The effect of giving managers more freedom established a competitive advantage that more curated, centralized retailers cannot match … every store feels different because its managers are bringing in artifacts and music from outside. If a Gap manager came to work one day with a rusty lamp or their own music, imagine how they would have been received. The company knew nothing about my musical tastes, but anytime I worked one particular area of the store (the changing room) where the store’s sound system was installed, I could bring in my own cassette tapes and play them. In college, I worked at the first Urban Outfitters on the campus of the University of Pennsylvania. If a manager saw an old rusty lamp on their way to work and thought, “That would look good in the men’s section of my store,” they could take it to work and put it on display. With artists managing their stores, the company could now give them more freedom. They put artists in charge of their stores. Instead of hiring from business schools they started looking at design and art schools. Since they are different, they can charge higher prices, which makes them actually more profitable! 3. But since they choose inefficiency when their competitors choose to drive for efficiency, Urban Outfitters is different (you can’t get used clothing at the Gap). Interestingly, selling used clothing is inefficient, making Urban Outfitter less efficient than its competitors. They would have to send buyers to Asia, source old jeans, ship them back to the US, wash them, dry them, sort them, SKU them, and send them out to their stories. The Gap, or any traditional retailer, would find copying this too disruptive. While most of what you buy at Urban Outfitters is new, you can purchase reconstituted concert t-shirts or vintage jeans. They experimented with selling some used clothing. Great businesses often begin with making a crystal clear decision on who their core customer is … ignoring everyone else. If a traditional retailer, say the Gap, wanted to copy this element of Urban Outfitters’ strategy, they would have to stop selling maternity wear, kids clothes, baby gear, and suits and ties.
Urban Outfitters’ first strategic choice was to design their products and services with only college students in mind, knowing that it would hurt their ability to attract other customers. When the fifth and final piece fell into place, their growth and profit suddenly took off.īelow are the five ways Urban Outfitters is outthinking its competition. The company meandered for a while, testing counterintuitive choices, codifying what worked and pivoting what didn’t. They’ll talk about store location, merchandising mix, and layout.īut ask Richard Hayne, the founder of Urban Outfitters, as I got a chance to some years ago, and you will hear a different narrative. If you can find a stock analyst willing to take a long-term perspective (and there aren’t many), they will explain this performance with the kind of logic you would expect from business-school-trained strategists. In the long run, every company reverts to average performance. Indeed, economic theory would tell you it’s impossible. That’s a feat very few companies can claim. This retailer has proven an ability, over many years, to consistently grow faster and produce higher profit margins than their peers.
Stacking up a tower of counterintuitive choicesĬonsider Urban Outfitters. A child sits down with Lego blocks and thinks of what imaginative next block they could stack on top, then another, then another until they end up with a spectacular, colorful tower unlike any that has been created before.Įmbracing strategy as play is fundamentally different than viewing it as science across four dimensions: Experts will tell you strategy is “a plan of action designed to achieve a major or overall aim.” Strategy is a science, and it’s serious.īut retrace the strategies of highly successful companies and you will see a path that looks much more like play. The word “strategy” too often brings to mind images of uptight executives in boardrooms, with heavy binders and spreadsheets, debating critical choices.
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