify the next Products successful trends Science and Art for 10 products: designers to take risks“Fashion cycles are good for our business, on new trends we are early adopters merchants selling to early adopters customers” Glen group CEO Senk, ex-URBN data driven process 21
  22. 22. Assortment: constantly renewed collectionsUrban relies on small but frequent inventory flows Broad versus Deep: no large bets in a few select items but broad assortment across arange of categories and styles1 week 1 week 1 week 1 week 1 week 1 week Glen group CEO Senk, “We design products with the changing world ex-URBN in mind” 22
  23. 23. Assortment: beyond apparel and accessoriesUrban Outfitters and Anthropologie sources and sells products matching their clients’aspirations with no category boundaries 23
  24. 24. Stores Differenciated and experience-enriched “We want to create stores that exceed people’s expectations” LondonGlasgow Stockholm Stockholm London 24
  25. 25. A well-fitted Pricing Strategy Each brand covers a distinct price category 49,95 € 54,00 € 59,00€ 59,90€ 68,00€ Urban Outfitters: low-end price category ($10 - $100) Free People: mid range ($50 - $200) Anthropology: higher range ($100 - $400) 25
  26. 26. A peculiar Value PropositionHybrid between luxury and massmarket URBN Products mass unique Selling proposition basic exclusive mass market low Retail experience enriched premium fashion retailers & luxury brands Customer relationship fonctionnal emotional & aspirational Price range cheap expensive 26
  27. 27. Highly attractive customer value proposition…With an efficient cost structure… And a multi-profit formula 27
  28. 28. Few storesUnited StatesUnited KingdomCanadaBelgiumDenmarkGermanyIrelandScotlandSwedenbutinternationaldeliveries 28
  29. 29. Encouraging impulsive higher lessshopping through a product appeal markdowns and promotionsscarcity model and sales “Scarcity breeds value” Richard HAYNE, URBN group founder and CEO 29
  30. 30. Less markdowns thanks to “At Urban, we have more tools and a rigorous a responsive approach to approach to managing Fashion Fashion cycles” Glen group CEO Senk, ex-URBN demand merchandiseThe company uses quantitatively driven inventoryprocesses to recognize and forecast... & assortment % 00ICE 1 PR Thanks to its flexible organization, it More accurate forecasting = a higher can adapt constantly its merchandise percentage of full price merchandise...the next emerging patterns and so inventory and assortment to major and less product markdownslimiting high-risk shift in demand. 30
  31. 31. An outstanding Urbn inventory turnover compared to other specialty retailers, 2010 inventory and supply 7.0x Inventory turnover 6.0x chain management 5.0x 4.0x URBN’s business model has two 3.0x key features: lean inventories and high 2.0x product turnover 1.0x 0.0x URBN JNY GES ITX CWTR CHS JCG LIZ TLB ANN ANF JNY : Jones Group, Inc CWTR : Coldwater Creek LIZ : Liz Claiborne,Inc GES : Guess, Inc. CHS : Chico’s FAS, Inc TLB : The Talbots, Inc ITX : Inditex JCG : JCrew Group, Inc ANN : Ann, IncNew collections’ arrivals jan feb mar apr may jun jul aug sep oct nov dec URBN delivery schedule Typical retailer delivery schedule Source: Company data, Credit Suisse estimates. 31
  32. 32. No spend on marketing and advertising “We spend the money that other companies Richard spend on marketing and advertising, HAYNE, to magnify our store experience” URBN group founder and CEO 32
  33. 33. A highly flexible assortmentthanks to third parties Urban Outfitters is uniquely positioned thanks to its mix of own-label and third-party branded assortments Urban not only sells its own brand, but also exclusive products and external brands 33
  34. 34. An highly attractive customer value proposition…With an efficient cost structure… And a multi-profit formula 34
  35. 35. Urban Outfitters group revenues: a multi-profit formula Own Exclusive External Brands Partnerships Brands Margin Low-end / Mid-range prices High prices Low-end / Mid-range prices Internal Production Internal Production External Production = High Margin = High Margin = Low Margin Volume Numerous Brands Few Partnerships Numerous Brands Few categories Few categories Numerous categories = High Volume = Low Volume = High Volume High margin x High volume High margin x Low volume Low margin x High volume 35
  36. 36. Is Urban Outfitters group the next Inditex? Give to a customer segment Give to a customer targetCustomer Value the latest Fashion trends all the products associated From productproposition focus to at affordable prices with their lifestyle customer-driven = Product Focus = Customer Centric approach Own Brands very high volume x high margin high volume x high marginProfit From maximizingFormula Partnerships X low volume x high margin profit to a multi - profit formula External Brands X high volume x low margin # 1. Trend chasing # 1. Customer ExpertiseKey # 2. Fast speed to market # 2. Lifestyle Development From processesresources Optimization # 3. Low cost structure # 3. Responsive approach to brand building = Process Optimization = Brand Building 36
  37. 37. From product focus to customer-driven approach:A new way of thinking Brand Retail? 37
  38. 38. “In my experience, retailers A differentiatedspend most of their time looking atthings from the company’s approach toperspective or the marketer’sperspective…they talk about trends and brands Fashion Worldbut rarely about the customerin a meaningful way. Glen Senk, At URBN, we’re customer experts. ex-URBN group CEO Our focus is on always doing what’s right for a specific customer we know very well.” 38
  39. 39. Urban Outfittersgroup key pillar:Customer ExpertiseCreate a relationship and that Richardrelationship then translates into sales HAYNE, URBN group founder and CEO Interacting “At URBN we see ourselves with their as customer specialists, customers with a collection of brands each one specializing in one particular customer group and lifestyle” Creating a special link 39
  40. 40. More thanjust brands…“lifestyle symbols” ! URBN success relies on having brands so strong that they are today lifestyle symbols 40
  41. 41. With more than “I envisioned Urban as being a team of peers looking for cool thingsjust customers… to sell to their peers.”“communities of Richard HAYNE,soul-mates” URBN group founder and CEO 41
  42. 42. The ability to build and managebrands independently... own executive team / sourcing function / designers Sourcing International Operations Shared services Logistics Finance HR/Talent Management e-commerce Real Estate Retail own executive team own executive team / sourcing function / sourcing function / designers / designers 42 Source: Company data, Credit Suisse estimates.
  43. 43. ... that allows Urban Outfitters groupto innovate consistently What’s next ? ? 43 Source: Company data, Credit Suisse estimates.
  44. 44. From pushing products to adapting to cus- tomers, a new way of thinking Brand Retail USUAL RETAILERS 1 2 3 4 5 Products Raw materials Large Scale High Investment Push Design Sourcing Manufacturing in Marketing & Selling Ads URBN 1 2 3 4 5Customer Lifestyle Products Design Products & Brands Large Scale Demand-fitted Analysis & Brands Selection Test Phase Manufacturing Selling 44
  45. 45. To conclude 45
  46. 46. Urban Outfitters group has deeply reshaped brand retail. It has opened the way for new modelling and operating The very essence of Urban Outfitters group’s success is lifestyle The lifestyle mission is to feed the aspirations and needs of a target group or community whatever product categories and distribution channels 46
  47. 47. Strategic Innovation to reinvent businessesIn a constantly changing world, companies To build such strategies, Helixa hascan no longer do business in the same devised a series of new tools and proceedsway as in the past. Indeed, companies by combining creativity with analysis tonow have to steer a course through a imagine for its clients what has as yetworld where everything is changing at a never seen light of day.high speed . It is forcing them to rethink With its wealth of experience in suchtheir strategic choices along completely sectors as luxury goods, media, retailing,different lines. Those firms able to rapidly chemistry, energy and internet and givenidentify disruptive innovation and take up its design thinking inspiration, Helixa canadequate strategies can gain the upper offer highly effective tailor-made solutions.hand on competitors and become the next Helixa’s team mixes engineers, strategistswinners. and designers. 47
  48. 48. For more information, contact us: 16, rue Brey Paris 17èmedevelopment@helixa.com (+33)1 45 72 55 89 This document is underCreative Commons License 48
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