2011
ABERCROMBIE & FITCH
Kamila Y. Hall
Towson University
4/7/2011
Background
Evaluating consumer behavior, also known as the psychology of marketing, is an
essential method used to help companies formulate strategies that will result in increased
sales and brand loyalty. In order for a firm to create effective marketing strategies, it is
critical that the firm understand the factors that influence consumer activity within their
market segment, and across the products and services in their portfolio. For my paper, I
researched Abercrombie & Fitch to determine well they integrated consumer data into
their marketing strategy, and how affectively they responded the changing trends in
consumer’s behavior.
Abercrombie and Fitch (A&F) is a publicly traded retailer that sells high quality
clothing, accessories, and fragrances for young men, women, and children, with a
primary focus on college students. The company is considered a specialty store in the
retail industry. Unlike the traditional, mass merchant department stores, which sales
decreased at a 4.9% pace in 2010, specialty store sales increased 6% in 2010 and are
expected to rise 3% to 4% in 2011 (GICS Sub-Industry Summary: Apparel Retail. 2011,
April 07). Specialty stores currently hold the largest market share of the apparel industry
which is about 31%, according to the NDP Group.
Brand Identity
Abercrombie and Fitch brand is promoted as an upscale image. The upscale
image in addition to its trademark, “Casual Luxury,” reflects every marketing touch point
the company has. For example, in an attempt to encourage consistent focus on its target
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audience, college students, the retail company spent 130M for the construction of its
headquarters in New Albany, OH (Morton, 2002). A&F stores are also located in high
end locations globally. For instance, there is an A&F Flag Ship store in London and one
in New York, on Fifth Avenue, next to Prada and other upscale retailers.
In all, A&F operates 1, 069 stores globally (Abercrombie & Fitch. 2011, April
05). The retail company’s target demographic represents 3% of all apparel sales in the
U.S. (GICS Sub-Industry Summary: Apparel Retail. 2011, April 07). They are young,
middle-class adults, particularly college students, sometimes known as the, "the great
American college kids," This demographic is attracted to strong brands, fashion and
value (GICS Sub-Industry Summary: Apparel Retail. 2011, April 07).
Lifestyle Image
Abercrombie and Fitch’s Vice President of Corporate Communications, Thomas
D. Lennox, stated that the in-store environment is the company’s “primary marketing
vehicle.” A&F invests approximately $650,000.00 in the construction of each store. The
store décor also reflects a college campus, including large leather couches, moose heads,
and dark Victorian style wood. In addition, there are large framed posters throughout the
store, featuring young models in collegiate or leisure themed settings. Their stores
feature a fraternity/fraternity house feel, which mimics the lifestyle of their target
consumer, and remains stay consistent with A&E’s image. The unique style of their
stores separate A&E from its competitors. It presents itself as an extension of the college
campus, beckoning students to hang out and socialize. Selling a lifestyle is the primary
objective in this approach. I believe the success of Starbucks is another good example of
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the use of this strategy. In addition to coffee, Starbucks sells an experience and a life
style, because of this, their customers are willing to pay $3.00 and up for a cup of coffee
that was priced at an averaged 90 cents prior to Starbucks entrance into the market. A&E
consumer behavior is positively affected by its lifestyle image.
Pricing Strategy
To avoid tarnishing its brand, A&F runs a full price business and abstains from
lowering prices, regardless of a struggling economy. This strategy is talked about in Per
Sjofors article, “Pricing Strategies, The top 10 mistakes most companies make.” Sjofors
believes that companies should base their price on their customer’s perception of value
and not their company’s costs. If the price is lower than the customers’ perception, the
company is failing to maximize its profits. In addition, consumers are reluctant to
purchase previous discounted items at its regular price in the future. This is the case with
“Coach.”
However, the failed economy, changed consumer’s purchasing behaviors, retail
sales dropped significantly, and the industry struggled. Surprisingly, A & E refused to
change its pricing strategies, they continued to sell polo t-shirts for approximately 60.00,
while other high-end stores like Kenneth Cole reduced their retail prices 50%. As a result,
A&E reported a record 30% price drop in same store sales. I agree with Per Sjofors, that
a discounted price could negatively impact on a consumer’s perception of a products
value. However, there are circumstances when retail companies must implement other
pricing strategies to maintain its market share. For example, Nordstrom’s, has the same
pricing strategy as Abercrombie & Fitch, for its high-end products. To prevent their sales
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from declining, in 2009, the luxury retail company focused on items that were up to 30%
less than its brand’s high-end line—which maintained at its regular price. Nordstrom’s
wide variety of quality name-brand clothing lines gave the company the advantage of
offering a variety of price points which in turn increased their sales, unlike many other
retail stores, during the downfall of the economy. By 2010 A&F was forced to improve it
clothing line—consumers were no longer buying their previous popular cargo pants,
lower its prices--although its products are still considered expensive by some consumers,
and cut cost because of its record low sales in 2009. Retail is a competitive industry that
continues to expand due to e-commerce. It’s not static. As consumer options increase,
maintaining market share will become more difficult. A&F needs to lower its prices and
offer a variety of price points to maintain its level of competitiveness. In my opinion,
their price strategy is continuously growing further away from their target market’s
purchasing behavior.
Advertising Strategy
Technology has caused many companies to change their marketing strategies and
it plays a critical role in effecting consumer’s purchasing behaviors. There is not only a
demand for companies to expand to an e-retail business, which must effectively provide
convenience in all aspects of its services, but companies must also learn how to take
advantage of new online marketing tools. For example, millions of consumers are using
social media outlets (SMO) such as blogs, online discussion forums, and online
communities. Many retailers, who promote their products using these tools, have had a
huge increased in sales. However, marketing through SMO is considerably successful.
Studies have proven that using SMO and traditional marketing together, obtains the best
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results. The two strategies complement each other, for example, click and mortars offer
online coupons to consumer who can print them and use them in offline stores. In
addition, consumers who are not comfortable with purchasing online, can search for the
product online and purchase it at the offline store. However, it’s critical that every
channel of communication is consistent. A&F marketing channels are consistent at every
customer touch point. The preppy, young Ivy League lifestyle is reflected through their
“casual luxurious” store environment, sales associates, who are usually models, and their
controversial black and white photographs. Their website also reflects the company’s
lifestyle. Consumers can securely shop and purchase items, there is a feedback link in
which will help A&F maintain customer service. Purchase confirmations and promotions
are e-mailed to customer. However; A&F needs to re-assess its online potential, in terms
of connecting with consumers globally and their risky advertisements. In order to grow
their consumer base and maximize their global sales, the online content needs to be
specifically tailored to meet the needs of international markets, with specific attention
given to the aspects of global cultures that should be recognized by their marketing
campaigns. While racy advertising in Europe is the norm and highly tolerated, some
countries are more sensitive and offended by the half naked models displayed on its print
advertisements. There are a number of consumers that suggests A&F products are too
mature for its younger customers. In March, 2011, the retail company received negative
attention because of a haltered bathing suit that was marketed as a “push up” bra. In
some cases the bra is offered to girls as young as seven. Executives at A&F were forced
to drop the term “push-up” in the same week of its launch. In addition, A&F is
continuously criticized for hiring males and females who resemble models. A&F uses
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this hiring strategy to assure that its image is also reflected through their employees. Last
year a lawsuit was filed by nine females previously employed by A&F. They claimed
during their employment they were assigned to work where they did not have to interact
with A&F employees. This was allegedly done because they did not look like the models
whose pictures decorated the store. The question is whether these actions affect their
customers’ purchasing behavior. It can have a negative effect, if a consumer feels
uncomfortable shopping at the store because he/she does not think they’re as pretty as
A&F’s poster models and sales persons. It will have a positive effect on someone who
feels that he or she has the look of a model. Unfortunately, there are probably more
people who do not look like the models than the people who do.
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