Urban Outfitters, INC.

April Sproehnle

Brooke-Ann Embry

Natalie Read

History of Urban Outfitters, INC

First store opened in 1970 near University of Pennsylvania Richard Hayne and Roommate Scott Belair called the store Free

People Came up with idea to open store for college students that would

sell inexpensive clothing and items for dorms and apartments Became huge success and incorporated in 1976 under name

Urban Outfitters Began opening more stores in metropolitan areas within 3 years Anthropologie opened in 1992

Type and Format of Stores

American merchandiser offering two retail chains: Urban Outfitters and Anthropologie

Multiple retail lines including Free People and Terrain Urban Outfitters

Casual clothing, furniture, accessories and house wares assortments

Ages 18-30 Every Urban Outfitters store is located in a renovated

building No stores look exactly the same

Target Customer

Urban Outfitters College aged individuals 18-30 who are self expressive and culturally

sophisticated

Anthropologie Thirty to forty year old women who are contemporary, sophisticated,

eclectic, and unique

Free People Women aged 25-30 who are interested in sixties and hip apparel

Terrain Men and women interested in creative and sophisticated outdoor living

and garden experience

Competitive Strategy and Positioning

Highly visible store locations Creative store design Broad merchandise selection

Gets majority of merchandise from overseas vendors and never allows more than ten percent of in-store merchandise to be from same vendor

Moderately priced and unique from other competitive stores

Visible presentation of merchandise Offers Exceptional Customer service

Customer mailing lists, response rates, catalog presentations, merchandise delivery, web site design and availability

Merchandise Assortment

Urban Outfitters: Men & Women’s apparel, shoes, and accessories to items for the apartment.

Lifestyle-specific shopping experience particularly for urban-minded individual ranging from 18-30 years of age.

Anthropologie: women’s clothing, accessories, shoes, beauty, home furnishing, found objects, gifts, and decor portraying vintage to global design.

Surrounds a sense of beauty, optimism, and discovery to the customer.

Merchandise Assortment cont.

Free People: women’s apparel, accessories, and house ware.

Specific for carefree, confident, and curious young women

BHLDN: heirloom-quality gowns, artisanal hair adornments, bridesmaid frocks, party dresses, footwear, jewelry, and lingerie.

Offers brides, partygoers, and party throwers inspired alternative

to life’s most anticipated milestones.

Merchandise Assortment cont.

Leifsdottir: wholesale apparel line, extraordinary details to women’s clothing and accessories such as unique trims, vintage buttons and intricate linings.

New sense of sophistication, timeless collectables with modern- dressmaking through fine fabrics and tailoring.

Terrian: plants for all seasons, inspired items for home and garden, all at an on-site nursery.

Transforms local garden centers, to an unforgettable experience for the senses

Service Description

Direct-to-Consumers Catalogs

Internet

We believe that our sites increase the reputation and recognition of our brands with our target customers and help support the strength of our stores operation. They go on to say, We also believe that our catalogs have aided in expanding our distribution channels and increasing brand awareness.

Location and Site Choices

Urban Outfitters: Operates in more than 130 stores in the United States, Canada, and Europe.

Specific locations in Europe include: London, Ireland, and Sweden.

Business district of heavily populated metropolitan cities

Anthropolgie: mainly online but operates in stores worldwide; on site location is in Wayne, Pennsylvania.

Also, chooses sites in business districts in heavily populated metropolitan cities to attract customers walking down the street.

Location and Site Choices cont.

Free People: wholesale brand, encompasses over 30 stores in the United States, three wholesale showrooms, cultivated relationships with 1,500 boutiques and departments stores across the globe.

Bloomingdale’s, Nordstrom, Lord & Taylor, Belk, and Macy’s

BLHLN: unveiled Valentines day 2011, and the first store will not open until fall, 2011.

Leifsdottir: wholesale line that is sold to specialty stores.

Terrian’s Flagship location is in Gen Mills, Pennsylvania.

Promotional Mix and Plan Implementation

Key: shopping experience

Creating an experience, not just selling products.

Goal: to sell a unique experience

Do not advertise

Rely heavily on word of mouth

Customers will spread the word and promote the great products and experience that is available in all stores.

Customer Relationship Management (CRM) is a vital component

Promotional Mix and Plan Implementation cont.

Target Market is very small.

Money goes towards decorating its stores and securing prime urban location.

Avoids enclosed malls.

Unique Layout of Store

Known for their market penetration.

Expanded market development with the addition of their new line BHLDN, Leifsdottir, and Terrain.

Pricing

Stress quality of products

High standards

Wide demographics due to material of merchandise

Dress range from $32 up to $548

Shoes range from $29 up to $348

Logistics

Urgency to BuySmall amounts of merchandiseLove selling out of items

Organizational Structure(Led from top to bottom)

Lead by Board of Directors

Corporate Officers

Regional Managers

District Managers

Designers

Store Managers

Assistant store managers

Sales Associates

Human Resource Policies

Hiring: rely heavily on resumes, personality characteristics, and fashion knowledge

Training: follows & mock customers tests

Exceptional benefits creates strong relationship with employees

Healthcare program to both full time and salaried staff

The plan addresses the costs of preventative care, hospital stays, emergency room visits, physician office visits, and prescription.

Buying Organizations Ability to ship lean amounts of merchandise due to Concept to Market

Complementary supply chain strategy

Flexibility is key

Dual Sourcing strategies

Alternate Locations

Decrease in turnaround time

Far East

Private Brand Merchandise from about 15 vendors

Establishing relationships with their agents

Eliminate middlemen

TradeStone’s System

Data for fiscal years (2007-2010)

In millions of dollars2007:

Net Sales: 1,224

Cost of Goods Sold: 164

Gross Margin: 452

Expenses: 409

Net Profit (Income): 116

Number of Stores: Urban- 158, Anthropologie- 125, Free People- 32 stores, 1383 department

Average Inventory: 149

Total Assets: 899

2008:

Net Sales: 1,508

Cost of Good Sold: 224

Gross Margin: 577

Expenses: 414

Net Profit (Income): 160

Number of Stores: Urban- 160, Anthropologie- 128, Free People- 34 stores, 1,386 department

Average Inventory: 125.3

Total Assets: 1,142

Data continued

2009:

Net Sales: 1,834

Cost of Goods Sold: 299

Gross Margin: 713

Expenses: 447

Net Profit (Income): 199

Number of Stores: Urban- 163, Anthropologie- 130, Free People- 35 stores, 1,389 department

Average Inventory: 111.5

Total Assets: 1,329

2010:

Net Sales: 1,937

Cost of Goods Sold: 338

Gross Margin: 786

Expenses: 522

Net Profit (Income): 219

Number of stores: Urban-170, Anthropologie- 135, Free People- 35 stores, 1,400 departments

Average Inventory: 106.2

Total Assets: 1,636

Financial Ratio Analysis2010 2009 2008 2007

Sales per store

6.24 5.81 6.13 5.72

Inventory 5.9 5.4 5.6 5.3ROA 15.2 14.8 12.7 11.9GMROI 19.3 18.5 16.5 13.8Expenses 9.83% 10.02% 10.39% 10.99%Net Profit Margin

11.0% 12.0% 14.0% 15.0%

Asset Turnover

1.3 1.2 1.3 1.4

Gross Margin %

45.6% 45.3% 43.9% 42.2%

Comparison to Top Competitor

Urban Outfitters, INC. ROA: 15.2% Net Profit Margin: 11.0% Inventory Turnover: 5.9 Gross Margin Percentage: 45.6%

GAP, INC. ROA: 17.0% Net Profit Margin: 6.5% Inventory Turnover: 5.3 Gross Margin Percentage: 44.0%

Suggestions

Open more retail stores Different locations

Open free standing stores for Free People and Terrain lines

Open Warehouse stores selling all merchandise and brands in one location

Other lines should sell men’s and children’s merchandise

Enhance online shopping experience Integrate coffee shops and/or restaurant Keep employees satisfied by offering more incentives