Urban Outfitters's Existential Crisis
"Don't do school eat your drugs stay in vegetables." That's the message on one of Urban Outfitters's trademark graphic T-shirts. But the word jumble can also be seen as a metaphor for the bind the retailer finds itself in: Long known for its radical teen clothing and controversial products, Urban Outfitters seems confused about what it wants to be and what it wants to say.
On Monday, Urban Outfitters Inc. reported a 10 percent decline in same-store sales for its flagship brand, the fourth quarterly drop in a row.
Drooping sales may be a symptom of changing teen spending, which is also hurting competitors such as Abercrombie & Fitch Co., Aeropostale and American Eagle Outfitters. Teen unemployment rates have been higher than 20 percent during most of the past year, compared with a little more than 6 percent for the general population. Teens are also spending more on food and electronics, and turning to cheaper apparel retailers such as H&M.
Aeropostale's latest marketing campaign, #AeroNow: "You've changed. We've changed," sums up the challenge the industry faces: Consumer preferences, especially teens', evolve quickly. Fickle teen shoppers today just aren't buying Urban Outfitters's merchandise.
This dilemma helps explain why Urban Outfitters is so reluctant to be seen mainly as a teen retailer. Perhaps with good reason: In contrast to Urban Outfitters's sales decline, the company's sister operations, Anthropologie and Free People, posted same-store sales increases of 6 percent and 21 percent, respectively. In a conference call on Monday, Chief Executive Officer Richard Hayne said the company was still working on shifting the focus of the Urban Outfitters brand. "There are a number of things that are resonating more effectively with the slightly older customer that we have always sought to have."
So far, the merchandise on offer at the flagship stores doesn't reflect these marketing efforts. There's everything from tees and toys to made-for-dorm-room cocktail shakers, red cup string lights and beer card party games. Last year after a denim-overalls-and-tutu outfit hit the racks, Goldman Sachs expressed "incremental concern" that the company might be "too aggressive and fashion forward" with its products.
The brand also has a long list of culturally insensitive (and sometimes racist and sexist) products that wouldn't appeal to the more mature or sophisticated consumer it seeks. If Urban Outfitters wants to attract an older clientele, it still has a lot to do to tone down the rebellion and bizarre.
Surely it can do better than this:
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