Urban Outfitters, once a trendsetter in alternative fashion, is now facing a challenge: how to connect with Gen Z. The retailer, known for its vintage-inspired clothing, recently admitted during its earnings call that it has struggled to appeal to the very demographic that once defined its brand—young adults. In response, the company is now embarking on a strategic turnaround, drawing inspiration from competitors like Abercrombie & Fitch, which has successfully reinvented itself in recent years.
Struggles with Gen Z: What Went Wrong?
During its August 2024 earnings call, Shea Jensen, president of Urban Outfitters North America, acknowledged that the company missed the “rapid and seismic shifts” in consumer preferences during the pandemic. The brand lost touch with its millennial base while failing to attract new Gen Z customers, a generation with different values, tastes, and shopping behaviors.
“As these shifts occurred and a new generation began coming of age, we lost focus on our customer, and we lost track of how to win with them in today’s dynamic retail environment,” said Jensen. This admission came on the heels of a 9.3% drop in sales during Q2 2024, while Urban’s parent company, which also owns Anthropologie and Free People, reported a 6% overall growth to $1.35 billion.
Competing in a Crowded Market
Urban Outfitters finds itself in a difficult position. With prices higher than fast-fashion competitors like Shein and H&M, but not exclusive enough to be considered luxury, the brand is stuck in a middle ground. Rival retailers such as Abercrombie & Fitch and American Eagle, however, have managed to thrive by staying ahead of trends and appealing to the changing needs of young consumers. Urban Outfitters, founded in the 1970s, now faces fierce competition in an ever-evolving market.
The Road to Recovery: A New Strategy
Urban Outfitters has laid out a five-pillar plan aimed at revitalizing the brand. At the core of this strategy is a renewed focus on identifying and understanding its target customer. Jensen emphasized that Gen Z is markedly different from millennials, with unique preferences in size, ethnicity, and interaction with the world.
To address these shifts, the company has revamped its leadership team and expanded its product offerings. Historically catering to an “aspirational 22-year-old living in major metropolitan cities,” the brand now seeks to attract a broader audience, including suburban teenagers, college students, and post-grads.
“We welcome and want to serve today’s population of young customers, across more prices and sizes, more categories and occasions, and across more aesthetics and sensibilities,” Jensen explained, hinting at a departure from the brand’s purely alternative and grunge aesthetic.
Changes in Store and Online
Urban Outfitters is also focusing on enhancing the in-store experience to appeal to Gen Z shoppers, who still value brick-and-mortar locations. This includes closing underperforming stores, relocating others, and resizing spaces to better serve their target customers.
The changes are already visible online, with Urban Outfitters making a notable shift in pricing strategy. The site now displays many of its staples with a “New Lower Price” tag, signaling a move to make its products more accessible to budget-conscious college students. A banner on the homepage even apologizes for previous pricing, humorously stating, “We were a lot,” alongside a figure holding an “I’m sorry” sign.
Challenges Ahead
Despite these efforts, Urban Outfitters faces a skeptical Gen Z audience. Some shoppers have pointed out on social media that the “lower prices” may be more of an illusion, as many items still remain expensive. Simeon Siegel, managing director of equity research at BMO Capital Markets, noted, “Half of the job of a retailer is marketing.”
Urban Outfitters’ future success hinges on its ability to not only adapt to Gen Z’s preferences but also to communicate those changes effectively. As the retail landscape returns to a competitive “winners and losers” environment post-pandemic, the company must work hard to regain market share.
While Urban Outfitters has not yet commented on its overall marketing strategy, one thing is clear: the retailer has its sights set on a Gen Z revival, and only time will tell if it can pull off the transformation it’s aiming for.
Urban Outfitters is navigating a crucial period in its history, striving to reconnect with the young shoppers that once propelled its success. By shifting focus to a broader, more inclusive customer base and enhancing both its in-store and online presence, the brand hopes to replicate the success of competitors like Abercrombie & Fitch. However, the road to recovery won’t be easy, especially in a fiercely competitive market where Gen Z holds all the power.
