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?


2 comments:

  1. Anonymous4:40 AM

    Kevin, as is typically the caes, you raise a number of good points. Having said that I think your skepticism about omni-channel may be missing the point and contain some logic problems.

    With few exceptions, customers are demanding more seamless integration and see the channels as blended. So wholeheartedly embracing an omni-channel is a requirement to remain relevant. It does not guarantee better than average results. It's the notion of necessary, not sufficient.

    Brands that operate in multiple channels that fail to deliver the essential elements of an omni-channel experience will almost certainly fall behind. Having said that, the omni-channel future will not be evenly distributed (which is a future blog post of mine). As you've correctly observed, many brands will incur the cost of creating a more frictionless experience and merely shift sales between channels not resulting in an improved competitive position and potentially fewer profits. Brands must embrace omni-channel because the customers require it and competition is doing it. It doesn't take you off the hook in deploying it in a carefully thought out way and it certainly doesn't overcome fundamental problems in the brand not being relevant and remarkable.

    ReplyDelete
  2. Best part of your response ... "it does not guarantee better than average results."

    You have "boots on the ground" experience, which sends you down a different and more reasonable path.

    ReplyDelete

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