The three challenges Urban Outfitters had are getting their product/idea to “mass produce”, controlling debt, and handle situations where things in the market began to age out. A “niche” product is a product that is manufactured and marketed for specialized uses and different from other products. Three examples of “niche” products are used cloths, bohemian knickknack, and found objects. The advantages of a niche company are you have the opportunity to make your work more enjoyable and price. By targeting a specific group you don’t have to have a big generalized ad that can cost a fortune.
Three reasons customers may pay more for exclusivity are quality, comfort, reputation. Niche players “chip away” at larger competitors’ base by creating a product that becomes successful in the market causing larger competitors to have to buy and sell their product through retail. Examples of niche players that have done this are Urban Outfitters, Apple, and Martha Stuart. Urban Outfitters Urban Outfitters started out as a small shop with unique products and escalated to a very successful company.
The original name was The Free People’s Store and was owned by Richard Haynes, his wife (whom he later divorced), and Scott Belair (whom later ventured off to Wall Street). Urban Outfitters faced some unique challenges that Richard Hayes had overcomed. One of the challenges Richard Hayes faced with the idea of Urban Outfitters is getting it to “mass produce”. He wanted to create a series of unique stores that sold products for a particular crowd of people, different; a niche product. The niche products he sold were used cloths, bohemian knickknacks, found objects, imported incense burners, and Madras bedspreads.
Some people may find these products exclusive and would purchase them because of the quality, comfort, and reputation. Controlling debt was another challenge. Urban Outfitters started off with no debt, but later developed some as new stores were being made. However, Hayes became adverse to his debt. Also, another challenge came when things in the market began to age out which caused Urban Outfitters to open its first London Anthropologie store. This store was an upscale store, in which, new concepts and product lines was introduced.
Though there were challenges, but there are some advantages to having a niche company, such as, Haye’s Urban Outfitters. By having a niche company you have the opportunity to make your work more enjoyable because it is based off of your own niche. “Work seems like playing when you focus on something you love doing for people you love working for. ” The real advantage is price. By targeting a specific group marketing cost is reduced and you don’t have to use big generalized ads that can cost a fortune. You can use marketing strategies that are more affordable yet gets the job done.
Richard Haynes is considered a niche player. Niche players “chip away” at larger competitors’ base. They do this by creating a product that becomes successful in the market causing larger competitors to have to buy and sell their product through retail. Richard Haynes used this concept when he brought out the Free People clothing line which was sold at Macy’s and Urban Outfitters. Other niche players are Apple and Martha Stuart. Urban Outfitters became a very successful company due to the great optimism of Richard Haynes.
Q2 FY 2009 Urban Outfitters Earnings Conference Call, Thursday, August 14, 2008 11:00 a.m. ET, http://phx.corporate-ir.net/phoenix.zhtml?c=115825&p=irol-EventDetails&EventId=1908465