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Alexandra Biesada

Urban Outfitters Tries On Pizza

by Alexandra Biesada | Dun & Bradstreet Editor

November 17, 2015 | No Comments »

Urban Outfitters signApparel retailer Urban Outfitters is trying something new on for size: the pizza business.

The company yesterday announced that it’s buying The Vetri Family group of Italian restaurants, including the popular Pizzeria Vetri, for an undisclosed sum. The six restaurants are located in the Philadelphia area, where Urban Outfitters is headquartered.

Why is the operator of hipster clothing brands, including the eponymous Urban Outfitters and Free People, as well as Anthropologie and wedding website BHLDN, getting into the restaurant business? The answer is simple. Increasingly, consumers are choosing to spend their disposable income on experiences, such as dining out, rather than merchandise. Indeed, restaurants have seen some of the strongest growth of any retail category this year.

By comparison, apparel retailers, including department stores Macy’s, Dillard’s, Nordstrom, and American Eagle, have all recently reported disappointing earnings and are forecasting a lackluster holiday selling season.

Urban Outfitters, while still growing, is also experiencing weak foot traffic to its stores. Third-quarter same-store sales, reported yesterday, rose just 1% over the same quarter last year. News of the pizza deal drove shares of Urban Outfitters down 7% yesterday. Overall, the stock is down about 40% year to date.

Hungry for growth, the company is looking beyond apparel to food. “Spending on casual dining is expanding rapidly,” said Richard Hayne, CEO of Urban Outfitters, in a press release, adding, “We believe there is tremendous opportunity to expand the Pizzeria Vetri concept.”

The company, which has previously experimented with putting restaurants in some of its Urban Outfitters stores, hasn’t yet said how it plans to develop the new business. Incorporating restaurants may drive more foot traffic to Urban Outfitters’ stores, but will it boost apparel sales?

Judging by Wall Street’s reaction, investors are skeptical.

Industry Impact: As consumers shift to purchasing experiences rather than things, retailers are struggling to attract shoppers and grow sales.

Alexandra Biesada shops every day, whether she wants to or not, and pines for the days when it was strictly a recreational activity. She has covered the retail beat for Hoover’s since 2001. Follow her on Twitter.

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