Abercrombie & Fitch was established in 1982 as a sporting and excursion brand, and later expanded into sport clothing to become "The Greatest Sporting Goods Store in the World" in 1939; however it went bankrupt in 1977. In 1978 the brand was bought by Oshman's Sporting Goods and then bought by The Limited Inc. in 1988. The company has shift the attention from sport clothes and accessories to high-end casual clothes targeted at young consumers promoted via "provocative and sexually explicit marketing campaigns". The company has opened several sub-brands, notably Abercrombie Kids in 1998 and Hollister Co in 2000 (aimed at consumers of 14-18). The company hires young attractive people as sales-force to work as brand ambassadors. A&F emphasizes the importance of shopping experience via music, fragrance and decor. Because of its focus on "cool" kids, it marketing campaigns and segmentation practices and hiring practices cause much controversy. In later 2000s and early 2010s, the company has changed its HR policy to promote diversity. The company is good in implementation of e-commerce, its direct-to-customer sales increased from about $100 million in 2003 50 more than $500 million in 2012. The company plans to continue increasing the share of direct-to-customer sales. Another area of growth is international expansion, which the company began in 2006 by opening stores in Canada. It expanded at deliberately slow pace to have a high level of sales per sq. foot. Meanwhile, company is eager to close all the under-performing stores in the U.S.
The problem is that the growth via international expansion might not be sustainable, because of the economic uncertainty all over the world and in Europe in particular. Apart from the fluctuations in exchange rates, there are risks associated with cultural differences and local regulations, given the provocative nature of the brand. The apparel industry is known for a sudden change of trends, and A&B faces decreasing interest towards the youth brands that promote sexuality and exclusivity, as the concept of "sexy" is now altering. Consumers are now not always interested in the appeal of A&F lifestyle and young customers are now not interested in “cool kid” image. In addition, the brand offering cheap clothes, such as Forever 21 and H&M, might be increasingly hazardous to A&B, because of high unemployment among youth and lower disposable income and customers might feel the brand's products are overpriced.
One alternative is keeping the status quo and focusing on international expansion while benefiting from e-commerce growth. However, this is not a viable alternative as the major problem would not be targeted. Hence, the most important problem is not about economic uncertainty, but in not responding to the changes into the interests of customers. Essentially, the company has not repositioned itself since Mike Jeffries became the CEO and promoted his idea of "cool kids" and "California dream image". Fast fashion brands are more flexible in reacting towards customers' needs and offer products at lower prices. While quality of the products by fashion brand is lower, this is not an issue as teens enjoy constant change of their clothing styles. The current Generation Z, unlike Generation Y, is not interested in brand loyalty (and thus large logos on clothes), nor they interested in embraced exclusivity or beauty standardization (Halley). They are interested in inclusivity and diversity, customization, and they are not brand-loyal (Peterson).
The changes may be only implemented if the entire top-management team and Mike Jeffries would be fired. In fact, this happened in late 2014, after the time the case study was written (Berfield and Lindsey). The implementation and control should be done by the new management team. It should reposition the brand, to attract the new generation of teenagers, who are interested in fast fashion, skinny clothes and modern image, instead of the sexual image in clothes and promotion. Hence, the new top-management should rebrand A&F, change the product line, marketing and positioning strategy. This would be challenging and hard, but this is the only way for the company to survive.
Works Cited
Berfield, Susan and Rupp, Lindsey, “The Aging of Abercrombie & Fitch”, 2015. Web. <http://www.bloomberg.com/news/features/2015-01-22/the-aging-of-abercrombie-fitch-i58ltcqx>Accessed on 28 January 2016.
Halley, Chloe, “Abercrombie and Fitch”, 2014. Web. <http://chloehalley.com/tag/abercrombie-and-fitch-swot-analysis/>. Accessed on 28 January 2016.
Peterson, Hayley, “Four Signs That Abercrombie Is Completely Out Of Touch With Its Customers”, 2013. Web. <http://www.businessinsider.com/abercrombie-is-out-of-touch-2013-11>. Accessed on 28 January 2016.
