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A Lesson in Anthropologie

For Anthropologie, more is definitely better. <BR><BR>“We embrace the complexity of our business rather than try to simplify it,” said Glen Senk, president of Anthropologie and executive vice president of its parent company, Urban...

“We tend to flip a lot of retail convention on its side.”— Glen Senk, Anthropologie

“We tend to flip a lot of retail convention on its side.”— Glen Senk, Anthropologie

John Calabrese

For Anthropologie, more is definitely better.

“We embrace the complexity of our business rather than try to simplify it,” said Glen Senk, president of Anthropologie and executive vice president of its parent company, Urban Outfitters Inc. “We carry more than 10,000 stockkeeping units. We have a broad range of price points. We go from $4 for a bar of soap to $30,000 for an antique.”

A one-time Bloomingdale’s executive who joined Anthropologie in 1994 when it was a single store in Wayne, Pa., with sales under $2 million, Senk today helms a 60-unit, $350 million-plus chain targeting women 30 to 45 years old with an eclectic mix of apparel, linen, books and furniture.

“We tend to flip a lot of retail convention on its side,” he said. “We have an extremely eclectic product offering. We believe that racks of clothing stripped down to bestsellers are boring. We’ve all had the disappointment of seeing our most treasured buys hit the sales racks. But those quirky fringe items are most often what narrate the concept the best, that create the most excitement and interest.”

Senk attributed the company’s success to its unorthodox mix and a laser-like focus on its target customer. “I like to think of Anthropologie as an independent movie or a small-press novel that reaches us in a way that big-studio films rarely achieve,” he said. “Our growth, and the growth of Urban Outfitters Inc., has been largely organic. But it’s always been driven by one thing: to exceed customer expectations.”

The prevailing wisdom in retailing, he said, is to “create an assortment of good, better, best, across a matrix of traditional, transitional and contemporary product.” But that’s not the strategy at Anthropologie. “Rather than be all things to all people or mastering a category,” Senk explained, “we seek to master a specific customer. We choose to slice the pie differently. We offer a broad variety of categories, but we’re quite edited within each category. Every product we buy, every real estate decision we make, we do through the eyes of the customer.”

That customer is college or post-graduate educated and married or in a committed relationship; more than 50 percent of them have children, he said. “She’s well-traveled, well-read, she’s into cooking, gardening and wine, she has a natural curiosity about the world, she’s relatively fit, she gets our references whether it’s a small town in Europe, a book or a movie.”

Senk said the company devotes a lot of time and energy to keeping up with this customer. In his early days at Bloomingdale’s, Senk said he spent 10 to 15 hours on the sales floor each week in a role he still views as the best way to understand the psyche of the shopper. “The department store method of moving developing merchants back and forth between the stores and buying offices was smart. It created a generalist view, and a heightened level of empathy and customer awareness that is virtually non-existent today.”

With this as a backdrop, Senk said “it’s critical to institutionalize that high level of closeness to the customer. We regularly conduct exit surveys, focus groups, fit sessions, open houses, and I still spend a lot of time in the stores and ask that my staff does as well. I believe you can learn more in one afternoon in the dressing room than you can from a month’s worth of analysis.”

The store environment is also essential to delivering the proper message, he continued. “We believe our stores are additive. Rather than treating our stores as neutral territory or a showcase, we believe our store environment is highly synergistic with our product offer.”

Senk said he views shopping as entertainment but the rules are different today. He cited the country promotions at Bloomingdale’s in the Eighties as “the most exciting retail theater” at the time. “They were like major Broadway openings, attended by thousands of people and covered by the New York Times and other high-profile media.”

But today’s customer travels much more and is bombarded with information from a variety of sources. So, Senk said, “Today’s retail theater must be more nuanced, personal and complex.”

As a result, Anthropologie designs its stores “to tell a narrative that literally pulls the customer throughout the space. Our store layout, merchandising and display may appear random, but it’s anything but. Through the use of sound, sight, touch and smell, we form a powerful emotional bond with the customer, far more powerful than any one sense or the product alone can accomplish.”

This bond creates a “sense of community in our stores, a sense of connection,” Senk said.

In fact, customers are so connected to Anthropologie that its most frequent shoppers visit the stores several times a week and its core customers twice a month. The average length of a visit is “well in excess of an hour and 15 minutes.”

To illustrate his point, Senk said that after the Sept. 11 terrorist attacks, Anthropologie’s New York stores bounced back almost immediately. He attributed it to the stores’ offering paper doves on which customers could write about their sense of loss. “In the blink of an eye, we had thousands of paper doves hanging in our stores with the most extraordinary moving sentiments. We also had thousands of people visit our stores during the aftermath of the tragedy because coming to our stores is not just about buying something, it’s about connecting with people.”

Customers also come to Anthropologie to learn, for stimulation or sometimes just to relax, he said. And that loyalty is paying off on the bottom line: Sales per square foot will near $800 this year.

Senk admitted that the company did hit a “blip” in 2000 when it posted three quarters of negative comps resulting in a down year. He said the company had “started to believe our press and lost sight of our customer. We got too young, too sexy, the clothing was unwearable.” Although it was painful to hear the criticism from its customers, the company moved quickly to correct its mistakes.

Anthropologie has made other changes as well. “We used to have similar store controls as Urban [Outfitters],” he said, noting that customers were only allowed to take six garments into a dressing room and they weren’t allowed to take anyone else in with them. “One day in a focus group we got onto this subject and these women were crazy about it. The next day we eliminated the limit and we allowed friends to go into dressing rooms and in fact, we made our dressing rooms bigger. Now you come to our stores and you see women come in with 50-60 things. You’ll see parties in those dressing rooms.”

Anthropologie thinks of its customer as queen and “everything we do is filtered through the eyes of our customer.” Although business is strong, the company is not managed for a quarterly result, but rather for the satisfaction of the customer.

At the same time, the company places a “high premium on creativity and our organization is structured to support that creative engine” — but that creative talent is juxtaposed with operational expertise. “We are as controlled as we are creative. Our systems are state-of-the-art, we live by a complex calendar, we’re risk-takers but our risks are always calculated. Accurate point-of-sale systems, immaculate stockrooms, tight expense controls all in one way or another help to improve the customer experience.”

On the creative end, the company seeks inspiration from nontraditional sources and travels the world tirelessly to find the right product. “The world is getting smaller every day, which means we have to work harder and reach further to have an innovative, original point of view,” he said.

Store associates are encouraged to steer clear of a quick sale and focus instead on creating friendships with our customers. “It’s always about helping someone look great, furnish their home beautifully and, most importantly, make them feel fantastic about themselves.”

Anthropologie also strives to offer the best of the best. “We build our product up, we don’t worry about stripping it down to hit a common denominator or a price point. We believe that if we love the product and want to own it, then our customers will love it too.”

Interestingly, the company does no advertising and takes the 2 percent of sales that most retailers spend on marketing and devote it to “execution,” Senk said. “There’s no immediate return on investment on this strategy but we’re convinced that this approach has contributed to our comparative sales performance.” Anthropologie has been 90 percent comp positive in the 12 years it’s been in business, he said, and double-digit comp positive 70 percent of the time. “I view comp-store sales as a vote as to where we stand with our customer.”

Senk also views the company’s catalogue as a form of advertising. The company will produce 18 million catalogues this year and the books are consistent with Anthropologie’s image. “I’m pretty maniacal about keeping it true to the vision so I don’t want the catalogue going off on one path and the store going off on another,” he said. In addition, Anthropologie operates a Web site. Although the catalogue is “a highly profitable, stand-alone business,” the Internet now comprises anywhere from 60 to 80 percent of the company’s direct sales, he said.

Although Anthropologie overall has been successful — it has posted a six-year compounded annual growth rate of 40 percent and revenues that Senk expects will approach nearly $500 million next year — he knows that it must constantly evolve in order to stay on top of its game. “To succeed in this business there must be continual improvement,” he said. “If you set high standards and goals, you’ll achieve them.”

But just because a goal is reached, he said, the bar must continue to be raised. “I’m also one of those people who lives in a fairly constant state of terror that the ball is about to drop,” he admitted. “Unfortunately that goes with the territory in this business and we’re all only as good as yesterday’s sales flash.”

Senk has surrounded himself with “people who have a similar sense of urgency. We don’t allow ourselves to become too comfortable and read our own press. We tend to look at the business in life cycles. We’re always asking ourselves, is it still fresh, does it look good, how does it sit in comparison to the rest of the world and how is our customer seeing it?”

This “company DNA” permeates the entire organization, he said, from the top executives to the sales associates. “I believe strongly in the inverted pyramid, that the most important people are the associates who interact with the customers and that the rest of us exist to serve those associates,” he said.

Anthropologie’s organization remains lean with only one or two levels between Senk and the stores. “Any individual can, often does, and is expected to, have the next great idea. Each and every person knows that they count.” The company seeks smart, creative, passionate, entrepreneurial and intellectually honest people and then works hard to keep them happy and fulfilled.

“We’ve all seen too many egos ruin businesses and I intend to do everything within my power to be sure that we remain humble, wildly appreciative servants of our customers,” he concluded.