Urban Outfitters Dumps Cash Registers, Doubles Up On Datacenters

Urban Outfitters is dumping its cash registers. The 456-store chain—which includes Anthropologie, Free People, Terrain and BHLDN stores—is retiring dedicated registers, replacing them with iPod Touches for in-aisle checkout and iPads for cashwraps, the chain's IT head told analysts on September 27.

The shift is part of an IT revamp that includes a merged inventory system, ship-from-any-store capability and improved turnaround on returns—in addition to a new West Coast datacenter that effectively works as a disaster recovery hot site for the company's existing East Coast IT operations.

"Two or three weeks ago, we placed our very last register order. We're out the register business," said Urban CIO Calvin Hollinger. "Going forward, we had placed the orders. We've got some new stores coming up. But once we successfully make sure this iPad works in all the stores, all stores will be designed and equipped with iPod Touches and iPads."

The iPads, mounted on swivel arms, will be the primary replacements for conventional registers at cashwraps, while all associates will eventually be issued sled-equipped iPod Touches for in-aisle checkout—1,100 iPods should be deployed by the end of 2012. One driver for the changeover was cost: The iPod "fully loaded, fully installed, is about $500, and a register is about $5,000," Hollinger said. "The iPad is $1,000 fully installed versus $5,000."

Let's be clear: Nothing in Urban's IT revamp is revolutionary. The unified view of inventory, the in-aisle checkout, the ability to find out-of-stocks instantly in nearby stores—that's all been pioneered before by Macy's, Nordstrom, Apple and other higher profile chains (and they're the ones with the scars to show for it).

A few nice touches are specific to Urban: For example, if an E-Commerce item from Anthropologie is returned by a customer to wedding-dress store BHLDN, which may not carry that product, the item can still be shipped out by the store to fill a new E-Commerce order without having to return it to a distribution center.

But what's really striking is how quickly, and with how little fanfare, Urban has pushed through the changes. If a $2.5 billion chain can roll this out in less than two years, there's been a very real shift in how fast non-cutting-edge retailers should be adopting the current wave of new technology.

In fairness, at least some of the new IT wasn't so easy to deliver. This year, Urban opened a $55 million West Coast distribution center in Reno, Nev., which will cut E-Commerce delivery time to under two days for 80 percent of Urban's customers. In the same building, Urban added the new datacenter, which splits Web site traffic that previously all went to the chain's IT shop in Trenton, S.C.

"We've built a state-of-the-art datacenter in here which replicates the datacenter we have on the East Coast and runs all our critical systems in parallel at the same time," Hollinger said. "From a business continuity perspective, if we ever lose Trenton to a hurricane, fire or massive mechanical failure, this facility can fill all the customer demand out of the West Coast."

He added, "We've all had examples where the backup system is on standby. We think it's going to work, but it doesn't work. We can't afford that. Our direct business is too important. So in here, this is not a backup facility. We are running our critical systems, our E-Commerce systems in parallel. So in the cloud, we direct some of the traffic to Reno and some of the traffic to our East Coast datacenter. If we ever lost one or the other, we would fail over seamlessly within seconds with no impact to the customer."

Notable among the technology that Urban decided not to use chain-wide is item-level RFID. After a pilot a year and a half ago, tagging denim apparel, Hollinger concluded that RFID was great for keeping stock on shelves and real-time sales visibility—confirming the benefits that RFID advocates have been pushing for years—but "RFID was not ready for us, and we were not ready for RFID. So we built a poor man's version of RFID on the mobile device."

The restocking application uses sales and inventory numbers instead of RFID-based counts. But it's still possible to flag associates when an item is running low and to let corporate track how well stores do at restocking. The app also helps in cases where on-shelf or stockroom counts don't match inventory numbers—"which gives an indication: Do we have some bad stockroom practices or operational practices in a store which need to be improved? Or do we have a shrink issue in the store?" Hollinger said.

Again, this is clearly second-wave use of retail IT. The pioneers have already collected the arrows in their backs, which makes it easier for Urban to know what to copy and what to avoid.

But it's also now clear that second-wave time has arrived for some of these technologies. Not every chain is going to be dumping all registers and building new parallel datacenters, but that's no longer cutting-edge retail IT.