Omni-Channel Retail and Sales Management
Omni-Channel Marketing of Urban Outfitters
Submitted by:
Vaibhav Keshri
Introduction OMNI CHANNEL
Omnichannel is the ability for a consumer to interact with businesses in the easiest,
most convenient ways possible. That includes in person, at home, with handheld
devices and any other way in which brands and consumers connect. This is
particularly important for sales, although marketing is just as influential when it
comes to connecting with customers through omnichannel strategies.
For independent merchants, the general idea of omnichannel can often be compared
to cross- merchandising – which is when one item is merchandised in multiple
displays throughout one store environment to help make consumers aware of its
presence and value despite any journey they may make along the way. Likewise,
omnichannel retail aims to make brands front and center among consumers despite
any journey a customer may make along the way, as well.
Connecting with customers: -
Ecommerce: -
What began in the 1990’s as a way to primarily sell books and CD’s has exploded
into a core consumer destination for products of all kinds. The growth of ecommerce
continues as each year passes, and yet brick and mortar stores continue to stay
relevant in our global marketplace.
Brick and Mortar: -
Physical storefronts offer more than face to face experiences for consumers to
engage with brands, businesses and employees alike. They help bring economic
vitality to communities, shape the character of local towns and introduce
personality to otherwise big-box towns.
Social media: -
In today’s busy world, consumers are often multi-tasking between shopping,
checking in on world news, catching up with their favorite pop-culture updates,
connecting with friends, planning what’s for dinner and more.
Online Marketing:
In a world where digital is everywhere, online marketing is certainly something
you want to ensure is part of your omnichannel strategy. Social media, email
marketing and having a web presence is critical – but looking beyond these online
strategies, consider what else you can do for your unique business
Email Marketing: - the best way to engage customers is through personalized
email subscription. “When customers opt in to your email list, you can segment
their interests and send them offers that are aligned with their buying habits.
Special Events: - It used to be that special events were meant for physical stores
only but nowadays you can introduce special events to your online efforts, as well.
Combined with in-store experiences, there is no shortage of events to consider for
your business.
Mobile: - Nowadays are on the go, which makes mobile a key strategy to connect
with consumers
Location Based Marketing: - Provides an opportunity for those introducing it to
their omnichannel efforts to get ahead of the competition.
Loyalty Programs: - it was reported that the cost of a new customer is much more
expensive than the cost of returning one.
Text Message Marketing: - With mobile devices in the palms of consumers hands
nearly 24/7, text message marketing increasingly proves to be beneficial in
communicating with customers
Why does omnichannel matter?
Today’s consumers are equipped with digital experiences and higher expectations
both online and offline unlike any customers from our past. The power that
consumers hold shape not only a retailer's success or failure, but also shapes how
retailers need to adjust to consumers in order to be relevant. In other words, the
decisions consumers make impact the decisions you need to make. (Reyhle, Bright
pearl, 01)
ABOUT BRAND
Urban Outfitters, Inc. is an American multinational lifestyle retail corporation
headquartered in Philadelphia, Pennsylvania. It operates in the United States,
Sweden, United Kingdom, Spain, Denmark, France, Germany, Ireland, Belgium,
Canada, Italy, the Netherlands, Israel and Pakistan. The Urban Outfitters brand
targets young adults with a merchandise mix of women's and men's fashion apparel,
footwear, beauty and accessories, activewear and gear, and housewares, as well as
music, primarily vinyl records and cassettes. Much of the merchandise is designed
and produced by the company's wholesale division on multiple private labels.
The company was founded as the retail store Free People by Richard Hayne, Judy
Wicks, and Scott Belair in 1970 as a project for an entrepreneurship class at
University of Pennsylvania. It was renamed to Urban Outfitters and incorporated in
1976.
The Company's Retail segment includes Urban Outfitters, which targets young
adults aged 18 to 28 through its merchandise mix, and store and Website
environment. The segment's Urban Outfitters has product offering, including
women's and men's fashion apparel, intimates, footwear, beauty and accessories,
home goods, activewear and gear, electronics, as well as a range of apartment wares
and gifts. Its apartment wares range from rugs, pillows and shower curtains to books,
candles and novelties. the Company operated 240 Urban Outfitters stores, of which
179 were located in the United States, 18 were located in Canada and 43 were located
in Europe.
The Company's Wholesale segment includes Free People branded tops, bottoms,
sweaters, dresses, intimates, shoes and activewear, which are sold through
department and specialty stores around the world, and its Free People stores. The
Company distributes its Free People products in certain department stores using a
shop-within-shop sales model. Free People wholesale sales and showroom facilities
are located in New York City, Los Angeles, Chicago and London (Estopace, 08)
Urban Outfitters’ Omni-Channel Adoption
The need for omni-channel retailing stems from the fact that, even though U.S.
buyers have been increasingly abandoning physical stores for convenient online
shopping, their experience has not been too good. An Internet performance
company, slow-loading webpages, intricate check-out systems and the hassles of
mobile shopping, prompt almost 30% of customers to abandon shopping mid-way.
Thus, by providing an omni-channel environment with ample convenience and
incentives, companies can retain these customers.
To this end, Urban Outfitters is trying hard to offer the best of both — the digital
and the physical world — to its customers. By leveraging customers’ online
shopping experience and their vast store presence, companies can propel their
overall comparable sales growth, provided they integrate inventory and back-end
systems effectively. Urban Outfitters has been deploying several initiatives centered
on website optimization, check out, search, personalization and mobile app
enhancements. It is also expanding its store base gradually in order to have an
optimum presence in the country necessary for omni-channel retailing.
The Philadelphia based retailer uses MongoDB’s database, which has served the
retail sector well, for its e-commerce and omni-channel innovations. MongoDB’s
platform helps Urban Outfitters enhance capabilities, accelerate design and launch
of apps, and enrich overall customer experience. In addition to providing ideas,
MongoDB develops new features and provides back-end support during peak
seasons. The document-oriented database company has played a pivotal role in
developing Urban Outfitters’ in-store pickup service and personalization features.
Pros
The biggest positive of omni-channel for Urban Outfitters is that it can attract those
customers to its stores and websites, who would have shied away if the inventory
pool across channels was not integrated. By listing its entire store inventory over its
websites, the company can ensure higher web traffic, which can be subsequently
redirected to stores through various incentives. Omni-channel shoppers exhibit a
tendency to shop more frequently and spend almost 3.5 times more than regular
shoppers. In-store conversion rate amid multichannel options is four times higher
than online-only conversion rates. If the in-store pick up option is available for
online orders, retailers can realize 7% higher net sales.
Considering its omni-channel goals, Urban Outfitters current store presence in the
U.S. works in its favor. An important component of omni-channel retailing is
strategically placed store locations across the country, positioned to cater to
incoming store traffic while serving as fulfillment centers, all without cannibalizing
sales at nearby stores. With this in mind, several apparel retailers are consolidating
their existing store network and re-opening stores at desired locations. Urban
Outfitters, on the other hand, is still in its expansion phase and can open stores at
strategic locations without worrying about closing other stores. Therefore, the
company does not have incur additional expenses related to store consolidation.
WEBSITE
MOBILE APP
INSTAGRAM
FACEBOOK
Cons
Omni-channel essentially means that online segment will play a much bigger
role in Urban Outfitters’ growth going forward. While this is a positive for
the company’s topline growth, it will come at an expense. Online by nature
is a low margin business and a rise in its penetration in Urban Outfitters’
overall sales will have a negative impact on margins. In fact, in Q1 fiscal 2016,
the retailer’s gross margins fell 141 basis points year over year partially due
to higher delivery and fulfillment expenses coming from a rise in direct-to-
consumer penetration. A similar trend was visible in the second quarter,
when gross margins shrunk 71 basis points.
On the outside, it appears that direct-to-consumer should have higher
margins since it does not have deal with the expenses related to pricey retail
stores. However, after factoring in the expenses related to storage, packaging
and delivery of online orders, as well as sales mix (aggressive pricing over the
Internet), the channel actually accounts for weaker margins as compared to
the brick-and-mortar business. It is certain that Urban Outfitters’ push
towards omni-channel retailing will be accompanied by an unwanted
pressure on gross and EBITDA margins. In order to dilute this impact, the
retailer may have to search for other avenues to cut its expenses, so its topline
and bottom-line can move forward at a similar pace. (Team, 2015)
References
Estopace, E. (08, 08 2015). Reuters. Retrieved from www.reuters.com:
https://www.reuters.com/finance/stocks/companyProfile/URBN.O
(Oct 7, 2015). Retrieved from www.scribd.com:
https://www.scribd.com/search?content_type=tops&page=1&query=urban%20outfitter
Reyhle, N. L. (01, june 2015). Bright pearl. Retrieved from www.brightpearl.com:
https://www.brightpearl.com/ecommerce-guides/an-introduction-to-omnichannel-retail
Team, T. (2015, oct 07). Forbes. Retrieved from www.forbes.com:
https://www.forbes.com/sites/greatspeculations/2015/10/07/urban-outfitters-omni-channel-
adoption-and-its-pros-cons/#37f8df141668
