Rebecca Proud L4 FT Buying and Merchandising Brand Report October 2017
CONTENTS . History/Current Position
. Fashionability Graph (Market Position) . Customer Profiling . PESTLE analysis . SWOT analysis . Target Market . Brand Summary . Conclusion . Bibliography
HISTORY Urban Outfitters was born in 1970 at a University in Pennyslvania. It started as a college project where Dick Hayne and his roomate Scott Belair came up with an idea to open a retail store. The first store was called Free People, it was located in a small space just across the street from the University. The general idea behind it was to provide second hand clothing, furniture, jewelery and home decor. Within a few short years, the first UO had grown into a series of small stores. They wanted a unique retail experience for creative, college age customers. It then became part of the URBN portfolio which is a global consumer comprised of Urban Outfitters, Anthropolgoie, Free People, BHLDN, Terrain and the Vetri Family. UO is by far the biggest brand within URBN and was the first brand to move across the atlantic in 1998, opening a store in Kensington High in London.
CURRENT POSITION The most recent information found (2015) shows that there is 238 UO stores worldwide however more have been added with 27 due to be built in 2017 alone. 179 are located in the United States, 16 located in Canada and 43 are located in Europe; the majority of these located within the UK. At the end of quater 2 in 2017 UO were not performing as well as hoped. Total net sales fell 2% on predictions. Comparable sales, including digital/online, fell 4.9% which UO said is due to ‘negative retail store sales’. CEO Richard Hayne comments “the quarter fell far short of expectations” continuing to say that this is due to an underperformance of womenswear products. However with UO main focus always being on the shopping experience for their customers they hope that with new products and ranges coming into store that quater 3 will show an increase in sales.
CURRENT MARKET POSITION
Price
High
Low
Fashionability
High
This graph shows the difference in fashionability and price between Urban Outfitters and its competitors. UO is very fashion forward but quite expensive whereas online brands such as Asos are still fashionable but much more affordable.
CUSTOMER PROFILE
Emma, 25, California
She is an American Blogger. She is loud, talkative and lives with her 2 best friends. She regularly visits art exhibitions and museaums for inspiration and aspires to travel the world. She spends her time blogging, shopping, walking along the beach, socialising and is a part time yoga instructor. She loves all things food and drink related and knows the best places to eat. Her style is very fashion forward with companies endorsing her for wearing their products. Her chic style is iconic and she can take any outfit from day to night.
Annie, 19, Brighton. She is British and a university student. She is sociable, bubbly, and works as a part time barmaid. Her hobbies are Art, blogging, photography, travelling, music, films and socialising. She spends her spare time shopping, reading, taking photos and doing pilates. She cares greatly for plants and the environment is an active member of many charities. She spends her night life in bars and clubs with friends. She dresses for comfort but stays stylish with vintage pieces and brand new items; she is always up to date with the latest trends.
Both girls fit into the UK tribes of ‘Leading Edge’ and ‘Aspirant’. Leading Edge are the proactive scene leaders that live for the new. They are creatives and activists, with increased access to smart devices. Aspirant tribes know the look, music and lifestyle of now and will spend in order to stay at the forefront. Social butterflies who spend summer holidays at festivals and on holidays. They want to be the ones who have seen it first.
PESTLE ANALYSIS POLITICAL
ECONOMICAL
1. Brexit :With the UK amidst negotiations with the EU over fair deals and trades, the retail world is suffering. Urban Outfitters relies on this as they are an American Company who mostly trade over seas. 2. Lots of UO stock is imported from Turkey, with the countries current political instability it causes concern. With lots of factories and workshops being in areas like Syria the ongoing feud may disrupt production and get in the way of communications. 3. Tourism expands due to the pound being much cheaper than other currencies so the UK becomes a less expensive destination prompting more visitors from abroad. 4. Online retail in the UK can flourish due to cheaper prices however they now face EU controls over sales to EU countries. Thus meaning some companies may create bases abroad in order to avoid these charges.
1. The fluctuation of the pound makes it difficult for retailers to plan for the future, with most ranges being created minimum 6 months ahead, manufacturing and import prices could change alot. 2. The mood across the UK has been down since brexit meaning that overall spending is falling. UO were down 2% at the end of their second quater with online sales being down also. The high price of their items could contribute to lack of sales. 3. Forecasts predict a 1.4% rise in spending this year however this is -0.3% lower than originally thought for 2017. It’s proposed consumers are spending more on holidays, restaurants and events etc rather than shopping for merchandise. 4. As of March 2017 the unemployment rate was 4.3%. Companies have to spend less thus meaning less employees.
SOCIAL
TECHNOLOGICAL
1. Urban Outfitters has come under fire for poor working conditions and making employees work for free. Asking people to volunteer over the weekends alongside paid employees, this caused huge controversy across the internet with UO still not fully addressing these issues. 2. They have been put under attack many times for using other companies names, for example selling t shirts labelled as ‘Coachella Vests’. Also for stealing designs off other websites like Etsy. They also released a number of tees in the past which caused controversy, as they were seen to support/ promote unhealthy or dangerous ideas. An example being a top with the words “eat less” across the front. 3. UO are mainly aimed at millenials, aged roughly between 16-26, with the current society this is a huge boost for them as fashion nowadays is almost solely based on the trends between peers. UO are at the forefront for fashionability with their shops and merchandise being instagrammable and easily accessible for many people.
1. The internet is part of everyday life which is a definite plus side for UO as they, to a great extent, rely on social media platforms to fuel their sales. 2. Networks such as Facebook, Instagram, Snapchat and Twitter (the main 4) make the fashion/celebrity world more accessible for normal people, in no time we can find out where their outfits are from/cheap alternatives. This meaning that anybody can dress like a celebrity and thus being the birth of blogs: Anybody can be famous. UO use these platforms to reach their customers. 3. Online shopping is now a huge part of the retail market. Last year (2016) UO saw online sales increase by double digits and continued to outperform stores, however they continue to build more stores and make it a more personal experience. 4. The future of technology will change the retail world completely with virtual reality dressing rooms and online delivery within an hour.
PESTLE ANALYSIS LEGAL
ENVIRONMENTAL
1. As previously mentioned UO have had many problems when it comes to legal issues. They have been sued by numerous companies and still 4 years on are dealing with a legal battle against The Navajo Nation who accused UO of alleged trademark infringement, violations of the Indian Arts and Crafts Act, amongst other allegations.
1. UO do not knowingly source or carry products that use cotton orginiating from Uzbekistan and they state they would terminate a relationship with suppliers if they are found to use this cotton.
2. UO asked some of its salaried employees to volunteer in some warehouses to ensure customers got their orders quickly. This was met with wild backlash. Since this, UO have been working to improve their labour practises, they announced in 2015 that they would end ‘on call scheduling’ in its New York Stores.
2. The Urban Renewal Collection uses recycled fabrics, deadstock fabrics, vintage, organic cotton and other sustainable materials. 3. In 2009 UO made an agreement with PETA to stop selling fur in their stores, however in 2011 they sold a cardigan with real fur. They are now working to take no fur seriously and make sure this doesnt happen again.
SWOT ANALYSIS STRENGTHS
WEAKNESSES
. Extremely well known store especially amongst the younger generation. . Huge range of clothing for both men and women with a very fashion forward image. . Very clear and defined brand image; vintage, retro, old school, quirky, individual, cool. . Layout of each store guides you through each section with different deparments being labelled clearly. . They consider themselves a lifestyle brand meaning they expand into a wider market of accessories and homeware. . A bold and recognisable brand with a huge online presence through facebook, instagram, pinterest etc. . They know there market well, so provide relevant deals such as student discounts and mid season sales.
. They do not cater for a range of sizes, for instance contempitors such as Topshop have maternity, petite and tall. . Some items of clothing are quite expensive and this can put customers off buying the item but also returning to that store. . They are designed for a certain type of customer, a very young ‘quirky’ image which puts off mass appeal. . They appeal to a technology obsessed audience as they dont use traditional forms of marketing like mail or billboards. . Multiple complaints about the quality of the product but also the pricing. . The models used for their campaigns are usually very slim and this is replicated in the sizes they stock. . Not a great relationship between brand and customer whereas shops such as ASOS reward their customers for shopping with them.
OPPORTUNITIES
THREATS
. Creating separate departments for different shaped people such as Maternity, Curve, Petite and Tall would encourage a bigger range of customers but also opens their market to a wider audience. . Creating more of a reward scheme for their customers, giving them deals or first look at new ranges to say thankyou for purchasing something. This encourages more spending and frequent visits. . Create more instore excitement by doing collaborations with artists, musicians and designers that suit the brand. This context would help keep them current and up to date in the retail world. . Stocking a larger variety of sizes in order to make it a more comfortable shopping experience for everybody. . Use their online presence even more to create excitement around the brand. Online shopping is the future and they need to stay on top of it by creating easy shopping through an app, click and collect and returns.
. The overpriced items of clothing puts people off shopping there and will force them to look elsewhere for cheaper alternatives. . With such a specific image they might be looking into a very narrow audience which could affect the sales. . With many other high street shops now becoming more fashion forward, every retailer is trying to create a stronger image. . UO has been involved in a number of legal issues and selling of insensitive products. This could put people shopping with them in the future as they do not agree with the ideologies of the company. It not only ruins sales but creates waste which in the current society is a big topic. . Other brands are equally as expensive but are providing better quality clothing with better customer care. . UO having a lack of one to one relationships with the shopper is a big gap in the market for other retailers to gain from.
TARGET MARKET
PRODUCT . UO sell clothes for a range of individual styles including: retro, hippy, grunge, bohemian, girly etc. . They dont just cater for women, they also have mens clothing and within these deparments they have daywear, nightwear, smart, casual, underwear/lingerie, shoes, accessories, loungewear, swimwear etc. They also expand into homeware including furniture, books, lights, cushions, mugs and almost anything else decorative you can find in a house. . Having a younger target market means UO have to keep up to date constantly with the newest trends in order to keep customers returning. This means sizes, shapes, colours and patterns. . They have to do this without pushing the boundaries too far and putting people off or offending people which has been an issue in the past . Customers rely on UO to sell unusual and indidividaul pieces.
PRICE . With UO being a medium to high end brand the prices do vary however as a whole, they tend to be high. The average dress being £30-£40 can then be compared with a competitor such as H&M, where the price is lowered to £20-£30. . Although they are known for being overpriced people continue to shop with them because they enjoy the product so much. They also offer deals such as student discount which help to bring in younger customers. . The home department of UO which includes bedding, books, kitchenware etc tends to also be at a high retail price but they are usually more unusual items so customers will spend the money for something different. . In a competitive high street UO and Topshop are at the same price range with these 2 being some of the most popular shops. They are fashion forward and have the ideology of being individual meaning people will spend a bit more.
TARGET MARKET PLACE . UO was created in Philedalphia and has its main market in the US. California is one of the most popular areas with lots of stores within a small area. This is the main image they cater for. . As previously mentioned they have moved overseas and especially in the UK they are becoming more and more popular. They can be found in almost all major cities now and with the help of online shopping nearly everyone in the world can shop with them. . They are always placed in the absolute centre of any city so they are easy to find. . The main focus for UO has always been creating a great shopping experience for its customers so the in store atmosphere is important. They use images, lights and fun/edgy architecture to create a better shopping experience. The use of mannequins shows their clothes as whole outfits and can inspire people to style pieces of clothing and potentially lead to more sales.
PROMOTION . Like its competitors UO takes part in end of season and mid season sales in a bid to clear left over stock ready for the new ranges. This is very popular especially for somewhere like UO who have high prices. . Many stores now (in the UK) have an area for sale in store at all times which increases footfall within the store and can lead to more impulse buys. . As stated before they also do student discount, at an average of 10% but sometimes during important dates for students they push it up to 20%. With student lock ins becoming a regular occurence in shopping centres they also parttake in this. . More promotions can be found online with deals such as packs of underwear/socks for 2 for ÂŁ15. . As a frequent shopper of UO you may also get special deals emailed to you such as 15% off for a limited time or free next day delivery.
BRAND SUMMARY Brand Position .UO is a vibrant and iconic brand with growing popularity year .They most recently have seen a fall in sales however this can by a number of things such as political, economical and social .They continue to be at the forefront of the high street, with iconic image.
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Target Market .16-30 year olds is the average range of customers for UO. 20+ is the main area of focus as these are the influencers in todays society. .They attract customers who want different, edgy and individual items of clothing. Competitors .Direct competitors on the high street include Topshop, H&M, Gap, All Saints, River Island etc while online competitors consist of Asos and Missguided. They all claim to be fashion forward and iconic however all have something differnt to offer with UO sticking to their ‘BoHo’ image. Products and Pricing .UO is known for its expensive clothing however they showcase such a wide range of items from womenswear, menswear, homeware and lifestyle. The store .With many stores being built every year the store proves to be a huge driving force in the UO brand. The whole brand was born around the idea of creating a good shopping experience. .They create a ‘shabby chic’ atmosphere with stripped back interiors and large areas making it easy to shop and browse. Online .The UO website reitterates the ‘BoHo’ image with young models and instagrammable photographs. .Their social media presence is huge with millions of followers on a number of networks such as Facebook, Instagram, Twitter and Snapchat. This is their main form of communication, they can create a more personal and one to one experience with their customers.
CONCLUSION . Urban Outfitters is a name which can be recognised worldwide and comes with icnoic and edgy connotations. In the current society fashion trends are being predicted by everyday people; they get inspiration from eachother. This is something UO have to understand and get on board with extremely quickly as this affects not only how people dress but how they shop and what they look for in a brand. . UO have always had a good range of products with excellent store layouts encouraging sales, however the price of products can be high. From personal experience I can say that I have left an UO store without buying anything because of the price of many items. If they were even ÂŁ10 cheaper I would have purchased them. This is a major market UO are missing out on especially in the current economical situation. . The United Kingdom, since Brexit, has had a number of problems arise. Retail was not exempt from this, nearly all shops have seen a fall in sales over the last year or so, with general moral across the country being very low. . The future for UO, in my eyes, is to widen their expertise and cater for a wider range of people. As simple as adding a tall, petite or maternity range would attract a whole new group of people and/or encourage existing customers to visit UO more often. . They need to continue their ideology of the shopping experience being the best part, with the online store still being extremely important especially when trying to attract a younger audience. However many high street shops are now embracing technology and becoming more of an online presence. Although this may be easier/quicker, many people still enjoy the hobby of trying on clothes and actually shopping in a store.
BIBLIOGRAPHY
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Used Throughout: https://www.urbanoutfitters.com/en-gb/
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My own photographs have been used throughout.