Sunday, August 30, 2009

Abercrombie: World's Worst Recession Brand?

TIME just selected Abercrombie & Fitch as the "world's worst recession brand," reporting that Abercrombie has suffered double-digit same-store-sales declines for the past 10 months.

We all know retail is hurting, but this isn't a category-wide problem. Compare Abercrombie's dismal performance with teen retailer AĆ©ropostale, who saw second quarter profits rise by 83% as Abercrombie fell by 134%. TIME blames the decline of Abercrombie on the brand's unwillingness to cut prices and offer promotions, but they also report that the brand is no longer as fashionable as it used to be.

So is it time for Abercrombie to slash prices, introduce BOGOF promotions and shed its preppy, aspirational image? Or should they protect their positioning as a high-end apparel brand and focus on creating "funkier fashions." What would you do if you were brand manager for Abercrombie?


  1. I see there unwillingness to cut prices as just part of their problem. While I do agree that they are overpriced for the fashion they are delivering I do still believe there is a demographic out there that would be willing to pay these prices if the demand was higher. Basically, that means they need to put themselves out there more and create a higher following of their brand. I believe if Abercrombie was to fully capatilize on the social media explosion that is going on right now and allow the fans of the brand to become its' ambassadors they would see an amazing turn around in their sales. People still love the brand and it still holds some weight in the fashion world so this wouldn't be the hardest thing to do. I wish I knew the markeing directors at this company so I could show them a bit of what I'm talking about!

  2. Abercrombie's exclusivity "branding" not it's risque advertisement, has always been the one source of the brand out-selling it's competitors. Teenagers and Young Adults identify Abercrombie and Fitch by it's expensive price tag; an stratosphere above it's competitors, and not whether or not it's made or wears any better.

    If I were an integral voice in pricing or costs I would have to acquiesce to the polarizing forces that dictate what is attainable and what isn't, and reduce the cost of our product. I know the stock holders are going to scoff at this move, but if modification in costs isn't taken into consideration, especially during a recession or downturn, then we'll likely to see Old Navy, Aeropostale, JcPenney, and Sears win out in the end--especially with back to school sales trumping our bottom line.

  3. think they need to start with their Brand Identity. They are viewed as elitist & preppy. I realize that this is part of how they wish to be viewed, but in a recession, they could try to be more approachable by the average teen. Also, improving quality and diversity of their product line can only help.

    If they acquire a new type of customer now, it will only benefit them when the economy recovers and discretionary spending increases. The tricky part is maintaining their brand image while increasing their customer diversity.

    I don't envy their brand managers for the job they have ahead.

  4. Depending on their cash flow situation, I'd be very cautious and conservative with trying to tinker their brand I.D. and positioning. They had an effective plan dialed in well - only to watch the wheels come off like many other companies and industries.

    A huge course correction targeting short-term gain might sacrifice long-term health of the brand. Even developing a sub- or secondary-brand within A&F might dilute A&F's identify with ultra-sensitive teens. (Think 'Gap' and 'Old Navy' here??).

    It's not negative to position a brand as 'elitest' or 'preppy'. Plenty other successful brands are positioned accordingly. (Polo, BMW, Louie Vuitton, Rolex, Calloway/Big Bertha, Grey Goose, etc). Just so long as the product lives up to the brand promise and uses appropriate channels to reach targeted customers.

    If some action is mandated, I'd use their "Hollister" brand to re-position. With roughly the same sales at $1.5B, using Hollister to grab market share or go after non-traditional segments can provide growth without risking adverse effects on the flagship A&F brand.

    Though share price is down from a 2-yr high in the low $80s, they're headed in the right direction at $33 after hitting a 2-yr low of $14 in Nov08.

    (NYSE: ANF).

    If they can hold out like many others until some economic rebound, they still have lots of wind in their sales and can pick back up where they left off.

    As the father of a 14 year old daughter - I live it!

  5. Interesting question...they were on the top not such a long time ago. What made them loose there appeal? Was it just the pricing war? I actually just went into and Abercombie a couple of days ago and I couldn't wait to go out. i didn't even want to look at anything. Firstly, place was over scented. Secondly, all the product had Abercombie written all over it...does not appeal to me. I don't think this appeals to teens either.Also, store was really dark...

  6. A&F has a few options concerning future course to “get upright”. I am of a certain age to remember when A&F was actually an elite version of LL Bean and I have the down-filled sleeping bag to prove it, how times and brands have changed.

    While Time Magazine may be quick to diminish the brand, just walk by their store on 5th Avenue in Manhattan, while the lines have diminished, there are still many shopping bags on the street.

    I would suggest revised branding taking pages from the playbook of American Apparel and Calvin Klein. A&F needs to return to “pushing the envelope” i.e. the borderline soft-porn and add a little edge away from the “all-American prep look”. Make the brand have some rebellion with mainstream acceptance. Maybe the buff teens with a tattoo of an Ivy League mascot or a Polo Pony with a slash through it.

    Once the branding and image have been slightly revised, get the teens back in the store. In Japan I was amazed at the variety of “vending machines” available, install some unique machines in A&F stores selling everything from Ipods (an Apple vending machine) to accessories up to $100 price-point accepting credit/debit.

    Open the “store faƧade” to the public, while the “hip, cool club” atmosphere was in a few years ago, consider “live mannequins or similar in high-traffic locations like NYC’s 5th Avenue. Create buzz where it has diminished, the PR and the clients will follow.

  7. Great article from Fast Company about the success of another teen retailer, Hot Topic. Check it out here:

  8. last december i wrote a post, encouraging a&f to stay the course on their no-price-cutting strategy (see -- despite the dismal results, i still believe this is the right approach to maintain the brand esteem -- however, a few recommendations:

    1. make the brand more accessible by focusing more on accessories (which are inherently lower-priced) and other lifestyle products (a la hot topic)

    2. use other promotional strategies to generate demand (e.g., brand ambassadors to talk up brand in target-relevant settings/media, etc.)

    3. ask (make?) the ceo give some of his pay back -- it was recently reported that jeffries made nearly $16MM last year -- that's certainly a hit on profits

  9. Maybe they should go "green" - bamboo fabric, eco-cotton, etc. Snob appeal (like names) is out right now. They used to have funny/edgy slogans on their shirts, not just the A&F logo. Forever 21 is HOT - they are known for knocking off designers. The stuff is cheap! It's made for 1-2 seasons, but I was in one the other day and it took 20 minutes in line to check out, there were so many people! It's all about the buyers - they need to be tuned into and have a vision for 2010, not 2000. I do worry that Forever 21 is hiring slaves somewhere in the 3rd world, tho... I mean the stuff is crazy- CHEAP.

  10. Probably they should broaden out thier appeal. here in the UK we think of A+F as an all American preppy brand. I used to love all the simplicity of the offer. Now GAP, A+F and Old navy all looks the same to me- boring and safe, also the sizing only work for twiggy figures, these days comsumers of all ages will buy and A+F look but not if those of us post 40 need to be a US size 8 or less. at a generous US 8-10 I find even thier most casual styles are too small

  11. I believe the target consumer has narrowed dramatically over the years. I was a customer from 25-30, but their assortments became too young in appearance and overtly branded. The product quality and details look great, but the fits are all focused to high school/college kids.

    I also believe they need to overhaul their in store experience. Very loud, dark, and odorous. Interesting to see the transformation from pre 90's old & stodgy to current day very niche oriented youth offerings.

    I thought the Rhuel concept store was a move in the right direction, but the fit was not extended past the current A&F stores. Still cut for kids.

    A&F also gets beat up on their promotion structure. I prefer their philosophy of limiting markdowns, but it has to be tough to compete with American Eagle and Gap promotion structures.

  12. Let's see...that would be the Time Magazine that is so thin these days it's amazing it's still around? Okay...their opinion is not quite as gospel as in years past, but they are probably not too far off in their assessment of A&F. A&F may want to look at opening more locations outside malls moving forward. Brand or no brand, malls are getting clobbered, filing bankruptcy, and losing foot traffic. Spend all the brand money you want but it won't make up for the lack of traffic at the mall. This Christmas will see the demise of many mall retailers who have been hanging on to the dream that this recession is almost over. Face it folks, credit is locked down and the party is over for the elite brands who tried to scale to the common folk. A&F better get a clue that consumers have wised up and are watching their pennies. It's time to change before it's too late. Parents are not doling out money to their teens like before and teens are finally beginning to see the value of a dollar.
    Make that A&F the Affordable Fashion Brand. You might survive. IMHO.

  13. Joe & Dan,

    Good comments regarding mall exit strategy + opening up store fronts. And lighten them up store a bit more. (The whole "dark cave-like atmosphere was fine 2-3 years ago - but it's getting a bit stale).

    They probably still have the brand strength to open free-standing stores though Wall Street probably would penalize them for brick & mortar investment.

    Again, their stock price is showing upside and debt is under control so they may simply wait it out for another 12-18 months while the re-tool their product line-up and branding strategy. (We may all be surprised as I'd bet their working feverishly on one at this point in time).

    Time will tell...

  14. I don't see the need to reposition Abercrombie. In July sales to consumers were down 13%. Of that 3.6% were a direct result of markdowns meaning sales and traffic were down about 9.5%. Not a great quarter but compared to the industry not a disaster. Neiman Marcus -27%, Nordstrums -17, Limited brands -12 and Gap -10. The numbers in the link stating Aeropostale's 83%+ are net sales and do not account for new store openings, closings and relocation sales so the number's are apples to oranges. Abercrombie seems to be taking the right steps by using the downturn to clean-up its balance sheet. Closing underperforming stores, slashing production costs and paying down debt. These steps should payoff when the economy turns upward.

    Now, if they were down 13% and everyone else was flat or positive I would have a different opinion but that's not the case. No need to overreact and throw out everything you have spent years building.

  15. I went into one many years ago but couldn't stand it for more than 2 minutes and never go back again. Comparing to it's similar competitors, GAP, American Eagle and Old Navy, A+F is more like a night club than a comfortable shopping store.

    I think they need to "clean up", get away from the darkness, loudness and the smell, and differentiate their products (somehow) from their competitors.

  16. those of us who are still rooting for abercrombie are definitely in the minority -- see the latest rant against mike jeffries:

  17. What I find interesting is that it's not so much that A & F have become stale, it's more that their traditional market are now not only wearing A & F, but they've been sucked into the whole indie wave, which is the antithesis of the brand. All those kids who wore their A & F hoodies with pride, are now also sporting skinny jeans, check shirts, retro sunnies and "Shoreditch" East London hairstyles. I think their pricing is fine, what they need to do is reconnect with their original fan base, because that fan base has had it's attention drawn away. That means connecting with them on a personal level - A & F should start looking at hosting gigs, or a young person's polo day or sailing race - all the preppies still do these activities, and A & F could rebuild the brand by being actively visible in the places where their fanbase hang, which isn't Mayfair where their flagship store is - the only people that shop there are mom's and tourists.

  18. Anonymous11/14/2009

    They are ignoring the current trend with their pricing, the clothing and the dark, loud stores. The soft core porno models on the wall are so OUT! Who cares if they fail? I was in AE, the GAP, Aeroposte and J Crew...all those stores were packed with people holiday shopping. The trend is towards moderatly priced clothing featuring active models with an everyday good-looking appeal doing things (not just staring shirtless into the void) Shoppers want a well-lit, friendly, family style hip environment to shop in.It's a return to simpler times, real people and a warn fuzzy feeling. I for one am soooo glad.

  19. What has the CEO for Abercrombie been doing if not preparing for this terrible recession. Wasn't he in the top 10 highest paid execs for 2008 (in the realm of $550MM)?