Abercrombie & Fitch Rethinking Premium on Prices
Last holiday season while competitors were cutting prices to try and drive store traffic, Abercrombie & Fitch management was adamant it was not going to go that route.
The company’s CEO Michael Jeffries saw the promotional tack others were taking as “a short-term solution with dreadful long-term effects.”
David Cupps, chief counsel for Abercrombie & Fitch, told The Wall Street Journal the retailer was not going to be falling in line to follow “the promotional pied piper.”
In the months that followed it became clear that Abercrombie & Fitch’s decision to hold the line on prices was also helping it hold onto a lot more inventory than it wanted to deal with.
Now, a Journal article reports Abercrombie & Fitch is ready to amend its position on discounting.
“Consumer spending patterns domestically continue to be dictated by cost and value propositions, and this is clearly a headwind for our premium brands,” Mr. Jeffries said during a recent conference call.
“We are planning to deliver greater reductions in [average retail prices] for the fall season, but we will continue to review pricing on an ongoing basis,” Mr. Jeffries said.
Discussion Questions: Has Abercrombie & Fitch’s delay in lowering its prices done the type of damage that will negatively affect the business for the longer term? Would the chain be in this position had it cut prices sooner?
- Abercrombie Plans to Cut More Prices – The Wall Street Journal
- Q2 2009 Abercrombie & Fitch Co. Earnings Conference Call – Abercrombie & Fitch Co.
- Losing Its Cool at the Mall – The New York Times