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Op-Ed: Urban Outfitters: Hip But No Hooray

It’s no secret that teen retailers have been struggling for some time and that there are few signs of improvement.

Two of the market’s most popular brands, Aeropostale and Abercrombie & Fitch both posted disappointing second quarter results. Urban Outfitters (URBN), the popular clothing, accessories and “stuff” retailer, which targets the 18-28 year-old set, is following suit with a 33 percent decrease in profits and a 7 percent decrease in comparable store sales at its Urban Outfitters division for the third quarter. Although the top-line is holding up relatively well at the group’s Free People and Anthropologie brands, it isn’t sufficient to offset dips at the flagship chain.

Given the slippery slope of selling to the notoriously fickle young adult market, and the ultra-competitive environment created by the fast fashion players, it would seem that the Urban brand might tread carefully in its sales strategies. That is, their efforts to lure young customers with edgy merchandise offerings should be mindful of the fine line between clever and crass. But this seems to be far from the case. A slew of marketing gaffes has left the namesake brand issuing apologies rather than stellar sales results.

Urban has acknowledged that it experienced a rough 12 months, but outlined several plans to bolster sales going forward. The company said it planned to double sales by 2020, and at its Analyst Day in September, the company cited product and service expansion, growing distribution and enhancing the customer experience as its primary objectives going forward. And these initiatives are particularly important for the Urban Outfitters brand given some of its recent missteps.

Instead of enhancing the customer experience, the company’s numerous merchandising blunders risk doing just the opposite. Granted, when it comes to the teen market, marketing misses are an occupational hazard. That said, it seems that Urban has become something of an expert in this area. Let’s recap some of its more egregious faux pas:

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  • A “Ghettopoly” board game offending African Americans
  • An “Eat Less” t-shirt modeled by a rail-thin girl which angered eating disorder activists
  • A vintage Kent State sweatshirt with what appeared to be blood stains
  • An array of Navajo items that violated Navajo Nation trademarks
  • A “Jewish Star” T-shirt which upset many Jewish-Americans
  • A product with a color combination offering of ‘Obama/Black’

Apparently, shock and awe as a selling tool is backfiring, compounded by the fact that today’s social media landscape makes instantaneous protest a breeze. In this case, the only ‘hip’ that is working flawlessly for Urban is the one joining teens and their smartphones or mobile devices.

According to Kit Yarrow, PhD, Consumer Psychologist, Author, and professor at Golden Gate University, Urban’s repeat offenses are no coincidence. She said, “They are catering to a generation that loves irony at a time in our society when the bar to shock is incredibly high.” Yarrow believes this generation of teens is actually very inclusive, but added, “I think most would also find the products confusing or inappropriate, but teens throughout time are attracted to companies that push boundaries.”

To add insult to insult, Urban Outfitters doesn’t get particularly high marks for its apologies. For example, in the wake of the Kent State sweatshirt disaster, the company expressed regret that the product was “perceived negatively.” When a retailer blames the shopper for his or her negative perception as a result of the company’s enormous lack of good judgment, it is hardly viewed as falling on one’s sword. It begs the question as to where and how the tone for the buying and merchandising teams is being set.

At an Analyst/Investor Day held by the company in September 2012, founder Richard Hayne said, “The Urban [Outfitter] customer, we always talk about, is the upscale homeless person, who has a slight degree of angst and is probably in the life stage of 18 to 26.” Executive Creative Director Sue Otto compared her observations of the Urban Outfitters shopper with anthropologist Jane Goodall’s research on chimpanzees in the wild. Now that’s a comparison you don’t hear every day in the annals of apparel retail.

The suggestion here is not that the company’s marketing blunders are the only, or even the primary, cause of its latest weak earnings results. However, given the difficult environment in today’s teen and young adult markets, Urban Outfitters might be well-served to hold the brand to higher standards of taste than it seems to be setting.