Urban Outfitters just outdid expectations with its latest earnings, reporting double-digit growth in its digital channel specifically. However, this progress didn’t come without challenges. Here are some tips other retailers can take from Urban Outfitters, which managed to stay sharp in a rapidly evolving category.
1. Know your disruptors. Consumer search behavior has evolved. Searches for online-only swim and fashion brands from Hong Kong and China increased in 2018, according to Gartner L2’s Digital IQ Index: Specialty Retail. Online fashion retailers such as Cupshe and Zaful offer ultra-low priced items and market heavily via shopping ads and Instagram. Urban Outfitters and its peers have had to monitor the rise of these brands, some of which earn higher organic visibility on unbranded swim terms than established retailers.
2. Adjust to a new home front. This year, specialty retail brands accounted for just 6% of text ads on unbranded home & gift terms, down from 11% last year. This encroachment can be attributed to Amazon, Wayfair, Overstock, and Houzz, which accounted for 37% of text ads on unbranded home terms in 2018, increasing from 22% in 2017. As new home & gift competitors continue to bulk up on paid search spend and consequently shake up the entire sector, brands including Urban Outfitters have had to allocate budgets to maintain visibility in the newly competitive text ads landscape.
3. Keep it new. As an early adopter of photo search on mobile apps, Urban Outfitters stood out in its sector. This year, however, peers like H&M and Steve Madden added the feature too, contributing to an overall 16% increase in adoption rate by brands throughout the sector. To top it off, 55% of specialty retail brands now include a barcode scanner on their apps, up from 47% in 2017, while loyalty program integration exhibits the fastest acceleration to date. As the mobile arena crowds, Urban Outfitters has had to top up its app with new features including a personalized discover feed, app-exclusive giveaways and discounts, and a more attractive rewards program.