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![$b 2.5 +15% CAGR 430
SALES (2006-2011) STORES
Urban
urban Outfitters BHLDN
outfitters
$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](https://image.slidesharecdn.com/urbanoutfittersgroupcasehelixa-130115092558-phpapp01/75/Urban-Outfitters-group-A-new-way-of-thinking-Brand-Retail-8-2048.jpg)
![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 years
9
8 URBN
7
6
Market sales growth:
CAGR:
5
+23% +1% of CAGR [2000 – 2010]
4
3
CAGR:
2
+1%
women’s Exceptional growth rate
1 index
in a gloomy market
0
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](https://image.slidesharecdn.com/urbanoutfittersgroupcasehelixa-130115092558-phpapp01/75/Urban-Outfitters-group-A-new-way-of-thinking-Brand-Retail-15-2048.jpg)
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Urban Outfitters group, A new way of thinking Brand Retail ?
Urban Outfitters group has achieved exceptional sales growth of 23% annually over the past 10 years, even as the fashion retail industry has seen gloomy conditions and saturated western markets. The group succeeds in increasing sales and improving operating margins through its unique brand concepts like Urban Outfitters, Anthropologie, and Free People that target specific demographics with curated merchandise and store experiences. Urban Outfitters group has developed a new model for brand retail that drives top sales productivity compared to its peers.
Urban Outfitters group, A new way of thinking Brand Retail ?
- 1. Urban Outfitters group, A new way of thinking Brand Retail? Helixa 16, rue Brey - 75017 Paris Creative Commons License July 2012
- 2. Why Urban Outfittersgroup? 2
- 3. Outstanding business resultsfor 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. Outstanding business resultsfor 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. As an introduction: UrbanOutfitters group at a glance 5
- 6. 1970 Richard Hayne opened The Free People Store, located on the Upenn’s campus in Philadelphia focusing on «funky» fashion and household products The 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. 1st Free Peoplestore 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. $b 2.5 +15% CAGR 430 SALES (2006-2011) STORES Urban urban Outfitters BHLDN outfitters $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. Urban Outfitters, thehistoric 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. Anthropologie, the precious gemof 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. 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. Terrain, the future growthopportunity 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. BHLDN, the brand newconcept 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. Top business resultsin a gloomy market: Is Urban Outfitters group the new rising star of Fashion Retail? 14
- 15. Urban Outfitters group, exceptionalresults in a very challenging market Urban Outfitters group has increased sales by 8x compared to Women’s index over the past 10 years 9 8 URBN 7 6 Market sales growth: CAGR: 5 +23% +1% of CAGR [2000 – 2010] 4 3 CAGR: 2 +1% women’s Exceptional growth rate 1 index in a gloomy market 0 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. Top sales productivity comparedto 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. The highest operating marginsin 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. Ahead in onlinebusiness 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. A sustainably moreefficient business model: Is Urban Outfitters group the next Inditex? 19
- 20. Highly attractive customervalue proposition… With an efficient cost structure… And a multi-profit formula 20
- 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. Assortment: constantly renewedcollections Urban relies on small but frequent inventory flows Broad versus Deep: no large bets in a few select items but broad assortment across a range of categories and styles 1 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. Assortment: beyond appareland accessories Urban Outfitters and Anthropologie sources and sells products matching their clients’ aspirations with no category boundaries 23
- 24. Stores Differenciated and experience-enriched “We want to create stores that exceed people’s expectations” London Glasgow Stockholm Stockholm London 24
- 25. A well-fitted PricingStrategy 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. A peculiar ValueProposition Hybrid 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. Highly attractive customervalue proposition… With an efficient cost structure… And a multi-profit formula 27
- 28. Few stores United States UnitedKingdom Canada Belgium Denmark Germany Ireland Scotland Sweden but international deliveries 28
- 29. Encouraging impulsive higher less shopping through a product appeal markdowns and promotions scarcity model and sales “Scarcity breeds value” Richard HAYNE, URBN group founder and CEO 29
- 30. Less markdowns thanksto “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 merchandise The company uses quantitatively driven inventory processes 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 markdowns limiting high-risk shift in demand. 30
- 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, Inc New 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. No spend onmarketing 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. A highly flexibleassortment thanks 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. An highly attractive customer value proposition… With an efficient cost structure… And a multi-profit formula 34
- 35. Urban Outfitters grouprevenues: 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. Is Urban Outfittersgroup the next Inditex? Give to a customer segment Give to a customer target Customer Value the latest Fashion trends all the products associated From product proposition 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 margin Profit From maximizing Formula 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 Expertise Key # 2. Fast speed to market # 2. Lifestyle Development From processes resources Optimization # 3. Low cost structure # 3. Responsive approach to brand building = Process Optimization = Brand Building 36
- 37. From product focusto customer-driven approach: A new way of thinking Brand Retail? 37
- 38. “In my experience,retailers A differentiated spend most of their time looking at things from the company’s approach to perspective or the marketer’s perspective… they talk about trends and brands Fashion World but rarely about the customer in 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. Urban Outfitters group keypillar: Customer Expertise Create a relationship and that Richard relationship 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. More than just brands… “lifestylesymbols” ! URBN success relies on having brands so strong that they are today lifestyle symbols 40
- 41. With more than “I envisioned Urban as being a team of peers looking for cool things just customers… to sell to their peers.” “communities of Richard HAYNE, soul-mates” URBN group founder and CEO 41
- 42. The ability tobuild and manage brands 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. ... that allowsUrban Outfitters group to innovate consistently What’s next ? ? 43 Source: Company data, Credit Suisse estimates.
- 44. From pushing productsto 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 5 Customer Lifestyle Products Design Products & Brands Large Scale Demand-fitted Analysis & Brands Selection Test Phase Manufacturing Selling 44
- 45. To conclude 45
- 46. Urban Outfitters grouphas 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. Strategic Innovation toreinvent businesses In a constantly changing world, companies To build such strategies, Helixa has can no longer do business in the same devised a series of new tools and proceeds way as in the past. Indeed, companies by combining creativity with analysis to now have to steer a course through a imagine for its clients what has as yet world 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 such their strategic choices along completely sectors as luxury goods, media, retailing, different lines. Those firms able to rapidly chemistry, energy and internet and given identify disruptive innovation and take up its design thinking inspiration, Helixa can adequate strategies can gain the upper offer highly effective tailor-made solutions. hand on competitors and become the next Helixa’s team mixes engineers, strategists winners. and designers. 47
- 48. For more information, contact us: 16, rue Brey Paris 17ème [email protected] (+33)1 45 72 55 89 This document is under Creative Commons License 48