[Image of: RetailWire Logo and Tagline (for print)]
 
[8 comments]

The good, the bad, and the ugly for Abercrombie

March 4, 2014

The once hip retailer, Abercrombie & Fitch, has struggled for more than a decade as it tries to find its footing with teens who research the latest trends on the internet, often buy there too, and are willing to settle for less than top quality.

As Euromonitor analyst David McGoldrick told CNNMoney, "Who needs a sweater that will last 10 years when you're just going to buy a new one three months later?"

Meanwhile, according to Mr. McGoldrick, fast fashion retailers like H&M and Forever 21 have stepped in to meet the need for cheaper, less durable clothes. To make matters worse, according to a Piper Jaffray survey also reported on CNNMoney, 71 percent of teen girls and 57 percent of boys are shopping at off-price stores such as T.J. Maxx and Marshall's.

A late January New York Times article noted that Abercrombie's most direct competitors — American Eagle Outfitters and AĆ©ropostale — as well as Wet Seal, Zumiez and others, equally felt the teen angst this past holiday season. Beyond heightened price competition from online players as well as Forever 21, H&M and T.J. Maxx, other contributors to the teen sector slump were identified as: high unemployment within the age group and more discretionary spending heading towards smartphone apps and gaming systems.

The problem didn't seem to be fashion-driven as in past years, although Abercrombie's mix was said to be too bland.

So, what's A & F doing about fickle teens? You guessed it — lowering prices, even though they had said back in November that prices would rise. Now, with profit down 58 percent and same-store sales off eight percent in the latest quarter, they plans include:

  • Getting more competitive on price;
  • Closing up to 70 stores in the U.S. while opening 16 stores abroad;
  • Reducing lead times;
  • Improving fashion for its womenswear; and,
  • Increasing marketing.

The company will also buy back some stock and attempt to cut costs.

FINANCIALS:     [NYSE:ANF]

Discussion Questions:

Is Abercrombie & Fitch finally on the right track with its plan to lower prices, improve its supply chain, enhance fashion, and increase marketing? Can the chain keep its brand image intact while making changes such as these?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Which initiative is most critical to Abercrombie & Fitch's short-term improvement?

Comments:

Until Jeffries goes, it's doubtful this brand can improve much.

[Image of: View Braintrust Panelist button]
Bob Phibbs, President/CEO, The Retail Doctor

Brand image? What brand image? A&F is caught in the middle (never a good place to be), between more nimble competitors like Forever 21 on the one hand and more upmarket stores like J.Crew. Abercrombie's image was built on edgy marketing tactics that lost their luster years ago...the catalog photos and the shirtless male employees. Now a lot of these moves look gimmicky.

The most important thing A&F can do now is to change its sourcing and product development model. Making big bets months in advance on a trend like plaids -- and then turning out to be wrong -- leaves Abercrombie in a losing position vs. its "fast fashion" competitors. We'll see whether the company culture can adapt to the new business model.

[Image of: View Braintrust Panelist button]
Dick Seesel, Principal, Retailing In Focus LLC

It seems ANF has all the right bases covered in their change plan. Their brand needs to shake its past - not an easy thing to do. Driving home their new message without any element of their past and considering the whole environment their targets live in will make this work. Meaning? Look cool but not sleazy. Target in marketing that parents think is hip. They still buy for their kids - even when the kids are mid 20s.

Also, get a major FACE to be their spokesperson...one that their target markets love....

More advice ? I would have to charge for that...Tom...hip and cool....

[Image of: View Braintrust Panelist button]
Tom Redd, Vice President, Strategic Communications, SAP Global Retail Business Unit

A&F may be suffering from older (than their target market) demographic wearing their clothes. Two sightings of people wearing A&F this weekend were easily in their 40s trying to look younger and not quite pulling it off.

'OscarSmith'

Their customers from 10 years ago grew up, are now in their twenties, loaded with college loans but working in jobs that don't require college degrees, and having to prioritize their spending far differently than they once did. And teenagers today have come of age in a far different economy, where money is tight, and price absolutely matters. $80 sweaters? I don't think so.

[Image of: View Braintrust Panelist button]
Ted Hurlbut, Principal, Hurlbut & Associates

Abercrombie & Fitch's epiphany is long overdue and comes amid a particularly difficult landscape for teen consumer spending.

Many of the claims management again has made - including to heighten style differentiation and fashion relevancy - are ones we've heard on previous occasions. In fact, its most recent plans - third-party collabs, wholesale deals and MFO - are all strategies many other retailers (notably J.Crew) pursued years ago.

In my view, the biggest challenge for A&F will be repositioning two retail banners whose very branding is anathema to the millennial mindset.

[Image of: View Braintrust Panelist button]
Kelly Tackett, Research Director, Planet Retail

A&F is still a great brand IMO. They've just never moved in terms of their fashion strata...never. At least to me, they had a lot of leeway to do so, but stuck to a very singular idea of how that great brand could be expressed. That worked for an extraordinary length of time for the specialty retail sector, but 20 years later, it's over - really over.

Les Wexner believes that the economy and all the other extraneous issues you can think of will not matter if you have the right fashion -- and he's right. Hot product cures all ills. A&F/Jeffries should've picked that one up from him while he was there in the beginning. But again, to me, it's not too late.

[Image of: View Braintrust Panelist button]
Lee Peterson, EVP Creative Services, WD Partners

The question was about improvements in the short term. For that, get more aggressive globally. Sitting here in Hong Kong, I can tell you that the brand remains HOT. So short term, continue the global expansion, particularly in Asia. For the medium to long term, radically improving the supply chain and driving an effective marketing strategy around trend-right fashion with meaningful spokesmodels (different for each geography) are key.

[Image of: View Braintrust Panelist button]
Mike Osorio, Senior VP Organizational Change Management, DFS Group

Search RetailWire
Follow Us...
[Image of:  Twitter Icon] [Image of:  Facebook Icon] [Image of:  LinkedIn Icon] [Image of:  RSS Icon]

RetailWire's
Getting Started video!

View this quick tutorial and learn all the essentials...

RetailWire Newsletters