Here’s How Urban Outfitters Is Gaining From Innovation In Its Mobile Strategy

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URBN: Urban Outfitters logo
URBN
Urban Outfitters

While it posted disappointing fourth quarter sales, Urban Outfitters (NASDAQ:URBN)  appears to have gotten its mobile marketing strategy right. The company achieved a 75% increase in customer conversions through a “smart” mobile messaging strategy within its mobile app.  By working closely with location intelligence firms PlaceIQ and Appboy the company was able to use location data to deliver personalized messages to customers, leading to conversions. The company mapped customer activity data with the user’s location to identify products which are best suited for a particular customer based on his lifestyle. For instance customers frequently visiting night clubs were targeted with related merchandise leading to higher conversions. With young consumers as its target audience an effective digital marketing strategy and focus on e-commerce is critical for Urban Outfitters growth. While the company missed revenue consensus estimates in Q4, it does have an effective mobile marketing strategy in place which should help drive its e-commerce revenues in the long term.

Strong Digital Strategy Essential For Teen Retailers to Drive Revenues

Teen focused retailers are facing a challenging time as mall traffic is declining with increasing internet and smartphone penetration and the rise in online retailing. According to a study conducted by Pew Research, 92% of teens go online daily and nearly 25% of them are online almost constantly. This indicates that teens are more likely to share their location data and information around activities being done by them which can be used by marketers effectively. Targeted, personalized marketing can lead to higher conversions and Urban Outfitters is using this strategy to its advantage. If this is able to boost its online sales, the company can make its stores more efficient and improve its valuation in the long term.

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According to our estimates, Urban Outfitters’ revenue per square foot from its namesake stores will grow moderately from $651 in 2017 to nearly $700 by the end of our forecast period.

If this number increases rapidly over our forecast period through higher online sales, there can be upside to our price estimate.

Urban Outfitters is struggling to grow revenues in a challenging retail environment and consumer preferences for online sales. However, the company appears to be working on an effective digital strategy which should drive revenues in the long term.

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