American Eagle Grows Up with Martin & Osa

Discussion
Sep 05, 2006
George Anderson

By George Anderson


American Eagle is looking to help young adults (25 – 40) graduate from the scruffy look of their teenage and college years to more mature designs better fitted to their current stage in life.


“We don’t want them to throw out those old clothes,” said Charles Martin, who along with his wife Michele head up design from American Eagle, “but we want to upgrade them.”


“We are going after a customer whose closet is overflowing,” said Ms. Martin. “She does not need a T-shirt. She needs an experience.”


The chain’s answer to the experience the 25 to 40 crowd is looking for is Martin & Osa, a new apparel store concept scheduled to open for the first time tomorrow in McLean, Va.


With Martin & Osa, American Eagle has joined others, such as Abercrombie & Fitch (Ruehl No. 925) and Pacific Sunwear (One Thousand Steps), as chains that have opened new concepts to continue offering clothing solutions for consumers once they have passed the target demographic of the flagship banner.


Demographic data supports the efforts of American Eagle and others to latch on to the post-collegiate clothing market. The number of Americans ages 25 to 34 is expected to rise by 5.2 percent by 2010, according to statistics from the U.S. Census Bureau. During the same period, the number of consumers 12- to 18-years old is projected to fall by 3.3. percent.


John Morris, an analyst at Wachovia Securities, told The New York Times, “Retailers are salivating over that 30-year-old demographic.”


American Eagle is relatively late in coming to the 25 – 40 party. “This has come later than the company would have wanted,” said Ken Pilot, the president of Martin & Osa. Mr. Pilot is a former chief executive of J. Crew and head of international operations at Gap.


The retailer plans to open five Martin & Osa stores this year with 15 in operation by the end of next year.


Discussion Questions: What do you see as the do’s and don’ts associated with serving the 25 – 40 consumer base? What retailers do you believe currently
do the best job of meeting this market’s needs?

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9 Comments on "American Eagle Grows Up with Martin & Osa"


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Ryan Mathews
Guest
14 years 5 months ago

I’m no fashionista, but isn’t 25 – 40 a rather large cohort for a clothing manufacturer to be looking at? And, is it a signal of an aging society that we consider a 40 year old a “young adult”? Let’s see, that would make the “adult” years 40 – 55 and 60 would become the new middle age. Somehow, I can picture a lot of 40 year olds who might think they look good dressing like kids that just got out of college but it’s a little hard to imagine a 25 year old aspiring for that “cool 40 year old” look.

Mark Lilien
Guest
14 years 5 months ago

The Triple-A Team (Abercrombie & Fitch, Aeropostale, American Eagle) performed better than any other retailers in a generation. American Eagle was $5 a share in the fall of 2002. It’s now $40. Abercrombie & Fitch was $30 five years ago and today it’s $65. Aeropostale (a Macy’s spin-off) was $4 in the Fall of 2002 and today it’s $25. All 3 retailers’ stock price growth slowed considerably in the past year or two. All three companies want to reignite spectacular growth by moving into new markets.

Creating new brands aimed at adults ages 25 to 40 isn’t easy. Their peer social interaction isn’t nearly as intense, since they aren’t in age-segregated surroundings any more. Translation: fashion has a bigger impact when you’re in college and everyone you see all day is your age, too. A lot of testing will be needed before the rollout is ready for Broadway.

Moniqua Suits
Guest
Moniqua Suits
14 years 5 months ago

Retail must go back to the basics in order for the reactionary attempts to gain market share to work. Lack of stellar customer service inhibits the best customer from spending consistently versus one hit wonder shopping sprees, and the lack of attention to the 15-19 male market indicates how retail misses the mark. It will be difficult for any retailer to help a customer grow-up if they weren’t there for the formative years.

Don Delzell
Guest
Don Delzell
14 years 5 months ago
I would suggest that “lifestage” is the best way to understand the demographic being targeted, not a specific age. Our society has changed. We don’t finish college, get married, have kids and move into the second home all at the same time. In fact, many of us don’t do all or some of those things at all. However, many of us still experience a lifestage in which we have several factors in common. The amount or degree of disposable income. The people or lack of them in our lives to spend that income on. The existence or lack of a home mortgage. The continued need for wardrobes beyond the “work” and “home”…social wardrobes. If the product development people at Martin & Osa can describe a lifestage, and then design product which enhances the self image of those at that lifestage, then they will have significant success. If they are simply looking to “transition” a customer from a successful format….beware. Lifestages exist. And when we pass through them, we change. Our tastes, our expressions, and our… Read more »
Bernie Slome
Guest
Bernie Slome
14 years 5 months ago

The strategy makes perfect sense. The most successful of these might be BMW. BMW tries to capture the young car buyer with their 325i or 3 series of cars. What they hope is that the experience is so satisfying that the customer stays with BMW and “graduates” to the 5 series and eventually to the 7 series.

Why wouldn’t that work for apparel retailers? It makes perfect sense. It is always easier to sell to an existing loyal customer that to find new customers.

Carol Spieckerman
Guest
14 years 5 months ago
When you do the math and apply the aging baby boomer year perception deduction (anywhere from ten to twenty) to the age ranges that all of these retail spin-offs are stating, you’ll see where all of this is going. How smart would it be for a retailer to say that they are targeting women aged thirty to forty eight that sometimes borrow their daughters’ clothing and are fighting aging with every fiber of their being? Big retailers are realizing that one brand cannot fit all. That’s why everyone from Best Buy with customer centricity’s “Buzz,” “Barry,” and crew; and Wal-Mart with “Gracie,” “Norma,” and other gals are using customer profiling to target specific lifestyles (age-only segmenting is very 2004), and to drive brand-creation beyond that. More nimble specialty retailers are realizing that one STORE brand does not fit all and apparently, that the weirder the name, the better (Paiva, Martin & Osa, Rheul, etc.). Thank you, Mr. Drexler for your recent introduction of plain ol’ “Madewell!” Enough brand segmentation to make Faded Glory, Arizona, and… Read more »
M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
14 years 5 months ago
“She does not need a T-shirt. She needs an experience.” I used that line once, but it didn’t work for me. Hopefully it will for American Eagle. Don’t get me wrong, I frequently wear a twenty-year-old American Eagle distressed leather bomber jacket that still gets compliments. Frankly, the jacket has worked better for me than the “line.” Some internet sales models that American Eagle should consider are Timberland, The Territory Ahead, TravelSmith, Orvis, Kangol, Lands’ End, Thousand Mile, Urban Outfitters, and all of the other “outfitters” competitors. I’m sure they’re doing that, and they have a great website, but they’re not featuring the “entry level” items that capture loyal shoppers. Baggy jeans with pre-made kneeholes? Come on! Simply put, get on their internet radar. While 25-40s enjoy the storefront shopping experience, the truly successful ones with disposable income work a lot. A lot. They want a satisfying and satisfactory online shopping experience, and weirdly enjoy having to dispose of all of the cardboard boxes that carry their online purchasing deliveries. More cardboard, more status. The… Read more »
Jeff Weitzman
Guest
Jeff Weitzman
14 years 5 months ago

Like Ryan I question the premise that there is a 25-40 market for clothing. But even at the extremes, these consumers are looking at the same styles for different reasons.

It’s the “real job” wardrobe that 25 year olds need — probably business casual these days — and the same clothes work for 35-40 year olds looking to freshen up their look. Dressing “smart” works for any age, and the at-work differences between 25 and 40 years olds probably have more to do with waist size than attitude.

Outside of work I think those ages are coming at the category from opposite ends. 40 year olds have probably neglected their “going out” clothes and now that their kids are more easily left with babysitters, they need some outfits for “date night.” 25 year olds (or maybe really 30 year olds) are realizing they need something to distinguish them from the “kids” and need clothes that say “I have a good job but I still know how to party.”

Carlos Barrios
Guest
Carlos Barrios
14 years 5 months ago

Targeting based on demographics alone is considered a mistake, especially in the fashion business. This kind of market changes fast and age can’t be the only fact to take into account.

For example, see Zara. Their business model is based on providing any kind of consumer what they want, the moment they want it; copying designs from major designers and selling them at low prices. This can be considered as an “ethically incorrect” strategy, but it has allowed all consumers to dress like they always wanted, and has allowed Zara to become a highly recognized company — and one of the most profitable worldwide.

I believe that this age-segmentation-based strategy is not clear because people dress considering their beliefs, expectations and likes, and the purchase process is based primarily on complying with the customer needs and especially their “dreams.”

Although this strategy fits these companies’ financial needs (stock price and benefits growth) and is based on cost cuts and mass distribution, it doesn’t entirely meet the customer needs.

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