Urban Outfitters generates billions in revenue, made possible through its unique approach to shopping and a strong online strategy. 

Urban Outfitters is one of the most well-known American clothing brands. In 2014, Urban Outfitters had a revenue of $2.9 billion, growing to $3.9 billion a year later. Net sales continued to grow for its retail operations, reaching $3.6 billion in 2020. In 2023, worldwide net sales for Urban Outfitters grew $4.4 billion. The story for Urban Outfitters started back in 1970 when Dick Hayne and his college roommate Scott Belair and Judy Wicks wanted to open their own retail store, growing from an entrepreneurial class Belair followed at the time.  

The trio opened their first store, called Free People. The store was tucked away in a small space across the street at the University of Pennsylvania. The founder of Urban Outfitters wanted to bring second-hand clothing, furniture, jewelry and home-decor a second life for young college-aged customers through a casual store concept. 

New leadership for Urban Outfitters

In May 2007, the clothing company announced the appointment of Glen Senk as the CEO of Urban Outfitters Inc. including its subsidiaries. Senk had joined the company back in 1994 as President of the one-story Anthropologie concept. Hayne praised Senk for assembling a highly talented team who turned one single entity into a global premiere consumer brand. Under his leadership, Anthropologie had expanded the brand’s presence to 95 retail stores, featuring an e-commerce storefront and an award-winning catalog. 

Senk’s seniority at the company expanded when taking responsibility over the Free People brand in 2003, where in 2004 he was given a seat at the Board of Directors. Shortly after Senk’s appointment, Urban Outfitters saw strong growth. In August 2004, the clothing company revealed its Q2 sales jumped 20 percent, resulting in a earning boost of 24 percent.  In the press release, Chairman and President, Robert Hayne said the company saw growth across all its distribution channels, except North America. The turnaround of Antropologie has resulted in continued growth for Urban Outfitters Inc. with Free People seeing strong results. 

In January 2009, Urban Outfitters announced it would open its first two European locations, opening two stores in London, picking two historically renowned buildings in Regent Street and King’s Road. In the press release, the company said the London locations would reflect the nature and history of the local environment, featuring works of local artists and artisans. Managing Director for Anthropologie Europe, James Bidwell, was delighted the brand was able to secure such iconic locations. 

In April 2011, Urban expected to triple its presence in Europe by 2015. The retailer operated 22 stores across Belgium, Denmark, Germany, Sweden, with a strong presence in the UK. To reinforce its presence in Europe, the company wants to expand its operations in Germany and France, aiming to triple its retail presence and subsequent sales output. Over this period, Fashion Network referenced, Urban wants to increase the number of stores in Germany to 15, and enter the French, Spanish and Italian market. 

Accelerating growth

In May 2011, Senk spoke at the Wharton Leadership Lecture offering a unique insight into the inner workings of Urban Outfitters. Senk adopted a radical strategy that helped the clothing company reach exponential growth. Over the last 10 years, the operating income grew by 36 percent year on year, with Urban Outfitters building a line-up of iconic brands, targeting women across a wide age-range. 

When Senk joined Urban Outfitters, responsible for running the prototype outlet store Anthropologie. The switch was in stark contrast to his role as general merchandise manager at kitchenware and home goods retailer Williams-Sonoma, where he supervised 200 people, receiving help from two assistants and flying the Concorde for business trips, to a small store with less than $1 million in revenue. But Senk believed that Urban Outfitters would have the right cultural fit that would allow him to thrive. 

Urban Outfitters culture, Senk pointed out, was one where creative, collaborative and curious people are given the freedom to operate as entrepreneurs. Diversity is a core asset of the company and sits at the middle of its culture. Senk said he was the first openly gay CEO of a Fortune 1,000 company, whilst Hayne is Republican. While these views can oppose each other, he explained, Urban Outfitters stays true to its values.Senk bursts with ambition, saying that the company aims to generate $10 billion in sales by 2020, having six to eight brands that have $500 million plus in revenue. 

In retrospect we know that the company is still far away from reaching $10 billion, but it has made great progress which has positioned it to reach record breaking revenue. One of the goals of Senk was to drive the company’s digital capabilities, which would not only enhance its online shopping experience, but also its retail operations as well. At the time, Urban Outfitters was piloting a mobile point of sale system across 21 stores, allowing customers to make purchases beyond the cash register. 

Entering the Spanish market

The entry into the Spanish market would take until February 2019, but for the fashion company it was deemed a critical step for its European expansion. In February 2019, Fashion Network spoke with Managing Director for Anthropologie, Peter Ruis, about the company’s plans to expand further into Europe, with Spain serving as an important test for how well it will be received. The opening of its store in the iconic city of Barcelona was symbolic for its ambitions to expand in the European fashion market. 

Hence, making its Barcelona store successful is its primary target during the opening phases. Secondly, Ruis explained, it will try to find a good site in the country’s capital, Madrid. Within 12 months, it wants to have a Spanish language website up and running. Once these elements are in place, the company can succeed. The brand, Ruis continued, is very Spanish in taste level. 

The power of Anthropolgie, Ruis believes, lies in its distinct, eclectic assortment, all packed with unique visual merchandising, including flowerpots, to chocolate. The approach will be unique to the Spanish market, allowing it to set itself apart from its competitors. The assortment will change week by week, helping it to blend in with other fast fashion competitors. Furthermore, Anthroplogie will tap into local talents such as designers and artisans to give the store a distinct experience.  

The company aims to go beyond Spain, Ruis emphasized to Fashion Network, having ambitions to expand further into Europe with Paris sitting at the top of its list. Simultaneously, Urban was expanding across Germany, looking for locations in Hamburg and Berlin, but also exploring opportunities in Belgium, Italy and Switzerland. Antropologie also remained dedicated to increasing the share of e-commerce across its channel mix. This early online strategy would prove fundamental to maintain sales as retail sales dropped.   

Real time analytics

We can see this strong emphasis on digital sales by the software integrations the company has rolled out throughout the years. In 2021, Urban Outfitters rolled out Qlik’s Sense Enterprise SaaS solution to track in-store purchases, which enabled managers and associates to track all sales through near-real time data in over 650 stores in the United States and EMEA. Through intelligent dashboarding, managers can track how stores are performing, measuring customer engagement and satisfaction.

CIO of Urban Outfitters, John Devine, explained that its digital strategy emphasized maximizing efficiencies and scalability of its cloud infrastructure. The company already used Qlit Data Integration, which fed its Snowflake cloud data warehouse. By harmonizing its cloud solutions, it can provide data to its associates who can reduce stress and costs for managing on-premise data. 

Creating reports was one of Urban Outfitters primary goals, which became especially true as the COVID-pandemic severely disrupted retail operations. Managers at the retailer needed real time data to stabilize their operations and maximize sales to ensure profitability. Qlik notes that as associates become more confident with data, they will discover new insights and develop their Qlik solutions to create tailored store strategies and adapt to local market conditions.    

A unique shopping experience

In July 2016, Nasdaq zoomed in on the relentless drive at Urban to open new stores, which was in stark contrast to its competitors were scaling down. Urban saw strong results despite seeing foot traffic in malls decrease. The clothing retailer found a way to uphold record sales through a successful e-commerce integration. Furthermore, Nasdaq noted, the company believed it had figured out what shoppers wanted, which spurred a redesign of its stores.

Urban Outfitters wants to create a unique and memorable in-store experience. The redesign of its store layout would allow the company to expand further into complementary vertices such as home, beauty and intimates and outdoor. Nasdaq references Hayne who said the US apparel category became overstocked, with the market having ten times more retail space per capita than its European counterparts. Urban wants to maximize its existing inventory to drive growth. 

In September 2015, Fashion United put a spotlight on the unique stores of Urban, who operated 47 stores across Europe and Asia. The news outlet spoke with Creative Director​ Stephen Briars about the retailer’s unique approach to store lay-outs. Briars explained the company had a ‘traveling concept’, with the concept evolving along the way. Urban Outfitters is not locked into having the same logo as most others brands, he adds. The flexibility of the brand allows it to change its concept per location and per season. 

For its Rotterdam pop-up store, the clothing company aimed for a simplistic interior, using exposed concrete and raw wood. While exposed concrete has been a running theme across multiple stores, in other stores Urban uses a different style. Briars points out its Brussels location which features an old 19th century interior. A concrete lay-out meanwhile, allows the team to be more theatrical with the interior design. Fashion United points out the company has learned to adapt to the spaces it operates. 

Briars explains that store plans include fixtures and the layout from the beginning. As its primary audience is women, they use this target demographic’s preferences for designing the space. For its Rotterdam location the floor plan is geared towards locals themselves, rather than its usual audience. The alternate approach to the store shows the willingness of Urban to invest and cater to local consumers, whilst incorporating elements from its flagship stores.

This extends to the selection of its clothing line-up. For the opening, Briars commented, the team made an educated guess as to which products to feature. They’ll explore which ones will sell, and adjust where necessary. A mixture of in-house brands, complemented with well-known ones such as Levi’s and Calvin Klein are dotted around the store. The store receives new deliveries every week, allowing it to quickly determine which brands are selling and worth continuing. 

Dutch success

In July 2016, Retail Director for Urban Outfitters, Claire Arksey, spoke with Fashion United about the company’s latest flagship store in Utrecht, a short train ride from its Rotterdam pop-up store. The Utrecht location is another iteration on its dedication to create unique shopping experiences. Arksey explained the company is always looking for interesting buildings that allow the team to put their own twist on it. Continue that they don’t have any one or two stores to be the same. Which is a challenge in and of itself.  

Arksey reflected on the first store in Amsterdam opened in 2013 and its 2015 pop-up store in Rotterdam. She pointed out that its Amsterdam location had been turned into one of its top European stores, attracting locals and tourists. Arksey believed that its new Utrecht store would strike a chord with the large student population present in the city. Continuing that the city is also strategically positioned in the center of the country, meaning it can attract tourists and locals alike. 

Urban remains dedicated to Millenials and Gen Z as its target audiences, however the clothing company is able to attract customers of all ages. However, Fashion United added that while this might certainly be the aim, with changing shopping behaviors among this target demographic, remaining relevant becomes an ever greater challenge. Arskey commented that as a retailer, one has to become a lifestyle brand. As competition increases, online and offline, the shopping experience has to become theater.  

The theatrics, Arksey highlighted, can be traced back to the retailer’s expansion into other product categories such as home, beauty and tech. As each store aims to deliver a unique, tailored experience, it has been able to maintain growth, Fashion United commented. The Utrecht store created a blend between its web store and retail experience, Arksey pointed out. The choice to mix on and offline is the centerpiece for Urban’s accelerated growth and acknowledgement that a pure offline experience, won’t be enough to create a durable business model.  

Culture at Urban Outfitters

An integral part of the sustained rise of the clothing company has been its working culture, something Senk mentioned during his talk at Wharton. In September 2013, NBC Philadelphia spoke with founder and CEO of Urban Outfitters, Richard Hayne, about the company’s success and the culture that made it possible. Hayne attributes the success of Urban Outfitters through sheer perseverance and not letting mistakes prevent from continuing on. Adding that the company is not organized top down, but operates collectively, with many employees participating and contributing to the organization’s success.

The willpower to overcome adversities can be traced back to Hayne’s demanding nature, where he expects a lot from his people. He likes to set goals and see employees achieve them by giving them the space to fulfill them. Hayne’s aims to not act on anger, trying to create a collaborative environment. He can’t recall a time where at the Navy Yard, people raised their voice, which he deems as unproductive.

Hayne ascribes the success of its culture to its female centered workforce. At Urban Outfitters, 75 percent of the workforce is female, which allows for a collaborative work environment, devoid of strict hierarchy. Hayne believes that this is great, adding that once one has experienced such a workplace, it gives the self-confidence to build. Urban Outfitters wants to create a friendly work environment, Hayne explains. 

The company relies heavily on its employees, who are the future of the company. In order to maintain this work culture, it wants to create a casual and open culture, which is pleasant to work at. Hayne adds that the company needs creativity and innovation to succeed, hence it needs to create a work environment where creatives feel at home. Continuing that it’s been demonstrated that people are far more creative in happy environments. Urban Outfitters goes to great lengths to foster such an environment. 

Renting Urban Outfitters

In May 2019, Urban Outfitters announced its rental service for women’s apparel, Nuuly. The clothing company notes that its monthly subscription service offers a way to experience clothing. The custom-built digital platform would boost its brands, third-party labels and vintage pieces. Subscribers will be able to change their wardrobe each month, the company commented. Subscription prices would start at $88 per month, which include a box filled with six items worth an average of $800. 

CEO and Chairman at  Urban Outfitters Inc, Richard A. Hayne, said in the press release that since its founding, the company aimed to deliver a creative, compelling shopping experience. Nuuly became the next step in that vision, pointing out its unparalleled curation of aspirational brands. In November 2023, Nuuly posted its first profit, clocking it at $300,000 with a revenue of $65.5 million. CNBC attributed its success to Gen Z and Millennial consumers who favored Nuuly over its primary competitor Rent a Runway, with the latter struggling to turn a profit since its launch 15 years ago. 

Nuuly surpassed Rent a Runway’s subscribers count, amassing 198,000 subscribers compared to 137,666 respectively. Rent a Runway meanwhile would need at least 185,000 paid members to turn a profit. Nuuly was able to drive itself toward a profit thanks to Urban Outfitters business, who could supply the clothing to the renters and cover part of the operational costs, CNBC noted. The large inventory from Urban Outfitters allows Nuuly to quickly ramp up its offering, a crucial element Rent a Runway lacked. 

Nuuly’s president and Urban’s chief technology officer, David Hayne, told CNBC that the platform was launched with expectations that it could become a large business. Rent a Runway commented to CNBC that both businesses are incomparable, pointing out that it had better unit economics compared to Nuuly and its recurring sales exceed those of newcomers. Furthermore Rent a Runway prided itself with its gross margins, which were double that of Nuuly. 

In February 2024, Urban announced it would open a new 600,000-square-foot fulfillment center for Nuuly in Raymore, Missouri. The $60 million investment would become the concept’s second fulfillment center, equipped with a laundry center and essential to maintain momentum for the rapidly growing subsidiary. In a statement cited by Fashion United, chief technology officer of URBN and president of Nuuly, David Hayne, commented that Nuuly had experienced substantial growth and the Kansas facility would support further development and momentum of the brand. The fulfillment center comes with expansive laundering and modification facilities, Fashion United noted, which would allow it to improve the service across the country. 

Building a brand

Urban Outfitters has been crafting its own unique style for decades. Executives were brave enough to let go of a fixed formula, allowing for retail locations to adapt to their surroundings and connect with local communities. This helped its stores to develop a unique character that connected with consumers. Urban Outfitters has also been very vocal about their target audience, women. This may seem straightforward, but many marketers will fail to either clearly vocalize who their products are targeted towards or speak in broad terms. While this might be true for certain commodities, they weren’t for Urban. 

Another integral part that spurred growth was the culture that Urban had built, that allowed for creatives to be creative and foster a unique experience that drew customers in over and over. This was incentivized by early investments into ecommerce, which served a crucial revenue driver when times got tough, but also gave the company a leading edge over competitors. Its digital operations meanwhile were contextualized through data projects which fed its decision making. Just like embracing its unique culture early on and investing into digital infrastructure, Urban was able to nudge itself into success. 

Culture, while abstract, can make or break a strategy or an inability to keep talents on. Something even the most successful companies of our generation have struggled building. Executives at the company were able to catch-on early on trends such as renting and vintage clothing. Through Nuuly, it attracted new audiences who were on the fence about the clothing assortment or fans who were eager for the next, new look. The story of Urban Outfitters isn’t without its controversies, but that is beyond this piece. What is true, is that Urban has built a strong foundation for growth in an ever more competitive market.