Somewhere in a boardroom not far away, a group of adults are racking their brains over the types of jeans teenagers prefer. Low-rise or high-rise, that’s the question. There’s no need to warn executives that mid-tier flare is trending. They are already working hard.
Urban Outfitters announced one of its main concerns during its August earnings call. It’s about catering to today’s kids, who don’t really want to wear 90s grunge-style outfits. Previously a mainstay of millennials, the retailer has apparently found itself behind the curve. Now, the company hopes to tap into suburban, pre- and post-college youth with a focus on denim, loungewear and newly accepted athleisure.
“Amidst a global pandemic, our segment experienced a rapid and seismic shift as we experienced a generational shift from Millennials to Gen Z,” said Shea Jensen, President of Urban Outfitters North America. Ta. “As these changes occurred and new generations began to come of age, we lost focus on the customer and lost sight of how to win with them in today’s dynamic retail environment.”
The lifestyle retail chain, which carries big-ticket, bohemian-inspired brands such as Anthropolgie and Free People, is reeling from a drop in new customers as well as repeat customers, with lower retention rates and lower sales in July and August. The reason for this is a slowdown in sales. .
“Urban Outfitters has lost its appeal over time,” said Jessica Ramirez, senior research analyst at Jane Hari & Associates, adding that the store “has been doing well for a while.” He pointed out that it was not. The mall’s flagship store was known for its high-quality, fun lifestyle products, but it is no longer “the place you go to for trends,” she added.
There’s a blink-and-you’ll-miss-it mentality when it comes to the passage of time and the cycles of modern trends. And Urban Outfitters, which built its name on “ambitious 22-year-old customers living in big cities”, has just admitted that it has been a bit out of touch with that demographic’s trend pulse during lockdown. is.
“Urban Outfitters has always targeted young and college consumers,” Jensen said in a statement to Fortune, adding that “Urban Outfitters has a clear strategy designed to meet the needs of a diverse Gen Z audience.” “We are evolving the brand with a plan,” he added. We are expanding our reach across pre-university, university and post-university segments, adapting our assortment to evolving tastes, scale and opportunities. ”
Parent company URBN’s sales rose 6% to $1.4 billion, a record high, and four of its five brands “performed very well,” the company told investors. This excludes the brand, which appears to be going through a difficult phase, as its same-store sales declined 9.3%, a significant decline that led to a new turnaround plan. Meanwhile, Free People’s lifestyle denim brand has been growing rapidly since last year, with Anthropologie expected to reach $3 billion in sales as it expands its lineup and customer base.
Still, Jensen asserts that “the brand is not fundamentally broken,” and that the bohemian-chic retailer is confident in its strategic pivot. Outlining a five-pronged strategy to stabilize its business, Urban Outfitters is stepping up its efforts to “gain a solid understanding of younger consumers.” According to Jensen’s comments on the earnings call, the brand said this generation is “significantly different than previous Millennials, from their size, ethnicity, preferences and opportunities to the way they see and interact with the world.” I am aware of this.
Suburban Outfitters?
It may not be all that surprising that Urban Outfitters chose “Barb” as the first part of its name. According to CNN, Abercrombie & Fitch successfully launched its rebrand, but was eyeing more upscale customers and those in need of workwear. “There’s a lot of immigration going on, and retailers need to follow that pattern,” Ramirez noted. “Younger generations are being priced out in big cities.”
Part of this change includes a “shift away from the traditional ‘alternative’ feel,” Urban Outfitters said. At one point, the retailer had a premium feel for vintage in its recycled lines, but with the rise of both selective and non-curated thrifting among Gen Z, that look is being seen elsewhere as well. Now it looks like this. “That market has become very competitive,” Ramirez says.
The problem is not just generational. “I think we lost our secret sauce a while ago,” Ramirez said of Urban Outfitters, citing anecdotal evidence of a decline in quality. She explained that Gen Z is a smart shopper with many tools at their disposal, and they often shop with direct-to-consumer brands.
The retailer said its “product assortment has become unintentionally too narrow in terms of price, opportunity and feel.” In response, the brand recently updated its marketing tag with “We heard you. We were there a lot.” However, as some on social media pointed out, the promotion doesn’t seem to be as good as advertised. , not everyone is buying it.
But when it comes to brands that are successfully appealing to younger generations, Ramirez said Lululemon, Shein, American Eagle and Levi’s stand out as big names. This means that buyers, regardless of age, are willing to spend money if they believe the product is an investment.
“Consumers are very focused, even though they’re strapped for money,” Ramirez said, noting that traditional brands like Levi’s and Ralph Lauren have succeeded by focusing on quality. He added that he is doing so.
Urban Outfitler’s woes are “self-inflicted,” Ramirez said, adding that modern brands must constantly iterate and adapt to the retail landscape. “If you just sit there, it’s going to come back and hurt you. You have to keep evolving, and I don’t think Urban Outfitters did that. It’s outdated.”
