Abercrombie and Fitch Is a Fashion Company That Primarily Target Young People

They are known for having an all-American style; country, sporty and fashionable. What Abercrombie and Fitch is perhaps even more known for is the unique set-up in every single store. The stores are dark, with spotlights on the clothes, very loud popular music is playing, their own perfume runs through the venting system and are sprayed onto the clothes, and the employees are casted to match the look of the all-American image. The store was founded by David T. Abercrombie the 4th of June in 1892, as a small shop in Manhattan NY. A regular customer lawyer Ezra Fitch, acquired an interest in the company, and moved it to a larger area on Broadway. Fitch mplemented his own ideas of how to run the company, and his name was added to the company name.

David T. Abercrombie and Ezra Fitch could not agree on how to run the company, which resulted in Ezra Fitch buying up the entire firm. Today the fashion store has 1035 stores in America, Canada, Japan, Italy, England, and the newest one recently opened on Kobmagergade in Copenhagen, on November 4th 2010.

Marketing strategy

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The way Abercrombie and Fitch is being marketed is that it is an upscale lifestyle concept brand directed towards teenagers and young adults. They have an idea of how the concept of Abercrombie and Fitch clothing should be perceived and are not prepared to commit to any changes when it comes to marketing new stores in new countries, and in America they so far haven’t been forced to. The concept of using shirt-less male models and employees to promote the store outside of the entrance as well as show jeans on males without shirts on in campaigns, has been a successful strategy in America, and little or no attention has been paid to all controversy directed towards their quite daring promotions.

For every article criticizing their brand, the curiosity of potential customers increases, because it fits the Abercrombie and Fitch slogan of “Naughty or Nice”. In order to maintain the fierce marketing of the all-American look that they promote with a vast majority of Caucasian models, there has been controversy in the form of discrimination charges against the company, where applicants of Latin, African-American and Asian descent have had their applications rejected because they do not fulfil the requirements.Abercrombie and Fitch believe that the concept that has been so successful in the United States will work just as well in other parts of the world, and do not want to change the type of models they are using. This has led to a number of goals decided in a settlement agreement, stating that they have to show diversity among employees, as well as report progress towards promotions for hiring members of minority groups.

Europe

In Europe, Abercrombie and Fitch has had a successful start to their expansion, and even though they run the same promotions as in America withCaucasian models, it is effective because it is an ideal that Europeans can relate to. They want to create an American feel to the store, and do this by having the employees greet customers in English.

In Denmark, this might not cause much harm, since Danes are generally well versed in English. But how effective has this marketing strategy been in parts of the world were the American culture does not have as big an influence as it does in Europe and Scandinavia in particular? Has Abercrombie and Fitch been successful in their attempt to expand to other parts of the world committing to small or no changes at all in their marketing promotions?

Abercrombie and Fitch in Japan

Abercrombie and Fitch launched one of their stores in Tokyo, Japan in December of 2009. They decided start without any local marketing campaigns, and instead tried to be successful only from word of mouth and being a trendy and exclusive clothing line, a strategy that has worked for many other brands before.The first day was a huge success, and long lines of people wanting to get in occupied the area outside of the store. A great reason for this is the curiosity created from not being able to view the clothes from the street. However, the lack of research in regards to how other western brands, like H&M successfully markets their products in Japan, eventually led to the inhabitants of Tokyo not finding Abercrombie and Fitch an attractive store to visit.

One reason is the fact that Abercrombie and Fitch never used Asian models, but rather Caucasian, which created an ideal that the Japanese cannot relate to. They might feel that the clothes are not designed or meant for the segment they belong to, whereas H&M has employees of local descent in their Japanese stores and mannequins with similar body types, the customers will go for the brand they can see themselves wearing. As far as in-store communication goes, English is not a big part of Japanese daily life, and therefore the Abercrombie and Fitch way of greeting customers with a “Hey what’s up? ” as well as the employees not being very good in Japanese, creates an awkward situation for the customers, who are not sure in what way to respond. Another reason for the store not doing well, and a second way of showing either bad research in marketing department or plain arrogance, is that Japan was at the time in the middle of a low-price fashion boom. People wanted cheap apparel, with hardly visible brands. In the middle of this Abercrombie and Fitch decided to price their products at an average of double the price compared to the same product in the United States, which was hardly an effective way of promoting a new brand for the first time in a new country.

Problem Statement

Instead of having a worldwide marketing strategy were they assume that all potential consumers are attracted to the all-American look, is there a more locally based strategy that they could use when opening up stores in non-western countries, that at the same time could help them fulfil the goals determined after the discrimination settlement?

Store layout and employee style

When Abercrombie and Fitch opened their store in Copenhagen, Denmark, the primary design objective was to keep the classic Abercrombie and Fitch image, so that the costumers can recognize the store. No attempt has been made to adapt the design to the surroundings.European customers do not necessarily value the same things as American customers. McDonald’s for instance maintains the concept of their fast food chain around the globe, but they do adapt their design and product range to the surroundings; in Europe the restaurants are decorated with large photos of lettuce and healthier products are offered along with the regular products. As discussed in 2. 1 Marketing Strategy, Abercrombie and Fitch uses exactly the same employee style in all of their stores.

Likewise they make no adjustments to the store layout. The entrance of a store is the decompression zone. Here customers make an adjustment to the new environment. In Abercrombie and Fitch there is a male model without a shirt on, at the entrance. He greets the customers as they pass him to enter the store. The first part of the store is the checkout counter, which is always manned by models, and there is a female model dancing and greeting the customers. Abercrombie and Fitch uses a free form layout, which is a costly layout since it takes up a lot of space, and it is less likely to enforce impulse shopping since it does not force the customer through the store as the racetrack layout does.

Signage and graphics can add personality, beauty and romance. Abercrombie and Fitch have large black and white photos of young models. The photos all bare the slogan of the firm: Naughty or Nice? The photos constitute a lifestyle image; the models are styled very naturally. The women have very little makeup on, and their hair is loose. By using these large photos in all of their stores Abercrombie and Fitch has created a bridge between the merchandise and their target market. They target young people who can identify themselves with the models on the photos and will want to become a part of this all-American lifestyle. The promotional aisle is placed in the middle of the ground floor, next to the stairs that lead to the first floor.

Abercrombie and Fitch make great use of their walls. The store is divided into smaller rooms by the use of walls that maintains clothing. By exposing hot new clothing in the windows, retailers can attract customers. Abercrombie and Fitch use their windows to attract customers but in a different manner. Customers cannot see through them. The facade of the store is designed to look like an old skiing hut from America. The fact that customers cannot see any clothing from the street can enhance curiosity.

Also Abercrombie and Fitch has become a well-known brand all over the world, therefore their customers know what is behind the walls. Abercrombie and Fitch use the technique of “popping the merchandise”. The stores are very dark, with spotlights on the clothes. This low light helps create the mood of being in a skiing hut. Abercrombie and Fitch takes great advantage of the mood different colours can create. The stores are very dark, to help create the cosy feeling of being in a skiing hut. Also red is a dominant colour, which creates an emotional, vibrant, hot and active response.

Different cultures respond differently to colours, it is therefore not certain that Scandinavian customers will respond in the same manner as the American customers. The music in the stores is very loud popular music, which in America attracts teenagers. Music that will make the customer feel relaxed and in the mood for shopping should be slow and soothing. The music played in the Abercrombie and Fitch stores is the exact opposite. This is to avoid a clash. Abercrombie and Fitch have created a fashionable hip environment, which loud popular music supports. It is said that customers in scented stores think they spend less time in the store then customers in unscented stores.

As mentioned Abercrombie and Fitch have their own perfume running through the venting system and sprayed onto the clothes. Therefore customers in Abercrombie and Fitch, will experience shorter perceived waiting time, when they are waiting for help and guidance.

As discussed previously the employees in the Abercrombie and Fitch stores are all casted to match the image of the brand. They wear clothes and perfume of Abercrombie and Fitch, the females have loose hair and natural makeup and the males are bottomed down. They are all very outgoing, and every single customer is greeted in a chick way; “Hey, what’s up? ” or “Hey, how are you today? ” Abercrombie and Fitch have created a unique experience in their stores.

Problem Statement 2

But does providing an experience, cost the customer to spend more time and money in the store? – And how can Abercrombie and Fitch have success in Denmark without making any adjustments in order to fit the Danish market? To discuss this issue the model of Growth Opportunities will be used, since it helps to define how a company can have successful growth, which is what Abercrombie and Fitch is aiming for by expanding to Denmark.

Working with growth strategies will lead to a discussion of who Abercrombie and Fitch’s customers are in Denmark, and how they can use this knowledge to have success in Denmark.

Pricing strategy

Throughout the global recession people have lost their jobs because companies need to cut down their expenses and some stores have been forced to shutdown because they were not able to survive with an ongoing decreasing profit. Some stores have managed to survive by re-evaluating their pricing strategy and having more frequent sales in the hope of getting rid of old merchandise or in the hope of creating customer traffic and thereby generating more profit. Like many of their competitors Abercrombie and Fitch have also been affect by the financial crisis but Abercrombie and Fitch have chosen a different path then their competitors. An aggressive style has been used to cut their expenses. 220 jobs have been cut and they have cut down on planned capital expenditures.

In 2009 they used between $165-175 million, whereas in 2008 the number was $376 million. Unlike their competitors, Abercrombie and Fitch has resisted to price discount because they feel it will tarnish the “luxury” label the brand has established. Time Magazine rated Abercrombie and Fitch the worst recession brand of 2009 since their sale dropped by 23% and their revenues declined by 17,2 %, which was more then in 2008. Abercrombie and Fitch’s operating margin, which measures the proportion of what is leftover from the company’s revenue, fell from just below 20% to 13%. Stock analyst, Jennifer Black, said in May 2009: “Abercrombie and Fitch has the cash to survive the recession without caving to discounts and will be helped by continued international growth” Instead of discounting their prices Abercrombie and Fitch has focused on growth within the international market. They have only opened 10 new stores in the U. S. in 2009 compared to the 90 stores they opened in 2008, but instead expanded in Europe and Asia.

Problem Statement 3

The fashion industry has suffered from the recession the last couple of years, which has changed the way customers shop for fashion. According to Fashion Market Director for Saks, Colleen Sherin: "Women are not necessarily looking for basics ... they're looking for wow pieces, something that inspires more of an emotional reaction…they are looking for value. They're looking for quality at a price". How have/can Abercrombie and Fitch change their strategy in order to adapt to the change in customers buying behaviour? And could a new pricing strategy affect their brand?

References

1. Connery. dk http://connery. dk/abercrombie-og-fitch-til-koebenhavn. 2844. html Published: May 19th, 2008 Retrieved: November 22nd, 2010 AFjustice. com http://www. afjustice. com/ Retrieved: December 4th, 2010
2. The Business of Fashion http://www. businessoffashion. com/2010/02/in-tokyo-abercrombie-misses-its-mark. html Published: February 4th, 2010 Retrieved: December 4th, 2010
3. Wikinvest.com - www.wikinvest. com/stoxk/Abercrombie_%26_Fitch_Company_(ANF) Retrieved: December 3rd, 2010
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