Abercrombie & Fitch is losing it!
Steve’s breakdown: The featured video is proof that this article is dead on. Please, please, please – someone get in there and fix this!
NEW ALBANY, OH: Abercrombie & Fitch Co.’s soft-porn ads and nightclub vibe once delighted American teenagers and infuriated parents. Today, many aren’t even paying attention.
The once-edgy brand has lost a third of its market value in the past year and is grappling with falling store sales in Europe and the United States. While the retailer blames the economy for its woes, brand consultants say Abercrombie has failed to change with the times. Today’s teens are underwhelmed by the half-naked models and blaring, dimly lit stores. And they’re less inclined to wear Abercrombie’s uniform of denim and graphic T’s.
Abercrombie’s U.S. revenue has slipped 2.5 percent this year and the retailer is bracing for same-store sales declines in the second half. The slide comes as rival American Eagle Outfitters Inc., which carries lower-priced, more wholesome styles, is boosting same-store performance. Falling sales prompted Abercrombie to shutter 71 U.S. stores in its most recent fiscal year.
Abercrombie is counting on growth overseas, where it opened 47 locations in its most recent fiscal year, and its styles remain fresh and popular with many teens. Still, international same-store sales plunged 26 percent in the second quarter. While Europe’s economic woes played a part, some new stores stole sales from existing locations, according to the company.
“There’s no personality anymore,” said Martin Lindstrom, author of “Buyology: Truth and Lies About Why We Buy.” “The pipeline of coolness is disappearing and once it dries up, then they will dry up.”
It’s up to 68-year-old Chief Executive Officer Mike Jeffries, who made Abercrombie cool, to connect with the new generation, Lindstrom said.
Abercrombie declined to comment for this story.
After taking the helm in 1992, Jeffries turned a chain that originally made safari and camping gear for the likes of Theodore Roosevelt and Ernest Hemingway into a teen emporium where sex met Ivy League. He used Abercrombie’s reputation for quality to charge more for youthful styles, recruiting all-American teens and college-age kids to model and work as salespeople. Risque quarterly catalogs enraged religious groups. In 1999, the boy band LFO paid homage with its top-10 song “Summer Girls,” which included the lyrics: “I like girls that wear Abercrombie & Fitch/ I’d take her if I had one wish.”
The Jeffries formula worked from 1995 into 2008, when the company boosted sales more than 20-fold and net income more than 56-fold. Then the world changed. The downturn made it hard for Abercrombie, long an aspirational brand, to keep selling $70 jeans when similar styles could be purchased elsewhere for $40, and Abercrombie’s customers began moving on.
Today’s teens are “radically different” from other generations, including Millennials now in their 20s, because they are rejecting uniforms, according to Marcie Merriman, founder of retail and brand strategy consultancy PrimalGrowth.
Dubbed Generation C – for creative and connected – they have a bevy of clothing options thanks to the boom in fast-fashion from Forever 21 Inc. and Hennes & Mauritz AB‘s H&M, said Merriman, who has consulted for Jack Daniels and Nike Inc. and is a former director of brand planning and strategy for Limited Brands Inc.‘s Victoria’s Secret. Gen C also has developed a more individual style from the Web and social media, she said.
Abercrombie must “look at ways to tie in with this creative class in a way that their brand will continue to resonate,” Merriman said. “They’re positioned well to take advantage of this group’s desire to be rebellious and indie and different, because that’s what the brand is about, but right now the product mix doesn’t communicate that or facilitate it.”