December 01, 2014

Urban Outfitters

Let's make an assumption. 

In an omnichannel world, the umbrella company that owns multiple brands is able to employ omnichannel solutions somewhat equally across brands, and therefore, if omnichannel "worked", it would greatly lift performance across all brands. Right?

Here's Urban Outfitters Q3 comp store sales performance (which includes online, which by definition, artificially inflates retail comps). Click here for the press release.
  • Free People = +15%.
  • Anthropologie = +2%.
  • Urban Outfitters = -7%.
From a logic standpoint, this puts omnichannel advocates in a difficult situation.
  • If they believe that Urban Outfitters (as a collection of brands) does a poor job at omnichannel, then why did two of the three brands post sales increases?
  • If they believe that Urban Outfitters (as a collection of brands) does an exemplary job at omnichannel, then why did one of the brands struggle so bad that is posted negative comps and had inventory problems resulting in more than a two point drop in gross margins?
Simply put, you can do omnichannel really well, and it's a +/- 2% proposition.

You can do merchandise+service+story really well, and within a portfolio of brands within a company, it can yield a 22% swing in volume.

Am I saying that omnichannel isn't real?
  • No.
Am I saying that you can get away with not aligning your channels?
  • Probably Not.
Am I saying that you don't have to digitize your business?
  • No.
Am I saying that omnichannel is going to be the key factor that allows your business to outperform the competition?
  • Absolutely Not.
Am I saying that merchandise+service+story is much, much, much more important?
  • YES!!!
So why are so few people focusing on merchandise+service+story when it is so clearly obvious that the secret to business success is embedded there?