Abercrombie & Fitch was once one of the edgiest brands in America; its controversial catalogues outraged parents and delighted teenagers. Abercrombie began by selling safari and camping gear to aficionados like Theodore Roosevelt and Ernest Hemingway. In 1992, Mike Jeffries took over as Abercrombie’s CEO and turned the company into a teen emporium where coolness and sexiness met Ivy League. Jeffries capitalized on Abercrombie’s reputation for quality. To make the brand more edgy, Jeffries recruited attractive all-American teens and college-aged kids to model products and work in the store. From 1995 to 2008, Abercrombie boasted sales more than 20 fold and net income more than 56 fold.
In 2008, the economy crashed, and consumers’ tastes changed. Consumers were no longer interested in $70 jeans that they could purchase for $40 elsewhere. Abercrombie did not alter its retail model to accommodate changing customer tastes and soon customers moved on. Since 2008, Abercrombie has closed 71 U.S. stores. Abercrombie is counting on international growth to keep the brand afloat; however, Europe suffers economic woes as well and Abercrombie’s international same-store sales dropped 26% in the second quarter of this year.
Abercrombie, as a fashion brand, has to compete by being edgy and cool. Today’s teenagers are no longer interested in the Abercrombie brand. Many are turning to American Eagle Outfitters, a retailer that sells similar styles at lower price points. Today’s teenager has a more individual style of his/her own; they are no longer interested in wearing what everyone else is wearing. In order for Abercrombie to win this customer back, it will have to develop creative ways to make the brand resonate with today’s fickle teenager.
Source: Sapna Maheshwari, “Abercrombie Sales Slide as Half-Naked Models Underwhelm: Retail,” Marketing Daily, August 22, 2012
You have to keep up with your customers… or they will just move on.
Kyle T. said:
This article really makes me wonder if Abercrombie has a future due to the large outflow of customers from the economic recession. The company’s inability to retain customers will likely put them in a difficult position as the economy begins to recover, as consumer tastes may have changed enough that even as teenagers spending power increases, potential customers may still prefer American Eagle clothes. Though Abercrombie could figure out a long-term strategy to regain market share, it is questionable whether or not they will survive long enough to have time to recapture the market. It will be an interesting story to watch as things develop but it just goes to show that if you do not cater to your customer through thick and thin, those who were loyal to a specific company will always be able to find a substitute.
Dan Shaffer said:
Since this model is no longer working for Abercrombie, I would recommend that they start having very low sale prices to attract teens back to the brand. Even if they refuse to lower their prices, they should at least get some teens back into their clothes.
Justin Laurenzo said:
This article was really interesting because it’s been a while since I’ve heard or seen anything from A&F, and now I know why. After the economy hit a rough spot a few years ago, they didn’t alter their business model, which we now know was a very costly move. They’ve been forced to close a bunch of stores since people are no longer looking to spend a ton of money on clothes if they don’t have to. And this is especially true for teenagers and middle-schoolers, who are constantly growing or changing preferences (I had a pair of jeans or two from here and some other shirts/sweatshirts that I grew out of or stopped liking within a year or two back when I was younger). They were a huge fad once upon a time, but now it seems like they’re a thing of the past – or will be very shortly. Furthermore, the closing of all of these stores has really hurt their brand awareness, especially for teenagers who would usually be reaching the age where they would start to shop at A&F. In losing brand awareness, they have lost their popularity and their image as that cool, hip brand has really taken a hit. Kids would convince their parents that they needed that $75 pair of jeans, $40 shirt, or $100 sweatshirt because it was cool and everyone else had one, so of course they needed one too. Now, there are tons of other options and ways to still look cool without spending a fortune. As of now, the future really is not looking good for A&F.