Urban Outfitters 2011 Annual Report Download - page 9

designed by our Free People wholesale division. Our Terrain garden center offers lifestyle home and
garden products combined with antiques, live plants, flowers, wellness products and accessories. Our
merchandise is continuously updated to appeal to our target customers’ changing tastes and is supplied
by a large number of domestic and foreign vendors, with new shipments of merchandise arriving at our
stores almost daily.
The wide breadth of merchandise offered by our retail segment includes national third-party
brands, as well as exclusive merchandise developed and designed internally by our brands. This
selection allows us to offer fashionable merchandise and to differentiate our product mix from that of
traditional department stores, as well as that of other specialty and direct-to-consumer retailers.
Merchandise designed and developed by our brands generally yields higher gross profit margins than
third-party branded merchandise, and helps to keep our product offerings current and unique.
The ever-changing mix of products available to our customers allows us to adapt our merchandise
to prevailing fashion trends, and, together with the inviting atmosphere of our stores, encourages our
core customers to visit our stores frequently.
We seek to select price points for our merchandise that are consistent with the spending patterns
of our target customers. As such, our stores carry merchandise at a wide range of price points that may
vary considerably within product categories.
Store Operations
We have organized our retail store operations by brand into geographic areas or districts, each
with a district manager. District managers are responsible for several stores and monitor and supervise
individual store managers. Each store manager is responsible for overseeing the daily operations of
one of our stores. In addition to a store manager, the staff of a typical Urban Outfitters, Anthropologie
and Terrain store includes a visual manager, several department managers and a full and part-time
sales and visual staff. The staff of a typical Anthropologie store may also include a customer care
manager who helps tailor the shopping experience to the needs of Anthropologie’s target customers.
Our Free People retail stores include a store manager, a visual coordinator and full and part-time sales
staff. A Terrain garden center may also include merchandise care and maintenance staff.
An essential requirement for the success of our stores is our ability to attract, train and retain
talented, highly motivated store managers, visual managers and other key employees. In addition to
management training programs for both newly hired and existing employees, we have a number of
retention programs that offer qualitative and quantitative performance-based incentives to district-level
managers, store-level managers and full-time sales associates.
Marketing and Promotion
We believe we have highly effective marketing tools in our catalogs and websites. We refresh this
media as frequently as daily to reflect the most cutting edge changes in fashion and culture. We also
believe that highly visible store locations, creative store design, broad merchandise selection and
visual presentation are key enticements for customers to enter and explore our stores and buy
merchandise. Consequently, we rely on these factors, as well as the brand recognition created by our
direct marketing activities, to draw customers into our stores, rather than on traditional forms of
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