Wednesday, October 15, 2008

Money & Business

Money Matters by Katy Marquardt and Kirk Shinkle

City Mouse, Country Mouse, Modest Mouse

February 13, 2008 12:58 PM ET | Kirk Shinkle | Permanent Link | Print

Click through the artfully disheveled habitués of Urban Outfitters' Flickr pool.

Now, take a gander at Mr. Jacob Styer.

What do they have in common?

One bought the other late last month.

Concordville, Pa.-based J. Franklin Styer Nurseries is now part of Urban's forthcoming Terrain concept—the retailer's push to extend its brand of youthful chic to the staid (if lucrative) DIY gardening market dominated by Home Depot and Lowes. The target market is the same wealthy age group (35-45) served by Urban's hot Anthropologie and Free People stores.

The home and garden market is worth about $79 billion, if you include spending on greenery plus landscape design, construction, and maintenance, according to the National Gardening Association.

What's interesting to me about the concept is its not-so-obvious parallel to another longtime retail winner: Tractor Supply Co.

Tractor Supply built a great business targeting a specific niche customer—the part-time, rural farmer and rancher. Its stores offer fewer products than a Wal-Mart, but they're a unique mix of practical items and pricey extras that cater to weekend agro-enthusiasts.

Urban has a similar opportunity with its own subset of shoppers: Suburban and urban gardeners could use something between the local flower shop and a superstore. The company has said it'll spend $2 million or so a year on the concept, and the concept could resemble a sort of Starbucks-meets-Mayberry experience (Styer's has an in-store coffee shop).

Keep an eye on Urban for other reasons as well. Its core business is coming off a strong holiday season, and Bear Stearns upgraded the company last week to "peer perform" from "underperform" and its shares have managed to stave off much of the weakness in the retail sector so far this year—something Luke Mullins and I noted in our year-end bottom-fishing expedition back in December.

So can hipsters get excited about potting soil? Discuss in the comments below.

Tags: business growth

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Katy Marquardt came to U.S. News from Kiplinger's Personal Finance magazine, where she profiled rising stars in the mutual-fund world and wrote about investing in stocks and racehorses. Katy hails from Abilene, Texas, and graduated from the University of Texas-Austin.

Kirk Shinkle is a senior editor at U.S. News. Formerly, he covered business and economics on both coasts for Investor's Business Daily. A native of the Montana-Texas corridor, he currently resides in the wilds of west Brooklyn. His checkered online evolution looks like this: Friendster, still (!). MySpace, no. Facebook, yes. He blogs here, Twitters occasionally, and has yet to Tumblr.

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