Urban Outfitters, Inc (NASDAQ:URBN) geared up to expand to Asia

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By Thomas Copeland on September 18, 2014 Consumer Staples

Urban Outfitters, Inc (NASDAQ:URBN) is planning to expand its web to international market. The reasons are nothing new – growing competition from fierce rivals and dwindling sales in the past couple of months. Seems reasonable!

Urban Outfitters, Inc (NASDAQ:URBN) is planning to open its first company based store in Hong Kong. It initially entered Asia through World Co Ltd but now it wants to take matters in its own hands. It’s not just Urban Outfitters, Inc (NASDAQ:URBN), almost all retailers are going international because running only domestic business is getting too risky; most of them have already gone international or are gearing up to do so. Worldwide expansion no doubt has its drawbacks, but the idea behind expansion is the wider customer range and of course big sales.

Urban Outfitters, Inc (NASDAQ:URBN) usually does well but poor choice of merchandise has hurt its sales in the past few months.

Hong Kong will open an Urban Outfitters, Inc (NASDAQ:URBN) portal to the Chinese market. The Chinese market is showing tremendous growth; therefore Urban Outfitters, Inc (NASDAQ:URBN) ideally should have no problem with expansion; however it needs to understand the demographics and psychographics of the country. Also the apparel market in China is quite competitive; and consumers come from different social classes. Urban Outfitters, Inc (NASDAQ:URBN) will have to cater to every class to expand successfully in the country.

The growing urbanization and people becoming more and more brand conscious in China is an indication that the apparel market in China will boom in the years to come. It’s a great opportunity for Urban Outfitters, Inc (NASDAQ:URBN) as the move seems timely and well planned. According to analysts apparel sales in China will see a great rise in the years to come.

Despite all the positivity, Urban Outfitters, Inc (NASDAQ:URBN) will face its shares of problems. China has a very awkward and peculiar consumer behavior. Many local bands haven’t been able to last more than 1.5 years in the country mainly because trends change fairly quickly in China as compared to other parts of the world.

Another huge task and hurdle for Urban Outfitters will be to look for ideal locations for its stores; real estate prices in China are quite high.

Many rivals of Urban Outfitters, Inc (NASDAQ:URBN) are also finding base in Asia. This will require a full-fledged marketing and business strategy from Urban Outfitters. Not only will it have to compete against international rivals, but it will also have to handle the local competition.

Urban Outfitters, Inc (NASDAQ:URBN) will have to take risks to pull in some sales in the midst of all its competitors. If Urban Outfitters, Inc (NASDAQ:URBN) succeeds in formulating an exclusive, strong and effective marketing and brand strategy for the Chinese market then it should have every opportunity to make the most of one of the biggest populations in the world. The company will have to be smart about its pricing, advertising and business objectives – what worked in the US might not help in China at all.