Running head: URBAN OUTFITTERS COMPANY

Urban Outfitters Company

Student's Name:

Institution Affiliation:
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Urban Outfitters Company

A. Introduction

Urban Outfitters is an apparel and accessories retailer that primarily offers accessories,

clothing, and personal care products. The identifiable customer segment of the Urban Outfitters

Company is the well-educated, Urban-minded young men and women between the ages of 20-30

years. Given their different branding, most of the products are sold in separate store locations.

Besides, The Urban Outfitters Company has a well-defined set of values which guides its

operations and the actions of employees. Urban Outfitters corporate responsibilities focus on

four key areas: the environment, our employees, supply chain factories, and communities. The

company is committed to making sure that the people who make clothes are treated with dignity

and respect. Besides, Urban Outfitters works to establish a more sustainable business operations

for a cleaner and healthier environment. Consequently, the company focuses on enhancing the

quality of life of our customers and associates to live, work and play.

B. Situational Analysis

Some of the core success factors for Urban Outfitters include maintenance of a strong

brand image, designing labels that satisfy specific market targets and offering unique products

and retail stores. Through these differentiation strategies, the Urban Outfitters has been able to

boost their yearly sales at a rate of 34 percent over the last two years. The different business

segment for the Urban Outfitters is designed to satisfy the dynamic needs of the diverse

consumer base. Currently, the primary strategy of the company is to expand its retail presence

both domestically and internationally so as to increase its revenue further. Also, the company
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seeks to improve its store layout so as to enable it Urban Outfitters Brand acquire more market

share in strategic categories like knit tops, denim, and fleece.

B1. Overview of the Firm

Company Profile

Company Name: Urban Outfitters Company

Industry: The Standard Industrial Classification of the company is a retail trade.

Market: The primary stock market for Urban Outfitters is the NYSE

Symbol:

Revenue: The business revenue grew by 7% in the 2016 fiscal year that ended on 30th

December 2016. This growth in revenue reversed the one and half years of failing sales.

As a result, the business has been able to attain higher average selling prices that are

characterized by fewer markdowns.

Assessment of Vision/ Mission

Urban Outfitters is an apparel and accessories retailer that primarily offers accessories,

clothing, and personal care products. The Urban Outfitters Company has a well-defined set of

values which guides its operations and the actions of employees. These includes;

PEOPLE: The strength of our business exist in our people. We Work together, we

Engage, we achieve.

INTEGRITY: We focus on high standards of accountability for our business. We don't

compromise in case of an encounter with difficulties and challenges.

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PASSION: our passion permeates our engagements and persistence. It transforms our

Retail centers to places of energy and customer delight.

INNOVATION: we exist in a competitive and dynamic industry. We consistently perfect

the unique processes that define our business, and we employ intuitive research and

analysis that guides our decisions and balances our instincts. Our associates represent

entrepreneurial spirit, establish innovative solutions and initiate change.

TEAMWORK: we work together so as to listen to one another, reach consensus, and

support group decisions.

Urban Outfitters corporate responsibilities focus on four key areas: the environment, our

employees, supply chain factories, and communities. The company is committed to making sure

that the people who make clothes are treated with dignity and respect. Besides, Urban Outfitters

works to establish a more sustainable business operations for a cleaner and healthier

environment. Consequently, the company focuses on enhancing the quality of life of our

customers and associates to live, work and play.

The company's vision is to "inspire imagination,” and the mission is to provide offer

high-end luxury, unique apparels that range from women accessories and garments to personal

care products. The rising star vision of the company is to nature young individuals who are

seeking their autonomy in the clothes they wear. As a result, it targets at providing a line of

clothing for young men while at the same time catering for their individuality, creativity, and

intelligence.

Industry/ Primary Competitors

The key competitors are the America Eagle Outfitters Inc., Aeropostle Inc., and Levi

Strauss & Co. These companies deal with the same products that are apparels and accessories
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(Kourdi, 2003). Urban Outfitters Company has significantly reshaped brand retail and has

provided new ways of modeling and operating. Through its strategy to reinvent businesses in a

dynamic world is a remarkable feature that defines the company's success.

Key Products

The key products sold by the Urban Outfitters are casual apparels with top categories

such as t-shirts, jeans, bras, and panties. These products are sold under the Urban Outfitters

brand, and the target market being young men and women aged between 15 to 25 years. The

business seeks to expand its retail stores across the different states in the U.S. The Business's

merchandise is transported from vendors in Philadelphia and distributed to the various store's

outlets (Kourdi, 2003).

Currently, the primary strategy of the company is to expand its retail presence both

domestically and internationally so as to increase its revenue further. Also, the company seeks to

improve its store layout so as to enable it Urban Outfitters Brand acquire more market share in

strategic categories like knit tops, denim, and fleece. By the end of the 2016 fiscal year, the

company had set aside $100,000 to remodel and refurbish the five existing stores.

Identifiable Customer Segments

The identifiable customer segment of the Urban Outfitters Company is the well-educated,

Urban-minded young men and women between the ages of 20-30 years. Given their different

branding, most of the products are sold in separate store locations. About 52 % of revenue earned

by urban outfitters comes from the sale of women's apparel and accessories, while 43% of the

revenues are from the sale casual men's wear. Also, the business has an online website where

customers can order their products at a free delivery upon payment.

Success to Date
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In fiscal 2016 that ended in December, the business spent approximately $ 800,000 on

advertising. The advertising expenses are related to in-store photographs, direct mail, and other

promotional costs that are associated with marketing campaigns. The main reason for our success

is the ability to understand and consider our customers and connect with their emotions. Another

reason for success is that the Urban Outfitters brands are both compelling and distinct. Each of

our brands suits a particular set of customers, and once selected, it sets out to establish a logical

point of differentiation with that segment.

Hot Current Issues

The company is currently experiencing top sales productivity compared to its peers. This

drastic increase in sales has been experienced due to the establishment of new strategies that

pushed the company's brand to overcome the domineering competitors. Consequently, there has

been a higher operating margins in women specialty retailers compared to the competitors. In

retail brands, Urban Outfitters designs creative stores that reverberate with the target audience.

As a result, an eclectic mix of products is given for the customers to choose from; and creates a

clear merchandise display that integrates the established objects into the innovative selling

vignettes. The primary goal is creativity that facilitates provision of product assortment and an

environment that is so distinctive and compelling that influences the customer to have an

empathetic connection to the brand hence he or she will be persuaded to buy.

Competitive advantages

The Urban Outfitters has a competitive edge since it sells its brands that provide a high

customer value scheme with an efficient cost structure. Also, the business employs a customer-

driven approach that seeks to offer a new perception on the brand retail. It not only offers brands

but also provides lifestyle symbols since success relies on brands that have high lifestyle
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symbols. The ability to build and manage brands autonomously with an active executive team.

Also, Urban Outfitters sources professional designers from different parts of the world to work

as members of their team (Lord, 2000). These attributes enable the Urban Outfitters Company to

innovate consistently.

Urban Outfitters Company Location and Address;

500 S Broad Street Philadelphia, PA 19112 United States; (215) 454-5503

Website; www.urbanoutfitters.com
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B2. Internal Factor Evaluation (EFE) for Urban Outfitters

Internal Factor Evaluation Matrix or IFE is a planning tool used to analyze the business’s

internal environment and to disclose the strengths and weaknesses. The Internal Factor

Evaluation on the internal environment of Urban Outfitters will be essential in revealing the key

factors that weigh’s down the company’s growth. The internal estimates involve the analysis

strengths and weaknesses of the company and involve all the factors that can be controlled

within the firm. Also, the weights and ratings of each of the internal factors will be assigned

subjectively so as for come with an effective evaluation (Jurevicius, 2017).

Internal Factor Evaluation (IFE) Matrix

Company Name: Urban Outfitters

Key External Factors Weight Rating Weighted
Score
Strengths
1) Loyal customer base .20 4 .80

2) social capital .10 3 .30

3) Strong brand name .20 4 .80

4) Consistent fashion trend .15 3 .45

5) Effective online marketing strategy .05 3 .45

6) High investment in product development and production .10 2 .20

technology
7) Excellent Employee Management .10 3 .30

8) Increasing incomes .05 2 .10

Weaknesses
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1) Limited target audience .20 2 .40

2) Utilization of debt .05 3 .45

3) Less market share .15 2 .30

4) Lack of brand presence in rural markets .15 1 .15

5) product offering limited .05 3 .45

6) Controversial products .05 1 .05

7) Ineffective customer service .15 4 .60

8) Weak Cost structures .05 2 .10

TOTAL: 1.75 5.90

Strengths

The key internal factors that will be used to establish strategic opportunities comprises of

a loyal customer base, social capital, Strong brand name, and strategic location. First, Urban

Outfitters has a loyal customer base that consists of different ages groups. This is a significant

factor that enables the company to grow because the loyal customers assure the constant flow of

sales hence the firm can earn more income. Furthermore, Urban Outfitters offers their clients full

control over their shopping experiences by providing a broad range of products to choose.

Urban Outfitters has a strong brand name that enables it to be recognized throughout the

industry. A strong brand name gives the company credibility; hence it can attract people to come

and shop. Consequently, it is a qualitative factor that makes the company unique, thereby making

the competing institutions unable to overcome it. Perhaps, the greatest strength for urban
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outfitters is the strong brand which plays a vital role in the marketing of the products. Urban

Outfitter's brand is firmly associated with high-quality products.

Urban Outfitters changes its inventory particularly after every two weeks which is

advantageous because it enables the customers to get new items to buy every visit. Moreover, the

company has a strong online marketing platform where the customers are notified through emails

when there is a new product. Also, the marketing strategy incorporates the use of social media

such as Facebook, Twitter, Instagram, and LinkedIn to reach out to their customers (Hoang,

2013). The company has a large Twitter following which is the leading brand's social media

platform. Through this strategy, the company has managed to acquire more customers due to the

establishment of an effective online marketing platform. In addition, products are often

recommended to the customer based on what was previously searched in the database.

The apparels sold by Urban Outfitters are made from quality textile fabrics through an

efficient manufacturing process so as to lengthen the lifecycle of the fashion product. Perhaps,

the company's products have futuristic designs which make the garments remain fashionable for

a longer period, thereby attracting more and more customers. Besides, Urban Outfitters always

react promptly to a new fashion trend, which means that the apparels are continually updated

with the emerging fashion designs.

Urban Outfitters has heavily invested in product development and production technology

so as to keep pace with the fashion trends. Consequently, the company has a good distribution

net which enabled the products to breakthrough foreign markets. Another strength of Urban

Outfitters is that it is strategically located in a busy area which means that more customers can

access the retail outlets. Besides, the garments are always displayed through the windows and

outside where it attracts customers.

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Weaknesses

Urban Outfitters has mainly targeted the urban areas, and therefore their products have

not been adequately distributed to the countryside. Therefore, the company's customers are only

limited to the urban areas while those in the rural areas remain unreached.

The youths constitute the largest customer base since the firm focuses on the age groups of

between 18 and 30. This is one of the weaknesses of the company because a majority of the older

people are willing to buy some products are not given the opportunity, hence narrowing down

the number of potential customers for the company. Also, young consumers have inconsistent

fashion interest which means that the company has to constantly follow the fashion trends

closely to maintain the highest sales.

The fact that the firm limits the target customer to an age group of 18 to 30 means that

the growth of the company will be limited because it cannot enter the new market territory. Also,

it escalates competition because of some of the Urban Outfitter's competitors such as Zara, sells

their products to all age groups. Another weakness of Urban Outfitters concerns the allegation of

controversial products. The company's merchandise has been tagged as being socially and

culturally insensitive; as a result, it has gathered much negative publicity.

One of the key weakness of Urban Outfitters is the ineffective customer service. The

company has lost many customers because the customer service has been considered to be weak.

Apparently, Urban Outfitters has to focus on ‘product knowledge' that is establishing measures

that will help the consumer understand the products that they do purchase. In addition, the

company has a large product offering which has often conveyed a confusing message to the

consumers.
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Another major weakness for Urban Outfitters is the weak supply Chain. The

consequences of the weak supply chain have resulted in the delays in the arrival of products to

the customers. In some cases, the customers have been forced to cancel orders which have

eventually affected the business's profitability.

Urban Outfitters has a weak cost structure which means that the business costs are higher

compared to the competitors. The cost structure has a substantial impact on business because it

has a long-term adverse implication on the enterprise (Capps, III & Glissmeyer, 2012). In

addition, Urban Outfitters has a low number of stores as compared to other companies with

similar products. This has led to a stiff competition, and the company is struggling to keep pace

with the competitors. Apparently, a high percentage of merchandise sold by Urban Outfitters is

female based; therefore there is the gender disparity in the target audience which may affect the

profitability of the business.

Conclusion

The strong brand name has enabled Urban Outfitters has established a lasting reputation,

and this is the reason why the company has a wide customer base and strong trade connections.

The reason why Urban Outfitters has a low IFE score is that of the lack of market share

compared to the competitors. Other internal factors that affect the company's performance

include lack of brand availability in rural areas, limited market share and product offering,

utilization of debt and narrow demographic.

B3. External Factor Evaluation (EFE) for Urban Outfitters

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The External Factor Evaluation (EFE) on the external environment of Urban Outfitters

Company will be based on the identified external opportunities and threats. The EFE matrix is a

significant management tool that helps in assessing the current business conditions of a

company. It is also a vital tool for visualizing and prioritizing the threats and opportunities that a

business is facing (Capps, III & Glissmeyer, 2012). Therefore, the EFE matrix will be used to assess the

current business condition of Urban Outfitters Company by considering the external factors of

opportunities and threats.

External Factor Evaluation (EFE) Matrix

Urban Outfitters

Company Name:

Key External Factors Weight Rating Weighted

Score

Opportunities

1) Innovation of new products in order to increase profits .15 2 .30

2) Increased demand for products results in expansion into .15 3 .45

new Markets

3) Creation of Discount Stores .05 2 .10

4) Increasing creative purposes and reorganizing the new .20 4 .80

processes and communication.

5) Development of Supply Chain Management .05 3 .15

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Threats

1) Controversial products .05 1 .05

2) Competitors opening new stores with similar products .20 3 .60

3) Consumers opting for Substitute products .10 2 .20

4) Declining Performance .15 1 .15

5) Changes in Consumers’ tastes and preferences. .15 3 .45

TOTAL: 1.25 2.95

Opportunities

Innovation of New products

Innovation is a crucial aspect for Urban Outfitters which would enable it to produce

outstanding goods and services that would satisfy consumer needs. Through innovation, the firm

can attract more customers and thus increase the overall returns for the business. In this case,

innovation is based on the different and unique clothing design that the firm would want to

produce. Apparently, innovation will significantly help the company to be competitive in the

market since it will be a key factor that would drive the sales (Capps, III & Glissmeyer, 2012).

Consequently, the introduction of new products would help the firm diversify their consumer

base and expand the business even at international level. There is also an opportunity for the

investment in male menswear market which has been in high demand. Most of the products sold
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by Urban Outfitters are for women, hence increasing men products will attract a broad range of

females, that is, both male and female.

Expansion into New Markets

Urban Outfitters sees long-term growth opportunities for its brand in both America and

Europe. For instance, in Europe, the firm has succeeded in regular price sells in several men and

women's categories of products. Also, the company thinks through the home business as an

adequate future opportunity since it witnessed a positive growth in the third quarter sales. The

recently opened stores' outlets for Urban Outfitters have already shown good signs for the future

opportunity since the sales have exceeded the expectations. As a result, the company has a higher

opportunity for a higher penetration rate in the market. In addition, the emerging markets,

especially in Asia, offers an opportunity for expansion of Urban Outfitters to the unexploited

regions. Perhaps this provides an enormous opportunity for the company to grow which will also

mean that it will acquire more profits due to increased sales (Hoang, 2013).

Create Discount Stores

Urban Outfitters has the opportunity of creating discount stores given the fact that there

few retailers who have discount stores. These kind of stores are essential particularly for the

consumers who want to buy the clothing at a lower price. Also, the discount stores are vital as

they help increase the customer base by pursuing those consumers who are not well off (Sudha,

2012). Moreover, it plays a vital role in increasing the sales from those consumers who are not

able to visit a full-priced apparel store because they are afraid of affording the higher prices of

the products in those stores. Apparently, Urban Outfitters can establish a new style for the retail

stores for each season so as to encourage longer customer visits and increase profits. Perhaps, the
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most significant thing about the Discount stores is that it helps the company to make up for any

losses of value from the standing stores.

Increasing creative purposes and reorganizing the new processes and communication.

One of the most significant opportunity is increasing its creative purposes and reorganizing the

new processes and communication, into a more dominant role so as to re-join with its main

clients. In its new plans, the company introduced the concept of ‘without walls' which seeks to

attract young customers with the trendy apparels sold by the urban outfitters. These products are

placed in a captivating environment which would definitely attract the customers' interest in

buying the products. Apparently, this concept of ‘without walls' has been introduced in five of

the store outlets which has so far shown a tremendous customer response. Another opportunity

for Urban Outfitters in this category is based on financial leverage which enables the firm to

easily grow into other products and markets, specifically in the fragmented industries (Vrontis,

Thrassou & Vignali, 2006). The company can take advantage of its fixed-income securities and

preferred equity to acquire more interest payments which will enable it to expand into other

markets.

Development of Supply Chain Management

In addition, the firm has so far made substantial strides towards the development of its

supply chain system during the year, which has assisted Urban Outfitters' revitalization. The

improvement in the supply chain system has helped the firm conform to the changing customer

preferences (Vrontis, Thrassou & Vignali, 2006). Moreover, it has minimized the direct-to-

consumer orders accomplishing time by 30% and distribution time by over 15% to enhance its

customer service. These strategies provide the firm with the most efficient way of expanding the

sales hence increasing the profits from the sales of the array of products.
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Threats

Controversial Products

The company's products have had many controversies which have utterly weakened its

operations to some extent. Apparently, these debates have emerged because the products have

been deemed culturally and socially insensitive. Perhaps, due to these controversies, the products

have gathered much public negative publicity which poses a significant threat to the sales.

Consequently, it can be alleged that customers at some instance believe that Urban Outfitters has

moved out too far and decide to longer support their businesses. Therefore, the reputation of

Urban Outfitters products is at stake because of the customers' attitude on some of the

merchandise sold by the company.

Intense Competition

One of the critical threats to Urban Outfitters is the competition from Zara and American Eagle.

These apparel stores have similar products which they sell them to all age groups; this poses a

significant threat to Urban Outfitters business. Consequently, these competitors have a much

faster shipping processes than that of Urban Outfitters, thereby most customers would prefer

them. Competition can lead to lower prices for homogenous products which pose a threat to the

business since it would eventually affect the sales (Sudha, 2012).

Substitute Products

Apart from the competition that Urban Outfitters faces, there is the availability of

substitute products. This means that customers may opt to go for alternative products that the

company sells probably due to the differences in cost. This factor hurts the ability of Urban

Outfitters to raise their prices since the consumer will quickly switch to the substitute product or

service. Volatile prices have a high impact on business thus posing a significant threat for Urban
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Outfitters. The firm has to plan for instances where costs rise steeply so as to prevent losses.

Careful planning would eventually result in development delays that can adversely affect Urban

Outfitters (Hoang, 2013). This is a major threat for the company since it has always been slow in

undertaking plans at various levels.

Declining Performance

Another substantial threat faced by the firm is the declining performance. Some of the

retail segments, in particular on the menswear, have experienced a significant decline in total

sales in the third quarter. The CEO of Urban Outfitters pointed out that the declining

performance has been due to off-pitch marketing, unexploited fashioned calls, and meager

creative execution. Furthermore, other apparel industries such as Zara has become exceptionally

promotional which has created a more challenging environment for many firms in the same

industry. Besides, female fashion has been considered as too narrow while the menswear did not

generate adequate volume.

Changes in the Consumers' Tastes and Preferences.

Urban Outfitters relies much on knowing the tastes and preferences of their customers;

therefore a shift in consumers' taste will affect the company. However, customers' tastes are

dynamic, which means that they can change it very quickly. Thus, this becomes a significant

threat to Urban Outfitters because a change in taste would mean a decrease in sales. Hence this

implies that the company will have to regularly change their product selection so as to adapt to

the consumer's latest needs. It is not easy to achieve this since it requires expensive research,

testing, marketing, and development to keep pace. If customers change their tastes and

preference and a seller does not keep pace, the business would be adversely affected by brand
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and revenue consequences that can affect it for many years; thus it becomes a threat for Urban

Outfitters (Vrontis, Thrassou & Vignali, 2006).

Conclusion

The External Factor Evaluation (EFE) on the external environment of Urban Outfitters

Company indicates that there are substantial threats and opportunities that need to be taken into

consideration. Perhaps the greatest threat that the firm faces is intense competition which will

have a set back on the sales. Nevertheless, the company can leverage the few discount stores and

establish more so as to increase sales. Besides, increasing creative purposes and reorganizing the

new processes and communication will also help the company enhance its performance and

increase the consumer base.

C. Five Forces of the Urban Outfitters

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The five forces model is the framework that is used to determine the level of competition

and profitability in the industry. The model asserts that the degree of the competition determines

the likelihood for earning abnormal profits for the industry. The relative bargaining power of

customer and suppliers will determine whether the abnormal profits will exist or not. One of the

competitive advantage for Urban Outfitters is its enormous potential for differentiation. This is

because the company has implemented various strategies to make the most out of its

competencies and establish the value of the firm. Urban Outfitters has always focused on

providing consumers with fashionable apparels through a unique shopping experience. The

industry depends much on word-to-mouth marketing and shopping experience. The five industry

forces include Barriers to entry, the intensity of rivalry, supplier power, buyer power, and threats

of substitutes.

Barriers to New Entry

The threats of entrants for urban outfitters exists and would eventually increase rivalry

among the existing businesses by devaluing the learning curve thus making it more price

conscious. Due to the nature of the Urban Outfitters industry, consumers seem to be

individualists, especially where it comes to fashion. Also, a majority of these consumers become

pessimistic when a retail appears in every shopping mall. The industry does not work under

economies of scale because there are high variations in consumer preferences.

The first mover advantage of Urban Outfitters industry is based on the notion that the

business is gaining a substantial advantage over the competitors by being the first major apparel

industry to enter into a new market. However, due to the high fragmentation and oversaturation

of the garment industry, the first mover advantage seems non-existence. Traditionally, apparel

manufacturers have been known to innovate and take risks, extending their products variety with
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the aim of gaining a competitive advantage (Gupta, & Yadav, 2012). Industries have reacted to

competition by establishing functional fragments to attract the target customer base.

Most clothing stores including, Urban Outfitters receive a substantial portion of their

attire and other goods from foreign sources. These products are either obtained directly from the

international markets or indirectly through the local merchants with foreign sources. The access

to channels of products distribution has negatively been affected by political of financial

instability. Also, trade restraints in the form of tariffs particularly for the apparel products could

have an implication on the importation of such merchandise and could reduce the supply and

increase the cost of the goods (Gupta, & Yadav, 2012).

Also, the weakening of dollar value against the foreign currencies would can result in an

increase in the costs of goods bought from merchants' abroad. Concisely, the aspects of

microeconomics substantially determine whether the entry is attainable. There are no legal

barriers that hinder new entrants for the retail apparel industry. However, there are trademarks

policies that are aimed at protecting against violation and avert consumer confusion between

similar cloth branding. Thus, the new entrants are required to adhere to the trademark

regulations.

Intensity of Rivalry

The extent in which firms generate revenue is significantly determined by the

competition between competitive industries. This implies that when the rivalries are at a high

intensity, then the profit margins for the industries will decrease (Arline, 2015). Also, the level of

industry growth plays a vital role in how an industry can gain a higher market share. Industry

growth can also be measured through the same-store sales. Urban Outfitters operates under a

strong competitive industry that also comprises of a significant threat of entry, particularly from
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potential players. Besides, the industry is extremely fragmented since apparel is more focused on

tastes and preferences as a result of the changing fashion trends that shapes this intermittent

industry.

Moreover, customers have comparatively low bargaining power because more businesses

will be grouped under the product differentiated category. The responsibilities of manufacturing

for urban outfitters results in a somewhat weak bargaining power. This is because the

competition for this industry is derived from the low costs (E. Dobbs, 2014). There is a high

degree of competition for urban outfitters, and it seems that the contest will still continue. The

industry has reached the "long run stage" of its monopolistic competitive structure, and this

means that the sector-based growth on profits will be low. The loyal consumer base and a strong

brand image are one of the most efficient strategies that have earned Urban Outfitters a

competitive advantage over other apparel industries. All of the industry's labels are well designed

with trendy, hip and fashionable products with a price code to match.

Supplier Power

Supplier power is the determination of the number of vendors of Urban Outfitters

compared to that of other industries. The analysis of supplier power reflects the image of

consumers. In this case, an effective firm is that which contains few businesses and few

substitutes accessible for their consumers. The suppliers would have more advantages over the

firms, and they could increase the price of retailers. Urban Outfitters is a store that is subdivided

into two segments; one section deals with the wholesale of goods and the other is the retail

section. The firm's wholesale apparel line is sold in various stores throughout the nation. This

gives the competitive advantage of selling certain, merchandise at a lower price than their
 URBAN OUTFITTERS COMPANY 23

competitors. The high number of suppliers has resulted in a low switching cost, low bargaining

power of providers and reduced foreign labor cost.

Buyer Power

Buyers in any industry always seek to buy a given product at a low or affordable cost.

Urban Outfitters is suitable for a wider variety of consumers, from the ages of 18-40. The focus

broad customer base means that the industry there will be more buyers in the firm thus creating a

high demand for the products. There are high and low switching costs for the Urban Outfitters

industry. Normally, switching costs in the clothing industry are low due to the presence of

similar products.

It is vital to point out that consumers become less sensitive to price especially if the

product is differentiated. The fact that the apparel industry is based on the consumers' tastes and

preferences, then these industries would not offer similar clothing lines for the exclusive tenacity

of appealing to their targeted consumer (Saint, 2014). In that sense, Urban Outfitters sales unique

apparels that are not sold at any other clothing store. Thus, consumers have a lower bargaining

power as a result of the high number of buyers, high switching costs, and a differentiated

industry. A typical Urban Outfitters buyer is willing to pay more for the product that they would

pay at a non-specialty retail shop.

Threat of Substitute products

Urban Outfitters is competitively allotted on either differentiation or price. Industries

with low customer switching costs will contend less on differentiation and more on price. The

industry competitors sell their apparels that are homogenous in some designs which imply that

consumers may purchase the products based on price (Cockayne & Mears, 2009). Consequently,

their purchasing power is increased amongst the relative competitors. However, these industries
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face the risk of substitute products from factory outlets and division stores. Higher switching cost

for a business would imply that the firm can be able to compete more on differentiation and

product quality. For instance, Urban Outfitters can be able to market a shirt at only $ 44 since

they have attained product differentiation and quality.

Some of the core success factors for Urban Outfitters include maintenance of a strong

brand image, designing labels that satisfy specific market targets and offering unique products

and retail stores. Through these differentiation strategies, the Urban Outfitters has been able to

boost their yearly sales at a rate of 34% over the last two years. The different business segment

for the Urban Outfitters is designed to satisfy the dynamic needs of the diverse consumer base.

Summary

In summary, from the five forces industry, it is clear that there are moderately low threats

to entry for Urban Outfitters since it's hard to imitate the unique lifestyle that the firm creates.

The supplier power is also relatively low because no supplier accounts for more than ten percent

of the industry's products. Consequently, the threats for substitutes is also relatively low since

there is no alternative for the industry. This is because their consumers always desire a unique

look and experience than the average merchandising chain. In addition, the power of the

consumer is moderately low because the customer can still find better deals on similar goods

offered by the Urban Outfitters retail outlets. However, it would be hard for the both the target

consumers to get the same collection of merchandise offerings at other stores.

D. Net Assessment

Perhaps the greatest threat that the firm faces is intense competition which will have a set

back on the sales. Nevertheless, the company can leverage the few discount stores and establish

more so as to increase sales. Besides, increasing creative purposes and reorganizing the new
 URBAN OUTFITTERS COMPANY 25

processes and communication will also help the company enhance its performance and increase

the consumer base. The Urban Outfitters has a competitive edge since it sells its brands that

provide a high customer value scheme with an efficient cost structure. Also, the business

employs a customer-driven approach that seeks to offer a new perception on the brand retail. It

not only offers brands but also provides lifestyle symbols since success relies on brands that have

high lifestyle symbols. The ability to build and manage brands autonomously with an active

executive team. Also, Urban Outfitters sources professional designers from different parts of the

world to work as members of their team (Lord, 2000). These attributes enable the Urban

Outfitters Company to innovate consistently.

 URBAN OUTFITTERS COMPANY 26

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