Problem
The provided case focuses on the Abercrombie & Fitch’s tumbling market share as well as declining sales during 2011. This was a major problem for the organization, which required sudden attention from the management. The company was required to make a quick decision regarding their domestic stores closure and ultimately expanding internationally to increase sales and revenue. Abercrombie & Fitch was also stuck in the middle way to find out which market segment would best fit the criteria of its target market. A&F was desperate to revive its standing of an upscale and fashionable clothing retailer. Furthermore, it was faced with a situation where it was considering closing down its stores.
Analysis
The case sheds light on the situation of Abercrombie & Fitch during 2009, when the company generated around 80% of its sales through its domestic stores. However, direct sales and sales through international stores remained petite. Similarly, the sales percentage increased during the year of 2011. Interestingly, company's sales through its domestic stores declined, which was compensated by a sharp increase in sales volume from its international stores as well as direct-to-customer sales. The company decided to go after the reasons for the sudden change in the market trend and found this change to be a result of two factors. First one was associated with the economic crises in the U.S, which led to the reduction in disposable income of the U.S. customers. Secondly, people started using technological gadgets to shop, which helped them to find a wide range of products at discounted prices. This market trend and change in customer preferences required Abercrombie & Fitch to adequately think and plan out a fresh strategy in order to secure the future of its brand.
This case also tells us about the impact of external environmental factors on an organization and how it can hit the firm’s bottom-line. As Abercrombie & Fitch were initially inclined towards in-store advertisement and were not concentrating on selling directly to the customer or selling through international chains. A&F has been positioned as an upscale and fashionable clothing brand in the mind of their customers. This showed that the firm’s target market was high-end customers and Mike Jefferies was right in his approach to giving the brand a push as the firm started attracting fashionable youth by promising them a completely exclusive lifestyle experience. The firm finally learned to move ahead with the time and put a bar on its domestic stores. While they move their attention towards social marketing and online selling, which eventually helped to change the fate of the organization and revive the brand.
Alternatives
I think that investing in ATL and BTL advertisement technique would be the best option for the company as it will eventually lead to increased brand awareness. This will also bring more visitors to its domestic stores resulting in increased sales and revenue.
Recommendations
Brand Positioning is the key to any organization, as a brand should be able to differentiate from other similar products. Therefore, A&F should continue to be inclined towards targeting a niche segment by positioning its apparel as an exclusive and upscale clothing brand. However, there is a need for concentrated marketing efforts in order to penetrate the exclusivity of its brand into the mind of customers. They should also be careful that they should not use discriminatory gesture in order to do so. It should try to bring customers to its domestic stores by increasing the visibility of its brand.
