Urban Outfitters Omnichannel Inventory Supports Store-Based Fulfillment

Urban Outfitters' recent move to store-based fulfillment of direct orders has been made possible by creating a single set of channel-agnostic inventory – a move that has made its overall inventory more productive and may lead to reduced markdown exposure.

"We're operating out of one inventory pool so we can fill our direct-to-consumer orders out of our store community, and utilizing that tool for our inventory reduction," said Urban Outfitters Group president Ted Marlow. "We can have the inventory in the store with a chance of sale as opposed to sitting in a DC, and leverage the total investment to the downside and I think get more productivity, and, I would hope and think, reduced markdown exposure."

Speaking at the Morgan Stanley Retail & Restaurant Conference, Marlow provided details on how Urban Outfitters manages the store-based fulfillment initiative that began last year. Asked about store-level incentives that might be needed to encourage store personnel to pack and ship popular items for online customers, Marlow credited a combination of payroll management and incentives.

"The store team did a very good job of creating an incentive system related to the fulfillment of orders, and the people are incented to fulfill and that can complement perhaps a downside exposure in regard to sales performance," said Marlow, adding that stores have quarterly bonus opportunities tied to sales performance. "That really was the work in the first 30 to 60 days of being up and running on pack and ship."

The retailer also uses business rules relating to margins and the particular item as well as around shopper behavior. "If we know a customer has been shopping sale goods online, chances are pretty good we're not going to want to fulfill that out of the stores if it doesn't happen to be in stock," said Marlow.

Urban Outfitters is looking at other ways to maximize its total inventory investment. Marlow discussed a test at its store in Long Island, NY's Roosevelt Field mall that offered customers the ability to browse and shop the retailer's entire footwear assortment, "which in the women's side runs up to 1,000 styles," he said. "Obviously we can't carry that in a [single] store location. We created an initiative to really understand what the customer response would be if they were able to shop via iPad the total assortment in a store environment.

"That particular test is something that we want to take and utilize for other categories to be able to utilize the total inventory investment not only online, but in store," said Marlow.

For related content: Urban Outfitters Improves Inventory with Virtual Warehouse

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