Abercrombie & Fitch: From Prom King to Pariah

The Nineties were the golden years for beepers, boybands, and Abercrombie & Fitch. The apparel chain reigned king in the teen retail sector for over ten years – which in teen’s years is a lifetime.

For a consumer market that changes trends every other week, it’s quite impressive how Abercrombie managed to retain its “cool” status for as long as it did. When things started to slow in the mid-2000s however, Abercrombie’s CEO Mike Jeffries continued to drive the brand down the same beaten path that had garnered it so much success in the previous decade. But this time, a few things had changed: the consumers and the market. What once seemed like a cool older brother became a snooty, exclusionary bully. Consumers who once desperately tried to fit in with the brand’s image now began rejecting it – and sales reflected that. Now, with the recent retirement of the autocratic Jeffries, Abercrombie has been given the chance to revive itself.

Analysis of the Brand and Its Environment

Since his start at the company in 1992, Jeffries played rather successfully on consumers’ subconscious desire for belonging, painting Abercrombie as an “aspirational” brand, intended for the teenage social elite (Note: I’ll be focussing only on the Abercrombie & Fitch brand, not sub-brands Hollister or Abercrombie kids). But increasingly over the past several years, there has been a shift in this mentality – instead of fitting in with the crowd, youth today are encouraged to be unique. The societal shift towards celebrating diversity and giving the spotlight to social outcasts is evidenced by the characters on popular TV shows in recent years, such as Glee (a ragtag high-school glee club) or The Big Bang Theory (a lovable yet undeniably nerdy group of physicists).

And that wasn’t all that was changing: the retail market was also quickly evolving. Online shopping became more prevalent as consumers grew accustomed to the convenience of e-commerce. Secondhand clothing became popular options for consumers who began frequenting charity shops and vintage stores. Most notably, however, was the rise of what we know today as “fast fashion.” The term describes the model that many high street retailers such as H&M and Primark have capitalised on, offering styles that feature the latest runway trends at very affordable prices. Abercrombie’s price point was much higher than that of these fast fashion retailers, and young consumers easily found themselves being seduced by competitors’ offerings, which showcased new products and styles nearly every day.

Jeffries had a clear vision for the brand, and for a decade straight, profits and the number of stores had increased.

Figure 1 illustrates the story-book sales growth Abercrombie displayed in the latter part of the ‘90s. At its peak in 2005, Abercrombie boasted 361 stores around the globe, with the majority of those stores located in the U.S. But now, the company is floundering. As of February 2014, there were 275 Abercrombie & Fitch stores worldwide, with 22 of those outside of the U.S. Figure 2 shows the rise and fall in the numbers of Abercrombie & Fitch stores around the world.

 

 

 

Since his start at the company in 1992, Jeffries played rather successfully on consumers’ subconscious desire for belonging, painting Abercrombie as an “aspirational” brand, intended for the teenage social elite (Note: I’ll be focussing only on the Abercrombie & Fitch brand, not sub-brands Hollister or Abercrombie kids). But increasingly over the past several years, there has been a shift in this mentality – instead of fitting in with the crowd, youth today are encouraged to be unique. The societal shift towards celebrating diversity and giving the spotlight to social outcasts is evidenced by the characters on popular TV shows in recent years, such as Glee (a ragtag high-school glee club) or The Big Bang Theory (a lovable yet undeniably nerdy group of physicists).

And that wasn’t all that was changing: the retail market was also quickly evolving. Online shopping became more prevalent as consumers grew accustomed to the convenience of e-commerce. Secondhand clothing became popular options for consumers who began frequenting charity shops and vintage stores. Most notably, however, was the rise of what we know today as “fast fashion.” The term describes the model that many high street retailers such as H&M and Primark have capitalised on, offering styles that feature the latest runway trends at very affordable prices. Abercrombie’s price point was much higher than that of these fast fashion retailers, and young consumers easily found themselves being seduced by competitors’ offerings, which showcased new products and styles nearly every day.

Jeffries had a clear vision for the brand, and for a decade straight, profits and the number of stores had increased. Figure 1 illustrates the story-book sales growth Abercrombie displayed in the latter part of the ‘90s. At its peak in 2005, Abercrombie boasted 361 stores around the globe, with the majority of those stores located in the U.S. But now, the company is floundering. As of February 2014, there were 275 Abercrombie & Fitch stores worldwide, with 22 of those outside of the U.S. Figure 2 shows the rise and fall in the numbers of Abercrombie & Fitch stores around the world.

As CEO and chairman, Jeffries had been credited with solidifying the brand’s image through meticulous uniformity of store environments and distinctive marketing visuals with an inherently sexualised tone. The brand was well-known for its muscular, attractive models dotting storefronts around the globe. But due to struggling sales, the board pushed for Jeffries to relinquish his role as chairman in January 2014, and by the end of the year, he retired from his position as CEO.

What the brand stood for under Jeffries’ leadership was the concept of cool, but of the unattainable sort. During an interview – for which he later suffered much public outcry –he commented that “a lot of people don’t belong [in our clothes], and they can’t belong. Are we exclusionary? Absolutely.” Jeffries positioned Abercrombie as clothing intended only for the slim and affluent cool kids, but consumers grew tired of feeling snubbed so the brand quickly lost relevance. In a Fall 2013 retail research survey, teen girls named Abercrombie & Fitch and its sub-brand Hollister as two brands they no longer wear.

In addition to touting a haughty brand persona, Abercrombie failed to deliver on the fashion front. Jeffries had a crystal-clear idea for the apparel line, which eventually proved to have a debilitating effect on the brand. The Abercrombie style did not evolve over the years, but even “classic” apparel brands can’t afford to be stagnant. The once-struggling J.Crew brand was extremely successful in reviving itself in the mid-2000s. It remained true to its East Coast, prep-style core yet stayed relevant by keeping abreast of fashion trends, bringing in products from third-party brands and shifting corporate focus to become design-led. In 2013, its annual revenue reportedly more than tripled to $2.2 billion since 2003, proving that fading brands can absolutely shift trajectory.

As J. Crew demonstrated, there still is hope. Despite stumbling in sales on the home front, the Abercrombie brand remains popular in its international stores, shown by growth in both sales and numbers of store locations, particularly in Europe. From its 2010 Annual Report, Abercrombie reported that even for sales within the U.S., flagship and tourist stores outperformed non-tourist stores, suggesting that perhaps a portion of these sales are made by tourists. What’s most reassuring is the enduring basis of the retail industry as a whole – people need clothes. There will always be a market for apparel retailers, and crafting a strong brand is essential in remaining at the head of the pack in an overcrowded marketplace.

Defining the Brand’s Role

Abercrombie’s brand purpose is to celebrate the casual, classic all-American lifestyle through its clothing, which seems fitting given its roots as an American sporting goods outfitter in 1892. Its modern-day proposition seems fairly on-point as well, which is about creating high-quality merchandise that compliments these casual, classic elements of the American lifestyle. However, its company Facebook page describes Abercrombie as “a destination for casual, classic, and trend-right clothing.” While it may have achieved the first two qualities, the brand was not always concerned with incorporating the latest fashions – surprising, considering its teen market. So, its proposition should evolve slightly to incorporate a focus on style, which Abercrombie actively needs to implement – this will be discussed later in further depth. But the most crucial brand idea that requires rescue is Abercrombie’s brand personality. Teens who once clamoured to fit in with the exclusive Abercrombie crowd now openly reject the brand’s inherently snooty attitude. We often realise this as we mature, and as author Daniel Pink reminds us, our richest experiences don’t come from validation by others but are instead driven by an internal sense of purpose and doing it well. This philosophy can easily be applied to brands as well. Ditching the layer of hierarchical social judgment, Abercrombie should communicate an open and forward-thinking brand personality that retains a focus on the clothing.

The role for the brand in all this is to convince consumers that Abercrombie is, in fact, cool, without explicitly saying so. Listening to its consumers and keeping an eye on the latest trends (though not necessarily incorporating them all into the product line) will allow the brand to become much more accessible, much more relatable. By rethinking its brand personality to derive influence from its consumers, it will become creatively classic instead of traditionally stagnant. This will spur a much-needed turnaround in sales to reach its aforementioned brand ambition.

Proposal for the Brand Idea

Speaking with potential Abercrombie customers of various ages, gender, and socioeconomic standing, a few insights were gathered on the apparel industry and how to make a clothing brand “cool.” One trend-conscious young man in his mid-20s realised that several large clothing retailers pitched a lifestyle, rather than the clothes itself. Successful brands like Levi’s or Nike align with a much more general lifestyle and target market than the tremendously specific lifestyle that Abercrombie sells, not to mention a tremendously specific target market and store guidelines. He felt that the blatantly orchestrated manner in which Abercrombie operates creates an obnoxious quality that seems mismatched with its rather ordinary clothes. By focusing more on the clothes and less on exclusivity, he thought that Abercrombie would do well to broaden itself a bit, raising its ceiling. A teenage girl who has previously shopped at Abercrombie noted that a brand could be cool by “having originality and authenticity rather than always going with the mainstream.” Interestingly, she also mentioned the high quality of the garments as an important factor in shopping for clothing – as a teenager with little disposable income, she must make wise purchase decisions by considering how long the clothes will last. But the most substantial finding in this research was that everyone interviewed agreed that they did not personally connect with Abercrombie as a brand and felt that an overhaul of this “exclusive” brand personality was a good idea.

From the research, it seems clear that Abercrombie’s brand idea needs to revolve around adapting its brand personality. It can still retain elements of the effortlessness and classic qualities of American style. But instead of beating consumers over the head with a calculated sense of cool, Abercrombie needs to keep its focus on the clothes and allow its resulting aura of cool to waft over its consumers naturally. Gone will be the days of the obnoxious, rich kid persona, and instead, Abercrombie’s personality will be seen as creatively classic – born from American heritage and raised by today’s youth. By drawing inspiration from two main sources (American classic style and the new generation), this new brand personality would create an authentic “cool” vibe because of its clear vision. Next, let’s look at some strategies for Abercrombie to achieve this.

Looking Forward: 3 Recommendations for the Brand

With the sharp drop in sales and popularity over recent years, Abercrombie has learnt its lesson the hard way – it needs to listen to market trends and consumers. It was only during the Christmas 2014 season that Abercrombie branded clothing first became available outside its own stores and website, via the popular online retailer Asos. A solid step forward, but perhaps too little too late – it needs to stop playing catch up and start being proactive about its strategies. Over the next five years, Abercrombie needs to implement its new brand personality by utilising the three strategies below:

1. Incorporate social and ethical fashion movements into brand culture

A floundering brand might try to jump on the bandwagon of the fast fashion movement, following in the footsteps of a model like H&M’s. But slashing prices would only highlight Abercrombie’s struggles, as former CEO Jeffries famously did not want to discount prices specifically to maintain the brand’s value. Abercrombie does not need to compete with high street retailers on price. Additionally, a quick study of consumers’ spending trends suggests that fast fashion may soon be dying out. Fast-fashion teens are now shifting to the next stage becoming more independent and financially stable, so they are looking for quality items. Stats have shown that the 2005 peak and subsequent decline in quantity of items bought demonstrated the birth of this social movement of buying less but buying better. Abercrombie’s higher price point and quality workmanship in its clothes have primed it for this perfect opportunity.

Another industry trend includes increasing numbers of retailers owning up to greater levels of ethical responsibility, such as Everlane who promotes “radical transparency.” Online retailer Zady promotes the “Slow Fashion Revolution,” a nod to the popular slow food movement that celebrates naturally occurring, locally produced items. These retailers know that consumers are becoming jaded to the constant discounts and promotions used by high street retailers nearly every week. Focusing more on their transparency about sourcing and manufacturing gives consumers more reason to trust them. Abercrombie was the second American retailer to sign the Bangladesh Fire & Safety Accord. The company also received its seventh consecutive perfect score from the 2014 Corporate Equality Index for LGBT policies and practices. Clearly, Abercrombie can easily emphasise its commitment as a responsible employer.

Building these values into Abercrombie’s brand culture will allow for employees to internalise them, which will rebuild relevance in an authentic way. Abercrombie can have its employees, ranging from executives to sales assistants, utilise the company blog or social media outlets to become thought leaders and active commentators in online communities. Abercrombie has already built a foundation that will allow it to easily and naturally capitalise in these areas, and a brand’s involvement in social programs will affect sales and loyalty. By funnelling some of its current marketing and advertising budget into exploring these trends, Abercrombie can shift its existing funds and not incur additional expenditures.

2. Partner with iconic brands to highlight fashion as brand offer

Under Jeffries’ guidance, the Abercrombie style remained relatively unchanged since the mid-1990s, stocking classics like hoodies and polo shirts. But if Abercrombie wants to carve out space in the youth retail market, catering to up-to-date teens, it needs to renew its commitment to a true American fashion brand. Realistically, this does not mean it needs to replicate each and every style coming off the runway. However, understanding its own brand strengths and recognising when to utilise its immense brand power to call for backup can be extremely valuable. Chairman and CEO of J.Crew Mickey Drexler bring in third-party collaborations to help raise the value of the J.Crew brand, explaining that the underlying strategy is to “buy what other people do much better than we can ever do.”

By carefully selecting other strong brands that would complement the Abercrombie brand, collaborations can increase visibility and reinforce Abercrombie’s contemporary knowledge of the fashion world. The greatest challenge lies in identifying appropriate brands to partner with. These partners would have to share some levels of similarity with Abercrombie, either through its classic style or its target market, whilst not detracting sales or market share from either brand. Executed properly, brand collaborations can create a range of financial, functional, and emotional benefits. In 2013, Abercrombie’s sub-brand Hollister partnered with classic shoe brand Keds to produce a very successful limited edition shoe, which even had style blog Refinery29, with over 10 million monthly site visitors, admiring it. Considering the outcome of that collaboration, Abercrombie clearly has the resources and know-how to pull it off just as well.

A fashion-forward increase in the brand offering would catapult Abercrombie to the forefront of teens’ radar. By slightly modifying its brand proposition to include more on-trend propensities, Abercrombie would immediately re-instil relevance for its target market, who are typically quite informed and interested in current styles. One potential brand identified for collaboration might be Frye, an American leather goods brand well-known as a bootmaker. With a similar workwear heritage, Frye could easily partner with Abercrombie to reach a new, younger consumer base, whereas Abercrombie could gain additional sales from heightened brand status by being able to offer Frye boots.

3. Build brand presence through authentic affiliations with target groups

The models currently featured in the brand’s advertising seem to love playing sports in the outdoors. Instead of crafting a superficial brand aura by policing the physical store environments and spritzing noxious amounts of cologne into the air, Abercrombie should build brand authenticity by actually reaching out to these target groups. If Abercrombie were to connect with real-life university sports clubs and teams, especially Ivy League-type schools, it would automatically legitimise the brand of lifestyle Abercrombie clearly wants to convey. For example, university lacrosse teams could be sponsored by Abercrombie for high-profile events, which would also be an excellent opportunity for Abercrombie to advertise to that target market. By not coming off as “This is who we want to be” but instead “This is who we are,” Abercrombie can communicate this authenticity without even having to say it. Creating this brand presence within actual university communities could also help by marketing to a slightly older, more sophisticated clientele: college-aged teens, instead of high schoolers. This would perhaps draw in the older crowd, as well as teenagers, who aspire to be these collegiate sports stars.

There are many other sports teams that could match Abercrombie’s current marketing, such as rowing, water polo, or American football. But as Abercrombie’s brand personality is evolving to become more inclusive, this could also be the perfect opportunity for the brand to reach out to previously untapped markets, like women’s sports teams. The idea of creating relevance with authenticity could even extend beyond sports to other all-American-type events, like music festivals. Of course, these would be much more effort for the brand, but Abercrombie needs to consider how to maximise the authenticity by gaining buy-in through its brand idea. The quadrant model below shows how the 3 recommendations would fit into the Abercrombie brand.

Though Abercrombie’s downward dance on the stock market and slowing sales in recent years have been keeping stakeholders up at night, these shaky times for Abercrombie are presenting a phenomenal opportunity for the brand to rescue itself. Being freed from the decades-long rule of former CEO Mike Jeffries, the well-recognised brand has a lot it can build upon. If the brand owners were able to implement the three strategies recommended to help change its brand personality (and bits of its proposition), Abercrombie would undoubtedly be miles closer to once again achieving brand relevance for consumers. It just needs to focus on its vision of being creatively classic, and very casually, almost effortlessly, consumers would start to feel the brand’s allure. I think we’d all agree – that’s pretty cool.

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