SWOT

For the SWOT analysis I will focus on Urban Outfitters namesake brand who has struggled most recently with identity and growth issues. Urban Outfitters stores experienced decreased sales and growth in 2014, while it’s sister stores, Anthropologie and Free People continued to flourish.

Urban Outfitters store front

Strengths

Urban Outfitters has strong brand recognition  and loyal customers in its favor.  It offers an alternative vision of retail. Its customers choose it for daring to offer something authentically different. With a creative, individual and progressive voice, Urban Outfitters champions youth culture and new ideas.

Controversies appear to be a weakness and a strength of the company. Urban outfitters have been time and again in middle of controversies due to their products; which are tagged as culturally and socially insensitive; and have garnered much negative publicity. Urban Outfitters’ target demographic is 18-to-30-year-olds who are drawn to rebellious images and messages.

Weaknesses

Urban Outfitters brand’s comparable sales declined by 9% during the quarter mainly due to weak response to its fashion and partially on account of adverse weather conditions. The management stated that poor product execution and lack of creativity resulted in the brand’s dismal performance.

The brand’s ideal customers are urban 20-somethings who have greater discretionary income than most teens, and who also wouldn’t want to be caught wearing the same clothes as a high school freshman. If the brand skews too young, it risks alienating that ideal customer. The company isn’t keen on adopting a younger market because teen consumers are becoming increasingly elusive. Teen mall traffic has declined by 30% over the past decade, according to Piper Jaffray’s 27th semi-annual study into teen spending behavior. And for the first time in the survey’s history, teens spent more on food than they did on clothing. The teen consumer segment is experiencing high unemployment. High school graduates and high school students have unemployment in the 20-plus-percentage range. And lastly, they are burdened by ever-increasing smartphone bills, which run an average of $120 per month.

Opportunities

Urban Outfitters is elevating its creative functions and restructuring new procedures and communication, into a more central role in order to reconnect with its core customers. During the quarter, Urban Outfitters introduced a new concept named “Without Walls”, which aims to attract young customers with active lifestyle products, placed in an enthralling environment. The concept was recently launched in five stores, where it received tremendous customer response. The retailer is now planning to open three to six such store-in-store locations in fiscal 2015.

Without Walls display

Additionally, the company made significant strides towards the improvement of its supply chain system during the year, which should assist Urban Outfitters’ revival. The retailer lowered its weeks of supply by one week and reduced its lead times by more than 10%. This should help it better adjust to the changing customer preferences. It also reduced direct-to-consumer orders fulfilling time by 30% and shipping time by over 15%, to improve the customer service.

Threats

Controversies appear to be a weakness and a strength of the company. Urban Outfitters have been time and again in middle of controversies due to their products; which are tagged as culturally and socially insensitive; and have garnered much negative publicity. Some feel consumers may at some point believe Urban Outfitters has gone to far and decide to no longer patronize their business. 

Changes Are Working

Efforts to elevate its creative functions and restructure new procedures and communication, into a more central role in order to reconnect with its core customers along with an improvement in design appear to be paying off.  So far it’s been an amazing come back for Urban Outfitters. The stock fell in 2013 and 2014 due to concerns about a sales slump at its namesake brand even though sales were up at its Anthropologie Group and Free People stores. But the Urban Outfitters brand is thriving again. Urban Outfitters stores are now attracting an older customer — people in their 20s as opposed to more fickle teens. Shifting the marketing focus to a slightly older group of millennials seems to be a smart move. Same-store sales rose 4% in the fourth quarter from a year ago, reversing a 7% year-over-year decline in the third quarter. For the overall company, same-store sales were up 6% and total revenue increased 12% from the fourth quarter of 2013.