Abercrombie & Fitch
Contents Page: Company Background Target Customer Merchandising Positioning, Marketing and Communications Product Offer The Supply Chain Retail Store Environment/Retail Strategy Location Strategy Store Design and Store Planning The Competition and Price Point Analysis Human Resources SWOT Analysis Conclusions Recommendations
Company Background The brand Abercrombie and Fitch was founded in 1892 by David T Abercrombie Co. The first store was opened in downtown New York City on the waterfront. The focus of the business was on outdoor equipment that was authentic and of high quality. In 1900 a loyal customer called Mr Ezra Fitch became partners with David Abercrombie to invest in the company. This partnership was incorporated in 1904. However Mr Fitch and Mr Abercrombie had different idea’s regarding the company direction and the partnership was dissolved in 1907. Abercrombie continued to work and expanded the company alone. By 1917 the store was based on Madison Avenue and occupied twelve stories. In 1910 womenswear was introduced. In 1928 Abercrombie retired and James Cobb became the president and Otis Guernsey became Vice-president. The business went on to expand further and had many famous customers such as Amelia Earhart. The company ran into trouble following the Second World War and was declared bankrupt in 1977. The company went on to be bought by Oshmans which was a sports chain and in 1988 by The Limited which was a chain of fashion stores. It was transformed from a sporting store, by ditching sporting goods, into lifestyle clothing brand for young women and men known for high quality merchandise. This change proved very successful as the brand is still in operation today. Target Customer The Abercrombie and Fitch target market is eighteen to twenty two years old; it is aimed at both females and males. The brand is targeted at a wealthy clientele as the slogan “Casual Luxury” is used. The price point of the merchandise is slightly higher than that of its competitors and this is what gives the brand its luxury appeal. It is one hundred percent an American brand and this clear in their vision statement. “aspirational, quality, casual, sexy, American classic, driven by our Adirondack and northeast heritage, the Abercrombie & Fitch brand personifies the all-American, collegiate lifestyle; east coast classic heritage with a fun, spirited, wholesome American attitude. Our legacy is a timeless juxtaposition of ivy league traditions and the great outdoors” (Case Study Webb, 2009: 5). The brand sells more than clothing and accessories, it is sells a lifestyle. A lifestyle that many young people aspire to follow and by purchasing the brand items believe or hope to represent.
Marketing Positioning, Marketing and Communications As the target customer is a young female or male between eighteen and twenty two years old the brand has focused its marketing within certain channels to communicate and engage with this group. The brand aims to engage with the customer to be at the forefront of the customer’s mind. The first channel used by the brand is the Abercrombie and Fitch store. The environment within the store and the real life poster boys and girls greeting customers is a direct in person marketing experience. “There is no store that can be everything for everyone. In order to have a clear positioning, a retailer will have to choose which target group it wants to focus on, and with what attributes it wants to differentiate itself primarily from the competition” (Floor, 2006: 63). The loud music, low lighting and young people wash over the customer to incorporate them into the brand. The store also uses models and hopefuls to gain a real life engagement with the customer. Other channels used are through music, literature and the internet. The brand is present on a network called Bebo. Bebo is a social networking website that states it is for the new generation to connect with others while expressing themselves and discovering, all in an engaging and fun environment. The brand is also present on Facebook. The
Abercrombie and Fitch merchandise was another channel used to gain attention in the US using racy slogans. This information filtered its way to the UK. The brand had produced mainly T-shirts with questionable slogans intended to provoke a response. Regardless of the feedback, even if some of it was negative it still met the purpose. It got people talking about the brand. Large billboards have also been used to catch the eye of many. Abercrombie and Fitch merchandise can also be obtained by purchasing online through their website www.abercrombie.co.uk. The CEO believed that international customers, including the UK customer, would come across the brand on the web so insisted it was of a high standard. What the CEO did not think of was the UK customer may also seek out the US website which showed merchandise at lower prices. This was not a planned marketing tool and quickly it was rectified by banning UK customers access to the US website.
Product offer In 1992 Michael Jeffries was appointed as the CEO and he decided that the product offer needed to be revamped and the brand was to change direction. Michael decided to focus the brand on the fastest growing demographic at that time. It was the youth sector and so Abercrombie and Fitch started to work on becoming a young lifestyle brand. The main product focus was on jeans, T-shirts, sweat shirts, cargo shorts and shorts. All items had logos or slogans. Today’s product offer includes dresses, skirts, swimwear and accessories. The product offer is narrow and deep even though at first it may seem like it is longtail. The reason it may seem like the merchandise is longtail is because there is a lot of merchandise on show in store; this gives the idea of a lot of products on offer. Techniques such as vertical colour blocking are used and stock is piled high. However when you review the actual range of the products and styles available it is clear the product offer is narrow and deep. This can be defined as fewer options but deeper assortment. For example one option may come in a large number of colours. The brand is known to re-merchandise the store on a regular basis to give the impression of fresh stock to those customers who visit often “Older merchandise is shuffled around to provide a different presentation for frequent customers each time they enter the store” (Case Study Webb, 2009: 15). Brand Extension
Abercrombie and Fitch have used brand extension to increase their range and price margin. This includes products like handbags, watches and toiletries. One of the concerns for a brand who relies heavily on their reputation is the consistent level of merchandise on offer. If a brand finds it is not an expert in a certain area of merchandise it may then outsource to another company. This may involve Abercrombie and Fitch outsourcing work to a company who has experience bringing in products from the United States of America to the United Kingdom via countries who benefit from trade agreements.
The Supply Chain “The supply chain encompasses all activities associated with the flow and transformation of goods (products and services) from the initial design stage through the early raw materials stage, and on to the end user. Additionally, associated information and cash flows form part of supply chain activities”(Hines & Bruce, 2007: 29). See figure 2 below. Abercrombie and Fitch have a very tight control over the design and manufacture of their clothing. By designing their own ranges and having these ranges manufactured exclusively it helps the company to keep control, have higher margins and protect the brand. The head office for Abercrombie and Fitch is located in Ohio and is called The Campus. At The Campus there is a centre known as “Innovative Design Center” where “a dedicated team uses more than 100 wash, quality assurance, lab and graphic machines” (Case Study Webb, 2009: 11). This centre is responsible for merchandise design and development. In order to reduce time and the costs of product development “design packages” were developed by the brand. The design packages are given to vendors. By keeping strict control over design, manufacture and product development the company is able to protect the brand from being copied and having the image damaged. The simplified structure of the supply chain allows Abercrombie and Fitch greater control over the whole process. By having greater control it allows the brand to deliver on the promise to the customer and consumer. It creates a relationship based on trust and gives the brand a competitive advantage. The competitive advantage comes back to three areas including scope, linkage and measurement.
Source: Clark ‘Supply Chain’
Retail Store Environment/Retail Strategy The founder of the company, David Abercrombie was focused on making his store more than just a place to buy merchandise, his vision was to create a store that was a destination venue. The store would offer a shopping experience and products that could not be bettered elsewhere. Today Abercrombie and Fitch still believe in this vision and it plays a vital role within the brand. Store experience is very important to the company to define the brand as very little is spent on external branding. The store environment is carefully planned and regulated. No aspect is left to chance. This is necessary in order to replicate the same experience in all stores. “The company strictly regulates the store environment in an effort to provide a consistent, pleasurable experience for customers in a manner that can be replicated in each store” (Case Study Webb, 2009:15). Everything from lighting, visual merchandising, fixtures, layout, staff, store fragrance and music is planned with in great detail. For example the music played in-store is pre-produced and refreshed on a monthly basis with all old CD’s thrown away. The volume is set to a regulated level and cannot be changed. The store also focuses on sensory experiences for the customer by spraying men’s fragrance in-store and laying out merchandise so the fabrics can be felt. “The American Abercrombie & Fitch stores, for example, are a real reflection of life at American colleges. The range, the visual merchandising, the salespeople and the catalogues all fit exactly with this lifestyle. The clothes are specifically what young people of that age want to wear. The visual merchandising consists of many pictures with sex appeal. There is hardly any difference between the models in the catalogue and the employees in the store. The employees are the same age and are dressed the same way as the target group” (Floor, 2006: 79). Location Strategy There are currently five flagship stores located in prestige’s locations around the world. The flagship stores are found in United Kingdom, in London, Italy, in Milan, Tokyo, in Ginza and America, New York and Los Angeles .The flagship store in the United Kingdom is located in London, just off Savile row which is famous for men’s bespoke tailoring. The location strategy of Abercrombie and Fitch is to place the store where it is at the forefront of the customer’s mind. As the store is the brand representative of Abercrombie and Fitch the flagship store plays the vital role of positioning itself in an area of exclusivity and prestige. By looking at the geographical location of the flagship stores this is clearly communicated. There are a number of regular stores across America found mostly in shopping malls. All the shopping malls need to have the same criteria to be considered as an Abercrombie and Fitch store. “They are nearly all located in socalled “A-Grade” malls- those centres with the highest footfall and producing the best sales per outlet” (Managing the Fashion Brand Case Study Book, p14). The reason for this need for a high footfall is the brand relays heavily on the store for the selling of merchandise and if the store is out of sight it may be out of mind, the mind of the customer and consumer that is. Store Design and Space Planning The concept of the Abercrombie and Fitch store is the store is a destination for its target market. The stores purpose is to sell merchandise as well provide an environment in which the target market feels it is part of. The layout of the store was designed through the brands head office. The layout of the store has a boutique feel about it as it is arranged in a series of small rooms with each room displaying a certain merchandise offering. “The layout of the store is arranged around a series of small rooms” (Case
Study Webb, 2009: 21). As the target market is between the ages of eighteen and twenty two a club like atmosphere is spot on and the store pretty much represent this. It has very dim lighting, dark wooden fixtures and spot lights that highlight the merchandise. Large black and white photos hang on the walls to drive home the image of beautiful, young people. The Competition and Price Point Analysis Abercrombie and Fitch’s competition in the UK are retailers who have a similar target customer. These competitors include Urban Outfitters, Jack Wills, Tommy Hilfiger and Hackett. These brands can all be described as lifestyle brands. However a couple of them do not represent the American way of life but the British way of life. These include Hackett and Jack Wills. What they do have in common is the engagement of the lifestyle that the brand is selling, whether this is American or British and the price point. Abercrombie and Fitch is an all American brand that is true and unique to America which is reflected within its pricing of merchandise. It is more expensive to buy the merchandise here in the UK than it is in America. As the company is setting up in a new location the cost of doing so must be kept in mind and the image of the brand being exclusive and somewhat a luxury. See below Figure 1, a positioning map of Abercrombie and Fitch among the brands competition. The brand is represented within Urban Cool and High price section.
Perceptual Positioning Map High Price Ralph Lauren
Hackett Urban Outfitters
Boden Tommy
Hilfiger
L.L.Bean
Abercrombie & Fitch Jack Wills J.Crew
Casual
Urban Cool American Eagle
Eddie Bauer GAP (USA)
Buckle
Zumiez American Apparel Uniqlo
Low Price
Webb (2007) ‘Perceptual Positioning Map’
Human Resources
The overall strategy of the brand when it comes to recruitment can be seen as politically incorrect. From the way in which staff was recruited to the job titles given to staff is anything but ordinary. Staff for the London store was recruited by a non-traditional method. Instead of using a recruitment agency Abercrombie and Fitch used scouts to find employees. The scouts were responsible for looking in places where people who would represent the brand best would be found. This included searching clubs, pubs, universities, gyms where cool, young beautiful people could be found. “Jeffries has always believed that his store personnel are first and foremost living representatives of his brand” (Case study p28). This means of finding the right staff was vital to the brand even if it meant causing trouble. The titles that are given to staff members are more about enhancing their status than the job they perform. “A&F, like many American retailers, refer to their retail staff as “Associates” in order to enhance their status” (Case Study Webb, 2009: 28). The recruitment strategy of the brand has caused legal trouble for the brand but has been widely accepted by the customer. After all if the customer is buying into the brand then the strategy is working. SWOT Analysis of the Brand The strengths of the brand are as follows: • Strong brand name as has been established since 1904. • The brand is clear who the target market is and uses the appropriate channels of communication. • The merchandise range is not very complex therefore it is easier to manage the supply chain. • Engagement with the target market. • Having one store in the UK enhances the image of the brand as being exclusive. The weaknesses of the brand are as follows: • The UK market is an aging market and the brand’s target market is aged between eighteen and twenty two. • Some of the UK customers may be aware of the higher prices locally and may wait to purchase in the US. • Internationally, outside of the UK, the brand seems to be running into difficulties with regards to the culture of different countries. For example Japan. This bad public image may have an indirect effect on the brand name. The opportunities for the brand are as follows: • International development in order to grow the brand within the UK. • By having the brand worldwide it can spread its risk if one country or countries under performs due to economic or political reasons. • International flagship stores are housed in great locations and should they run into financial difficulty the properties could be re-let. The threats to the brand are as follows: • The UK market is an aging population and it may need to consider this for expansion reasons in the future. • Recruitment strategy may continue to cause the brand financial lose due to discrimination charges brought against the brand. • Expanding to quickly internationally while economy is unstable may cause harm to brand in UK. Conclusions
Abercrombie and Fitch have managed to make an impact in London, England. The brand has a strong following and captures the imagination of its target market. As the product offering is narrow and deep this allows for a simpler supply chain strategy. With only one store in the UK it comes across as exclusive which helps with the brand image. Recommendations The brand needs to keep in mind the aging population of the UK market as its target market is eighteen to twenty two. This will eventually have an impact on potential sales and the company may need to consider growing with the market and amend its strategy in the country it is operating in. This may result in a higher volume of sales. The recruitment policy of the brand may continue to face problems that could affect the financial side of the company so this maybe an area where it could consider amending its strategy while protecting itself at the same time.
References: Books Webb, B. (2009) Managing the Fashion Brand Case Study Assignment. Floor, K. (2006) Branding A Store. Great Britain and United States: Kogan Page Limited Hines, T. and Bruce, M. (2007) Fashion Marketing: Contemporary issues. 2nd Edition. Oxford: Elsevier Ltd Images Clark, J. (2010) ‘Supply Chain’ [Illus]. Lecture 1 Notes Webb, B. (2009) ‘Perceptual Positioning Map’ [Illus]. Managing the Fashion Brand Case Study Assignment.