Through a special arrangement, what follows is an excerpt of an article from WayfinD, a quarterly e-magazine filled with insights, trends and predictions from the retail and foodservice experts at WD Partners.
Urban Outfitters went out of its way late last year to tell analysts that its direct-to-consumer channel was strongly outperforming its stores.
If direct-to-consumer is outperforming, why is Urban Outfitters opening 32 stores this year?
While struggling to resurrect comp-store sales from once enviable heights, Urban Outfitters has still managed to grow its direct-to-consumer business. That's something the company never would have been able to achieve if it didn't maintain cultural relevance in the marketplace with physical stores.
In fact, Urban Outfitters is an ideal case for studying how store brands can keep physical stores alive and relevant, while still navigating solid investments in online growth.
Photo: Urban Outfitters
1. Investing in stores isn't a zero-sum game.
In our study of "Third Wave" retail brands, we discovered that brands emphasizing in-store innovation also experienced growth in direct-to-consumer channels. Urban Outfitters' officials recently outlined a series of innovative initiatives to rejuvenate the in-store experience at its flagship chain:
The initiatives included:
- Space Ninety 8 in Williamsburg, Brooklyn, which has a community minded emphasis and its own local marketplace;
- Herald Square in Manhattan, its largest store to date, which now includes a hair salon and eatery;
- Without Walls, its own active lifestyle brand that has developed a community of athletic advocates.
The lesson: Brands can't stand still. In-store innovations can often lead to direct-to-consumer growth.
2. Loyal direct-to-consumer customers are found with meaningful in-store experiences.
Urban Outfitters became the brand known for street style by appealing first to the senses, including wide-open doors that literally lead right out into the streets. Without millions of consumers embarking on Saturday morning walks downtown after leisurely brunches, and without the tactile experience of wandering up and down open staircases inside these emporiums of ephemeral trends, they would never have been able to launch a successful direct-to-consumer business. You can't peddle hipsterdom to the masses if you aren't in key urban centers.
The Lesson: Unless a store brand has built a concrete and tangible in-store experience, it will be difficult to drive direct-to-consumer sales.
3. A single store brand banner is too limiting.
Founded in 1970, Urban Outfitters now operates five separate brands across over 400 locations, including its namesake stores, Anthropologie, Free People and newer concept stores such as the BHLDN bridal store. Terrain, with only two locations, offers an in-store restaurant with a local, organic/farm-to-plate theme. Space Ninety 8 was recently described by The New York Times as "a preservationist gesture, a middle-class beachhead against creeping luxury at every turn."
The Lesson: Don't be monolithic. Retailers must constantly adapt with new assortments to appeal to emerging demographics and generational change.