3. Outstanding business results for 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 results for 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
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 People store 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
9. Urban Outfitters,
the historic 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 gem of 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 growth opportunity
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 new concept
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 results in a gloomy market:
Is Urban Outfitters group the new rising star
of Fashion Retail?
14
15. 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
16. Top sales productivity
compared to 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
margins in 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 online business
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 more efficient business model:
Is Urban Outfitters group the next Inditex?
19
20. Highly attractive
customer value 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 renewed collections
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 apparel and 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 Pricing Strategy
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 Value Proposition
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
customer value proposition…
With an efficient cost structure…
And a multi-profit formula
27
28. Few stores
United States
United Kingdom
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 thanks to “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 on marketing 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 flexible assortment
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 group revenues: 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 Outfitters group 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 focus to
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 key pillar:
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…
“lifestyle symbols” ! 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 to build 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 allows Urban Outfitters group
to innovate consistently
What’s next ?
?
43 Source: Company data, Credit Suisse estimates.
44. From pushing products to 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
46. Urban Outfitters group has 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 to reinvent 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
development@helixa.com
(+33)1 45 72 55 89
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Creative Commons License
48