urban-outfitters-business-model

How Does Urban Outfitters Make Money? The Urban Outfitters Business Model In A Nutshell

Urban Outfitters is a multinational lifestyle retail corporation with a company headquarters in Philadelphia, Pennsylvania. The company was founded in 1970 by Richard Hayne, Judy Wicks, and Scott Belair.

History of Urban Outfitters

Urban Outfitters is a multinational lifestyle retail corporation with a company headquarters in Philadelphia, Pennsylvania.

The company was founded in 1970 by Richard Hayne, Judy Wicks, and Scott Belair. At the time, college student Hayne had the idea to open a retail store for an entrepreneurial class he was taking. The store, which was called Free People, was located in a small space right across the road from the University of Pennsylvania. It had a mission to provide second-hand clothing, furniture, jewelry, drug paraphernalia, and home décor to college and grad students in a casual yet fun environment.

In 1976, the store was renamed Urban Outfitters and incorporated. New stores were opened following the original concept in metropolitan areas near college campuses. Portfolio brand Anthropologie was then launched in 1992 as a lifestyle brand for creative, affluent women in the 30-45 year age bracket. The following year, an Urban Outfitters IPO was held raising $13 million.

In the ensuing decades, Urban Outfitters has continued to expand through new store openings and new brands. In 2008, the company acquired a popular garden center in Pennsylvania and reimagined it as a combination retail store, café, and event space. It also launched BHLDN in 2011, offering brides-to-be a curated selection of wedding gowns, bridal party dresses, accessories, and gifts.

Urban Outfitters revenue generation

In terms of revenue generation, Urban Outfitters has two main sources.

Retail sales

As an online and bricks-and-mortar retailer, the company earns money by purchasing goods and then selling them for a profit. Urban Outfitters defines retail sales as any merchandise sold directly through its stores, catalogs, call centers, and websites. Forbes estimates retail sales contribute approximately 90% of all company revenue in a given year.

This revenue is attributed to Urban Outfitters portfolio brands including:

  1. Anthropologie.
  2. BHLDN.
  3. Free People.
  4. Terrain Café – a dining experience as part of the aforementioned nursery center acquisition.
  5. Menus & Venues – a food and beverage division encompassing formal and casual Italian restaurants, pizza bars, and business event venues. 

Wholesale arrangements

Through wholesale arrangements, Urban Outfitters sells Free People, Anthropologie, and other company-branded products through department and specialty stores around the world.

Nuuly

Nuuly is a clothing rental subscription service in keeping with the company’s mission to empower customers to express themselves through fashion.

For $88/month, customers can rent any six items chosen from over 150 brands and 1,000 curated styles.

There are no shipping fees for Nuuly, nor are there any late fees, damage fees, or dry-cleaning fees.

At the time of writing, Nuuly was only offered as a single plan. For customers desiring seven or eight items to rent, the company charges an additional $18 per item.

Key takeaways:

  • Urban Outfitters is a lifestyle retail company founded by Richard Hayne, Judy Wicks, and Scott Belair in 1970. The pilot store, Free People, was a university project for an entrepreneurial class.
  • Urban Outfitters makes approximately 90% of its revenue from retail sales across its various brands. A much smaller amount of revenue is made through wholesale agreements.
  • Urban Outfitters also offers a clothes rental service called Nuuly, priced at $88/month for six items with additional items attracting an $18 charge.

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"