Admitting the Challenge: Struggling to Attract Gen Z
Urban Outfitters, once a favorite among young adults for its alternative, vintage-inspired styles, recently admitted it’s struggling to connect with Generation Z. During a recent earnings call, the company acknowledged that it failed to keep pace with the shifting preferences of younger consumers, which has negatively impacted sales and customer retention.
The Shift in Customer Preferences
Shea Jensen, President of Urban Outfitters Brand in North America, revealed that the company failed to adjust to the “seismic shifts” in preferences between Millennials and Gen Z, especially during the global pandemic. This resulted in the company not only losing new Gen Z customers but also losing favor with its Millennial base. Despite these challenges, Urban Outfitters is optimistic about staging a brand revival and reestablishing itself as the top choice for young adults.
Decline in Sales: Competition on the Rise
Urban Outfitters’ sales have dropped by 9.3% in the second quarter of 2024, while competitors like Abercrombie & Fitch and American Eagle have seen significant growth. Abercrombie, in particular, reported a 21% increase in revenue, largely due to its successful brand overhaul that repositioned it as a more adult-focused label. Meanwhile, Urban Outfitters’ unclear positioning and higher price points compared to fast fashion giants like Shein and H&M have added to its struggles.
Abercrombie’s Success: A Model for Urban’s Turnaround?
Abercrombie & Fitch shifted its focus from teenage customers to adults, moving away from its controversial and exclusionary past. This strategy has paid off, allowing the brand to connect with a broader audience and thrive in the retail space. Urban Outfitters, however, has maintained its youthful image, without enough emphasis on appealing to today’s high school and college students, contributing to its decline.
Urban Outfitters’ Five-Pillar Recovery Plan
In response to these challenges, Urban Outfitters has outlined a five-pillar recovery plan to regain its footing. The strategy includes identifying its target audience more effectively and expanding its product offerings. The company plans to appeal to a broader range of customers, from suburban teens to post-college young adults, with new product categories, price points, and aesthetics.
Changes to Pricing and Store Locations
Urban Outfitters is also making efforts to adjust its pricing and store experience. Online, the brand now promotes “New Lower Prices” on many of its products, though some Gen Z consumers have questioned the actual impact of these price reductions. The company is also focusing on improving its in-store experience by resizing locations, relocating stores closer to target customers, and closing underperforming branches.
Challenges Ahead: Rebuilding Trust with Gen Z
Urban Outfitters faces a challenging road ahead as it works to win back Gen Z consumers. While it has taken steps to adjust its strategy, the company must prove that it can evolve with today’s retail landscape and meet the high expectations of a new generation of shoppers. Only time will tell if the brand can pull off a successful turnaround in the competitive retail environment.