Fresh off Navajo controversy, Urban Outfitters stock plummets, CEO exits

Jan. 27, 2012 | by Jon O'Barr

Late last year, a post on a popular blog started a ripple of protest against retailer Urban Outfitters. Sasha Houston Brown, a member of the Santee Sioux Nation, wrote an open letter to Urban Outfitters in which she criticized the company for selling "cheap, vulgar, and culturally offensive" items. The target of her ire was a line of items described by the Urban Outfitters website and marketing materials as "Navajo." The products ranged from Navajo Hipster Panties to accessories such as a Navajo Print Fabric Wrapped Flask.

The open letter first appeared on the blog Racialicious, and quickly spread to other sites. Soon the Attorney-General of the Navajo Nation sent a cease-and-desist letter to Urban Outfitters, asserting the Nation's copyright of the name "Navajo" and noting:

"Your corporation's use of 'Navajo' will cause confusion in the market and society concerning the source or origin of your corporation's products."

It was not an idle threat. The Federal Indian Arts and Crafts act of 1990 and the Federal Trade Commission Act prohibit U.S. retailers and manufacturers from even implying that a product is Native American-made when it is not. The Navajo Nation has a long history of fiercely protecting its intellectual property: As far back as 1930, the FTC and the Navajo Nation had stepped in to prevent the Beacon Manufacturing Company from claiming or implying that their patterned fabrics were made by Native Americans. In early 2011, legal pressure from the tribe forced a French company to stop using the name "Navaho" in its U.S. businesses because of potential consumer confusion.

Urban Outfitters responded to the protests and the threat of legal action by renaming the items and removing the word "Navajo." But the controversy was a black eye for the retailer, already struggling with inventory and declining margins. Its net income fell in each quarter of 2011, despite strong November and December numbers. On Jan. 9, Urban Outfitters CEO Glen Senk abruptly resigned. The management shake-up led shares in the retailer to drop 18.6 percent.

So what can others retailers learn from Urban Outfitters mistakes?

"There's a great many Navajo designers out there who would be more than willing to work for a firm and design garments for them," said Shane Hendren, head of Albuquerque, New Mexico-based Indian Arts and Crafts Association Education Fund, in an interview with the Associated Press. "And having the cultural background, be able to not only give you an authentic design but stay within their cultural parameters."

"Your brand is in a fishbowl," said Doug Stephens, a 20-year veteran of the retail industry and founder of Retail Prophet. "Your products, claims, and business ethics are on constant public display. When you get caught (making a mistake), admit the mistake fully and completely and over-fix the problem. (Urban Outfitters) should have withdrawn (these products) immediately in the first place."

That's not to say that marketing products that are identifiable with indigenous and/or marginalized cultures is always a mistake. Some retailers, such as Pendleton Wool, have a long history of success with just such items. Pendleton, however, started by selling the bulk of their patterned blankets directly to Native Americans, who would then resell the products.

"Leveraging heritage, whether native, African-American, Asian or otherwise is fine, provided it's a genuine and inclusive celebration of that culture," Stephens said. "When it's a blatant cultural rip-off or worse yet, an insult, it's a huge problem. It's particularly difficult when dealing with cultures who have suffered the adversities that Native Americans have. Brands have to be sensitive to that. Authenticity matters. Don't flippantly pass something off on your consumers."

In fashion retailing, where deliberately courting controversy can translate into higher sales, playing publicly with notions of cultural authenticity is not unusual. Nor are backlashes against the misappropriation of cultural signifiers.

For retailers, marketing products that may have cultural baggage is a risky proposition. But honesty and due diligence help navigate that potential minefield. In the age of blogs and social media, everyone has a voice, and that voice can be amplified a thousand fold overnight. Retailers can make that amplification work in their favor, though as Urban Outfitters found out, it's much easier to get bad publicity than good.

Urban Outfitters declined to comment on this story.

(Photo by Ryan Speth.)

Topics: Consumer Behavior , Marketing , Merchandising , Retail - Apparel

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