Assignment: Case Analyze
Marketing Strategy in Action
Abercrombie & Fitch
As you stroll into the store, you are greeted by blaring music, racy photos, and a cooler-than-cool "sales force" that doesn't actually try to sell you anything. And if you're over 25, there is a decent chance you are the oldest person in the place. To borrow a phrase from another company's marketing compaign, Abercrombie & Fitch is definitely not your father's clothing store-although, interest- ingly, it may have been your grandfather's.
A&F is one of a handful of retail chains that has done a masterful job of appealing to fashion-conscious teens and college students. The challenge for A&F, The Gap, J. Crew, and others is how to remain relevant to the notoriously fickle youth subculture.
Founded in 1892, A&F was originally an outlet for camping gear. Early in its history, in fact, it outfitted former U.S. president Theodore Roosevelt's African safaris. Later it established a niche selling conser- vative menswear to an older clientele, but eventually sales plummeted and A&F filed for bankruptcy. The Limited purchased the chain in 1988 and four years later hired Michael Jeffries to oversee A&F operations. Jeffries wanted to shift the company's focus away from, as he describes it, the "70 to death" demographic toward a much younger and faster-growing group: consumers between ages 14 and 24. The tweed suits came off the racks, replaced by jeans and T-shirts. It worked. By the time The Limited spun off A&F in 1998, the company was already a hit. Sales exploded from $165 million in 1994 to $1.6 billion in 2002. The number of stores jumped from 36 in 1992 to 340 in 2003 (plus 167 Abercrombie stores and 112 Hollister Com- pany stores). A 1999 survey showed A&F to be the sixth coolest brand in the world among kids, outranking Levi's and Nintendo. In the summer of 1999, A&F's spot in the pantheon of youth culture was solidified in a hit pop song by the group LFO, who sang about how much they liked girls who "look like Abercrombie and Fitch."
A&F and its direct competitors are appealing to the so-called echo boom generation-people born between 1977 and 1994. It is estimated that by 2010, the United States will have 34 million people between ages 12 and 19. And, unlike previous generations, most of these youths have money to spend. In 1998 the average teen earned almost $80 per week, and because most live at home and have few financial responsibilities, much of that money goes toward clothing.
At an A&F store, there is no such thing as a minor detail. Accord- ing to an analyst at Goldman, Sachs, & Co, "they are very single- minded and very driven. Everything they do is directed to making sure they are truly representative of the lifestyle of their core college- age consumer." A&F unabashedly admits it hires employees based less on skill than on how they look and act. In fact, because A&F believes young people don't like being told what to buy, the sales staff doesn't actually offer sales help. Their job is to greet customers, walk around, and look beautiful. "We're not interested in salespeople or clerks," declared Lonnie Fogel, director of investor relations. "We're interested in finding people who represent the brand's lifestyle . . . who portray the image of the brand." And management makes cer- tain employees don't deviate from that image. For example, employ- ees can wear only certain kinds of shirts with certain styles of pants. And black shoes are completely forbidden because the company believes they project an undesirable urban street image.
A&F's reach is not limited to its storefront. It is one of only a hand- ful of clothing companies that have successfully targeted young buy- ers via catalogs. Alloy and the very hip Delia's also have a large catalog customer base. But A&F's publication, the Quarterly, is more than just a catalog. It has become required reading for people who consider themselves cool. The catalog is filled with erotic photo- graphs of scantily clad coeds and buff frat boys cavorting on the beach or caught in compromising positions. The Christmas 1999 catalog included a fake interview with a mall Santa purported to be a pedophile, along with sex advice from a renowned porn star. Older folks-including the Michigan attorney general-expressed their con- cern, and A&F agreed to distribute the publication only to people over 18. But one can assume the controversy and establishment out- rage probably made the catalog (and the brand) all the more appeal- ing to A&F's younger clientele.
How does any company remain popular and keep up with what fashions young people consider cool? It's not easy. Thanks to the Internet and MTV, the concept of "fashionable" has become a con- stantly moving target. Wet Seal is a company that specializes in "club" clothing. Its president, Ed Thomas says, "The market is all about change. You have to constantly reinvent yourself to attract people to your store and that's constantly a challenge." The Limited, A&F's former sister chain, was once hailed for its skill at keeping pace with youth fashion trends. But somewhere along the line it lost its touch. In 1998, a $40 million operating loss forced The Limited to close stores. A&F is trying to keep pace with its customers by filling its merchandising and design staffs with people right out of college- young people who already live the A&F lifestyle. Plus, the company employs a team of "field editors," college students from all over the United States who provide weekly reports on the latest fashion and lifestyle trends.
Despite A&F's success, it does not have a monopoly on the youth market. Some elements of that subculture don't find the A&F lifestyle or clothing appealing. "A lot of my friends think Abercrombie's kind of silly, between the way they advertise with magazines and their high prices," says Erik Lappinen, a high school senior from New Jersey. Another New Jersey high school student, Kristen Ricciardi, agrees: "I'd rather buy the same clothes from The Gap or American Eagle and not have the company's name on my shirt." Gap, Inc.'s Old Navy stores, with their $8 T-shirts and $25 cargo pants, appeal to those who want to keep pace with fashion but won't pay A&F's prices. Of course, there are some young people who want to get as far away as possible from the A&F lifestyle and sense of fashion. At the 270-store Hot Topic chain, you can buy patent leather military boots, hair dye, vinyl pants, and even jewelry for your pierced tongue.
Why have A&F and other companies been so successful market- ing to teens and college students? It is largely because they appeal to a sense of belonging that is especially important to people in this age group. "These young people want to be with one another," says the 55-year-old Jeffries. "That is totally different. My generation grew up as loners." So while the definition of what is fashionable may vary from person to person, most young people do feel social pressure to wear clothes and live a lifestyle that others in their peer group con- sider cool.
Of course, there is a catch-22: How cool is too cool? Airwalk ini- tially marketed its shoes to teens who were part of a more alternative subculture. But eventually so many people were wearing Airwalks that the brand was perceived as mainstream and therefore not appropriate footwear for someone truly avant-garde. Now the com- pany is trying to reshape its image to become more relevant to those in its original target market. So, somewhat paradoxically, while young people seek social acceptance, they also want to retain some sense of individuality. As one teen said about A&F, "No one wants to admit they shop at a store because it's cool."
In sum, it is a never-ending battle for companies like A&F. Cultural tastes change, fashions change, established competitors redouble their efforts, and new competitors spring up seemingly out of nowhere.
To remain a major player in the youth clothing market for the long haul requires an intelligent marketing strategy and an accurate feel for the ever-changing lifestyles of young consumers.
Subculture and how it's used in this marketing strategy?