The Two A&F Strategy
Abercrombie & Fitch refused to follow the discounting route of its competitors when the economy turned downward and the result in 2009 was a 19 percent decrease in same-store sales.
While A&F CEO Michael Jeffries once described the discounting of competitors as "a short-term solution with dreadful long-term effects," the chain found that it too had to lower prices to remain relevant.
Having learned its lessons the hard way, A&F has lowered prices in its U.S. stores by roughly 10 percent. Overseas, however, there is a different story as the chain continues to sell at luxury price points.
Kimberly Greenberger of Morgan Stanley told The Wall Street Journal that the same items sold at A&F in New York are roughly 50 percent higher at the chain’s stores in Tokyo and 30 percent in London.
The same article suggested that A&F’s change in pricing in the U.S. may mean it will never be able to go back to its old, high price ways.
Discussion Questions: What do you think of Abercrombie & Fitch’s two-tier approach that has it maintaining its traditonal positioning in overseas’ markets while lowering prices in the U.S.? Will A&F ever be able to go back to its luxury pricing approach in America?