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In a presentation entitled “Engaging Customers at the Point-of-Interest,” Urban Outfitters chief information and logistics officer Calvin Hollinger discussed ways in which the retailer’s rapidly evolving mobile POS system helps to manage issues as varied as store operations, online returns, out-of-stocks and rapid delivery. Urban Outfitters has more than 400 retail locations under five brand banners and annual sales of about $3 billion. “We are global,” Hollinger said, “retail, direct and wholesale.” E-commerce direct sales represent one-fourth of total revenue, “and one of the challenges confronting us is managing the growth of that channel,” he said. “Could it become 40 percent, 50 percent, 60 percent of revenues? We’re in the process of working out what it can be and how to deal with it.”
The ‘upscale homeless’ Urban Outfitters’ core customer base is what Hollinger and his colleagues refer to as the “upscale homeless” — hip 18- to 28-year-olds, most of them college students with no homes, using their parents’ credit cards — though each brand has its own identity. Urban Outfitters’ e-commerce business is dubbed by Hollinger “the alpha” operation; the company focuses on a broad, deep assortment online, less broad and deep in the stores. In this it is modeled primarily on operations like the U.K.’s ASOS. Anthropologie is aimed at the core group’s older siblings and parents — 28- to 45-year-olds in the nesting phase of life. This brand, said Hollinger, is very high-touch and focused on customer service. Free People is somewhere between Urban Outfitters and Anthropologie — small stores in terms of square footage, assortment and back office space. Terrain is a gardening concept with a café in which the customers can contemplate (and buy) plants while they snack. BHLDN (pronounced “beholden”) is a wedding shop.
Mobile POS Terrain was something of a pioneer in mobile checkout at Urban Outfitters, based mostly on logistics; if you have customers buying trees, large plants and bags of loam, and then loading them into their cars, it’s easier to bring checkout to them. BHLDN, which has wedding dresses on display, has also been a big user of mobile POS. About a year ago, Urban Outfitters deployed mobile POS systems to every store. The device, Hollinger said, handles all transactions except cash, check and debit. The decision to deploy was based on sensible business considerations, but it received a certain extra impetus from company CEO Richard Hayne. “We were sick and tired of hearing [Hayne] … telling us, ‘Apple can do this,’ ‘Apple can do that,’ ‘Apple has digital receipts and mobile POS,’ Hollinger said. “We said, ‘Right, we can do that,’ and were deployed fairly quickly.” The system, he said, had quite a lot going for it: It was well received from a usability perspective, didn’t present a steep learning curve and wasn’t cost-prohibitive. A fully deployed mobile device costs around $500, while a full-scale POS terminal and cash register costs around $5,000. “We could avoid rolling out holiday registers,” said Hollinger. “We told the stores, ‘If you give us back a register, we’ll give you five of these devices.’”
Slow adoption There was only one problem: After a year, Urban Outfitters was what Hollinger described as a low-single-digit user of the device. “We soon realized,” he said, “that we had replaced one technology with another without adding any features or functions. What we had made a lot of sense, but we simply weren’t seeing associates use the devices as we expected. So we began rolling out a new application.” Urban Outfitters added a function for handling returns of merchandise purchased online. About 20 percent of Internet-sold merchandise is returned, and some 60 percent of those transactions take place in stores despite the fact that Urban Outfitters offers free shipping on returns. “As our e-commerce share is rapidly growing, this was a huge operational challenge,” Hollinger said. One part of the challenge: Web-sold merchandise comes in without a price tag. Urban Outfitters added a ticket-printing function to the mobile POS that enabled associates to print out price tags on the spot. This helped increase usage, as did a store out-of-stock application, which, like many good ideas, had its origins in an unsuccessful experiment.
‘Poor man’s RFID’ In 2011, Urban Outfitters “experimented” with RFID. “A lot of stuff wasn’t stocked in the main floor, and the idea was this would help an associate find it in the back,” Hollinger said. “We did it for our denim brand, and we noticed very quickly that while we were getting a sales lift, we couldn’t afford RFID. More importantly, for RFID to work you have to tag it at the source,” and Urban Outfitters has approximately 4,000 vendors. As an alternative, the company came up with what Hollinger called a “poor man’s RFID,” a stocking application that does two extremely useful things. One is restocking; at any time, an associate can log onto the system, choose a category — women’s outer-wear, say — and choose a concept, and the system will tell her how much to restock. The other, an out-of-stock function, scours the entire enterprise to see where an item is — a distribution center, another store — and will fulfill the transaction immediately on the mobile device. This is terrific for associates, and gave Urban Outfitters a big boost in device usage, but it’s also a big step forward in competing with companies like the “Tech Titans.” “We had to re-platform the entire back end to put in automatic systems to look where the inventory is and begin to replenish it,” said Hollinger. “This has increased sales and also helped reduce markdowns in stores.” Urban Outfitters will have mobile POS devices in the hands of every associate within two years, Hollinger said, with the long-term goal of replacing registers entirely. It also, as noted, plans to go head-to-head with those Tech Titans in terms of convenience and delivery time. “We can do same-day delivery from stores,” Hollinger said. “We can contract with [local search app] Milo to keep track of everything, or we can do it ourselves. What Amazon wants to do, we can do it, too. With 400 stores, we have more distribution centers than they do.”