Motley Fool: Urban Outfitter’s Green Thumb

By Alyce Lomax
Today’s headlines about Urban Outfitters(Nasdaq: URBN) new brand are hardly news to the company’s close observers. The real scoop today is what the new brand’s all about, and who it’s targeting: rich people with green thumbs.

No surprise here — as with all its other chains, Urban Outfitters is aiming for affluent customers with its new concept. Like previous hit Anthropologie, it’ll presumably target 30-to-45-year-old shoppers; unlike Anthropoligie, it’ll welcome male and female shoppers alike.

In the press announcement, Chairman and President Richard Hayne said the new concept will be inspired by “the greenhouse,” offering home and garden products, live plants and flowers, and oddly enough, antiques. The new concept will launch its first large, free-standing sites early next year.

I’m no Miss Moneybags, but since I’ve been dabbling with gardening this year, I can appreciate Urban Outfitters’ latest attempt to garner a new source of dollars from its familiar favorite demographic. In addition, gardening in its many forms appears to be an increasingly popular pastime. Last year’s National Gardening Association survey showed that 83% of Americans did some kind of do-it-yourself gardening. Over the last five years, the U.S. spent an average annual $36.9 billion on gardening. (It probably didn’t hurt that the real estate market emphasized the importance of attractive lawns.)

Retail chains like Home Depot (NYSE: HD), Target (NYSE: TGT), and Costco (Nasdaq: COST) offer some garden-oriented products, but I’ve often found their selection lacking, and they’re not exactly classy. Independent gardening centers and nurseries always seem to have more exciting gardening wares; they may command a greater share of the upscale market.

Urban Outfitters is no stranger to taking on independents like these. Much of its individualistic branding relies on distinguishing itself from many mass retailers. Urban Outfitters is loath to describe its concepts as “chains;” its storefronts are often eclectic, giving customers slightly different experiences at different locations.

Transferring that hipster cachet from garments to gardening may prove tricky, though. Large, free-standing sites sound costly; peddling living things and antiques sounds a bit more challenging than many retail endeavors; and if Anthropologie’s current home decor merchandise is any example, the items won’t come cheap.

That said, I’ve long considered Urban Outfitters a solid company for the long term. As far as I can tell, it’s run by smart people who seem to understand their core customers. I’m more impressed that this concept identifies a new market opportunity while staying true to its customer base than I am nervous about its potential risks. Perhaps, without a little risk, it wouldn’t be worthwhile.