NEW YORK — As its name implies, Anthropologie studies its customers a little more closely than most retailers to find out what they really want. For its efforts, the chain has been rewarded with 31 out of 37 quarters of positive same-store sales since opening.
While other retailers complain about the dismal economic environment and its impact on business, the 43-unit chain based in Philadelphia has logged a compound annual growth rate of 40 percent on average for the last five years — enviable under the best of circumstances.
Quietly and with little fanfare, Anthropologie has honed its concept by turning conventional retail wisdom on its ear. There are no matrixes, minimum orders or sourcing rules. Stores are densely yet artfully filled with merchandise, clean sight lines be damned.
The stores are also filled with customers. On a recent sunny day in SoHo, shoppers were milling around Anthropologie’s West Broadway unit, where the hardwood floors have been refinished five times and replaced twice since its opening in 1996, according to Glen Senk, the company’s affable president.
In an exclusive interview, Senk sketched a growth plan that hints at Anthropologie’s potential and lifted the scrim on the publicity-shy firm’s philosophy.
“We’ve done analysis and believe we can have a minimum of 200 stores in the next five years,” Senk said. “That’s about a $1 billion business.”
In fiscal 2002, sales for Anthropologie’s parent company, Urban Outfitters Inc., were $422.8 million. Anthropologie accounted for 43 percent of Urban’s sales that year Anthropologie units do about $555 a square foot.
“They have stores that are doing north of $5 million,” said Kimberly Greenberger, an analyst at Lehman Brothers. “With only 43 stores open today, it’s tough to say what the average number will be in terms of sales. We think they could open more than 200 stores.
“One of the reasons Anthropologie is bucking the negative trend and doing well is that they are very different,” continued Greenberger. “What they carry in terms of presentation, collection and attitude is difficult to find anywhere else. A lack of competition in a deflationary apparel market is probably a key to their success. You have to be right on target.”Urban Outfitters Inc., which also owns the wholesale brand Free People, plans to grow its top line by 25 percent a year going forward.
Senk was recently given responsibility for Free People, a young, contemporary line aimed at 26- to 32-year-olds. The brand is sold at Fred Segal, Scoop, Nordstrom and Macy’s, and opened its first store at Garden State Plaza in Paramus, N.J.
“There’s certainly a possibility that Free People could be a third retail brand,” Senk said. “We’ll absolutely have a third retail brand because we’ll eventually max out on Urban and Anthropologie.”
The company has the means to expand. When Urban Outfitters reported its first-quarter results, it had $57.6 million in the bank.
“We’ll never grow to the point where we’d have to change our customer focus,” Senk was quick to add.
Everything Anthropologie does, according to Senk, is in service of its customer, a well-defined female profile drawn from extensive research. She’s between the ages of 30 and 45, highly educated, suburban or ex-urban, in a committed relationship and likely to have kids.
The target woman is confident enough to know her own style, which is why Anthropologie sales associates don’t approach shoppers with suggestions for putting outfits together or pitch ancillary products like socks to go with the pants she’s buying.
And unlike the Gap, which throws its weight behind a single item or trend each season — that can make or break profits —Anthropologie isn’t about finding the one hot product that everyone will be wearing on their backs or bottoms.
While the chain has the ability to sell thousands of units of “a good item,” Senk is more interested in creating an overall mood for the store than piling tables high with pants or sweaters with all the charm of a warehouse.
Senk’s self-described management style is supportive and collaborative, but he can also be exacting and hard-driving. Buyers have the autonomy to fill stores with unusual finds and are encouraged to scour the world for unique items.
“Wendy doesn’t come to me unless she has a question,” said Senk, referring to Wendy Wurtzburger, head merchant for women’s apparel and accessories. “She’s the boss.“This is a company of shared vision and collaboration,” added Senk. “Ideas can come from anywhere. We have such low turnover in our organization. When we make the right choice, people don’t leave this company. We encourage a lot of entrepreneurialism.”
Each season, Senk, the design staff, merchant staff and visual team develop concepts together.
There are usually several fashion stories. For example, for fall, Boys and Girls features Sixties-inspired silhouettes without a trace of retro gimmickry. A short corduroy kick-pleat skirt with six ornamental buttons and a red stretch corduroy peacoat subtly suggest Carnaby Street in its heyday.
Other themes for fall include Muse, a bohemian riff on the artist and her studio, with romantic mesh wrap tops, silk devoré jackets, silk-trimmed cargo pants and asymmetric skirts. Starlet is Anthropologie’s take on Hollywood glamour circa the 1950s: lace-trimmed pinstripe pants, bias-cut silk slip dresses and shawl-collared sweaters with bow details that bring to mind Marilyn Monroe.
Greenberger noted that in the specialty retail sector, Lehman Brothers is only recommending three stocks out of 14 and Urban Outfitters is one of them. “The single most important thing for Anthropologie’s success is its ability to execute on product,” she said. “Glen [Senk] has been doing a terrific job of identifying trends and translating those trends for their customer and showcasing them in stores. That’s translating into sales.”
“We’re vertical, but we would never walk away from the market,” said Senk. “We’re 50 percent private label and 50 percent market-driven. Market products leverage the risk and add eclecticism. We are excited about working with smaller resources. We’ve been able to help people with sourcing and partnered people with each other.”
At Anthropologie, the shopping experience is almost equal in importance to the actual product.
Consumers, who spend an average of 1 1/2 hours in stores, are seduced by a setting that’s at once soothing and stimulating. Even entrances signal that something exotic lies behind the massive wooden doors.
When Anthropologie executives talk about stores, they use words like “discovery” and “escape.” It would be a cliché if not for the one-of-a-kind fixtures such as an antique pharmacy transplanted from Italy, Murano lanterns hanging from the ceiling and products such as $1,000 tile wall hangings made in France.“The stores are a very real experience,” Senk said. “The floors are recycled wood. There’s nothing Disneyesque about the design.”
Store decor and merchandising includes creative and colorful window displays, often with scenes painted directly on the glass. Large branches, mobiles, streamers and awnings decorate the spaces, which average 8,000 square feet, and iron campaign beds laden with Japanese patchwork bedding and antique furniture lend a residential look. It’s a lot to take in, but the goal is to take the customer’s breath away the minute she steps into the store.
While the total effect seems effortless and organic, the process is actually quite controlled. “Designers climb up on a ladder and spend hours watching foot traffic,” Senk explained.
Senk and his team are as restless as their customers. (“We are the customer,” they’re fond of saying.) Displays are changed several times during a 12-week cycle to help repeat shoppers feel like they’re seeing something new every time they come in.
“A theme may be valid for 12 weeks, but it will look different during the 12 weeks,” said Senk. “We turn inventory six times a year and receive new product four days a week. We say a trend has 12 weeks on a micro level. It’s a complex business.”
Every Anthropologie store employs two full-time visual display people, which would be considered a luxury even for larger retailers. Rather than spend money on advertising, the company funnels its resources back into stores to enhance the shopping experience.
“We believe people shop for escape and entertainment,” Senk said.
Greenberger worries that the firm’s high design standards will be difficult to execute across a large number of stores. “This is a company that hires the highest level of talent,” she explained. “They essentially hire set designers and every store is a different set. They depend on incredibly talented, creative people. Sometimes talented people are not scalable.”
How Anthropologie resolves this issue remains to be seen. Right now, a designer’s personal imprint, something most chains try to obliterate in favor of a uniform look rolled out from unit to unit, is encouraged. In SoHo, for example, the entire wall of a room devoted to home furnishings is covered with folios torn from old books.Unlike some retailers that are reluctant to mark down merchandise, Senk admonishes managers to take out their red pens at the first sign of a clunker.
“It’s not about managing margins or floor space,” said Senk. “We think about how we run our stores differently from other people. We’re not afraid to take markdowns. We get rid of the mistakes and bring in more new stuff. We move quickly if we see a product isn’t selling. We can predict how a product will sell within a few days.
“We’ve marked down some fall merchandise already — but not a lot,” he said. “We run at a very low markdown rate. Our regular price sell-through is in the 80-to-90 percent range.”
Senk views mistakes as a learning opportunity.
“We had one negative quarter in 2000,” Senk said.
“We lost sight of the customer,” explained Wurtzburger. “Since then, we’ve employed a systematic process of staying in touch, including focus groups, exit surveys and fit sessions. We really started listening and focusing on quality. Quality and fit were a big initiative.”
In addition to Nanette Lepore, Michael Stars, Velvet, C.C. Outlaw, Left of Center, Sanctuary, Jethro and Peter Kent for shoes, Anthropologie makes fashion under various private labels, like Louie, Elevenses, Odille and Sitwell.
The chain sells vintage jewelry priced under $500, and necklaces and bracelets with freshwater pearls and semi-precious stones for under $400. “Our customer buys serious shoes and she has real jewelry,” said Senk, adding that these are two areas he’d like to expand.
In the home area, stories abound about artists and crafts people discovered by Senk’s life partner, Keith Johnson, who spends half his time visiting foreign flea markets and auctions buying furniture, tabletop and linens.
“A lot of products we buy as antiques and they sell really well,” said Senk referring to furniture. “Once a month, someone will come in and spend $30,000 or $40,000 and buy everything.”
He recalled the time Jean Paul Gaultier came to the SoHo store and bought an entire collection of furniture crafted from the side of an airplane that Johnson found in Paris.One of Senk’s favorite anecdotes is about a homeless husband-and-wife who were living in the south of France when they were discovered by Johnson. The wife, Odille, paints bright flowers overflowing from blue and white pottery and signs the work. Her husband makes the frames for the paintings. “He had a drinking problem,” said Senk. “Keith really saved them. Odille got new teeth.”
This eclecticism is not an anomaly. Napkins embroidered with roosters were designed by Julia Dickens, the granddaughter of Charles Dickens. The writer’s great-granddaughter, Polly Dickens, is the chain’s home designer.
“People’s personalities come through,” said Senk, whose challenge now is to grow the chain without losing that personal touch.
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