Abercrombie & Fitch Co is a leading, global retailer of apparel and accessories for Men, Women and Kids through three renowned brands. For over 125 years, the iconic Abercrombie & Fitch brand has outfitted innovators, explorers and entrepreneurs. After sales and profit decline over the previous years, mainly due to increasing competition from fast fashion brands both in the US and globally, the company had to reposition its eponymous brand to appeal to an older audience, using a more redefined design approach (Euromonitor, 2018). Millennials (defined as those born between 1981 and 1997) are now the sole focus for Abercrombie & Fitch, while Hollister keeps its attention on Gen Z (defined as those born between 1998 and 2016) (Donnan, 2017). Beside it, an overhaul of its store network, the closure of unprofitable stores, a depletion of excess inventory and improvements in consumer engagements thanks to investment in digital, direct-to-consumers and social media marketing, all have contributed to the company’s return to growth and the improvement of Hollister’s performance in 2017 (Euromonitor, 2018).
Today, the brand reflects the updated attitude of the Millennials customer, while remaining true to its heritage of creating expertly crafted products with an effortless, American style. While the Hollister brand epitomizes the liberating and carefree spirit of the endless California summer for the Gen Z customer. An Abercrombie kid creates smart, playful apparel for children ages 5-14, celebrating the wide-eyed wonder of childhood, which also includes its sub-brand, Gilly Hicks by Hollister.
The brands share a commitment to offering products of enduring quality and exceptional comfort that allow consumers of both Millenials and Gen Zers around the world to express their own individuality and style. The company operates over 850 stores under these brands across North America, Europe, Asia and the Middle East, as well as the e-commerce sites http://www.abercrombie.com and http://www.hollisterco.com (Globenewswire, 2018).
Thus, the company has aimed to create a distinct narrative for each brand. Abercrombie & Fitch is based on an East Coast collegiate vibe, while Hollister reflects the relaxed coastal atmosphere of Southern California. Yet, market shares of Abercrombie & Fitch’s brands remain relatively low, even in the company’s core markets. In the meantime, the lower-priced Hollister brand has become an increasingly important driver of growth. The brand contributed 58% of the total company’s sales in 2017 (Euromonitor, 2018). In order to strengthen its market position, Abercrombie & Fitch need to clearly distinguish itself by accentuating personality and authenticity and creating a narrative to which consumers can relate, especially in the international markets, where competition is high. As the company moves away from its heavily-logoed designs to more trendy, it should, also, consider exploring other categories that maintain its brand identity and to expand further in the region. For example, footwear offers strong potential, with a CAGR of 3% over 2017-2022. Additionally, sportswear that is predicted to post a CAGR of 4% over the period to 2022, could prove lucrative, in particular for Hollister brand that is created on Californian lifestyle aesthetic (Euromonitor, 2018)
Considering Hollister performance growth, it is a perfect time to explore the mindset, preferences and expectations of Gen Z tendencies. With the tendency of technology trends to trickle up rather than down the age span, Gen Zers potentially holds the reigns in terms of the future of all things digital. From attitudes to spending, to their outlook on the future, Gen Zers across the globe are resembling each other more than any other generation (Viga and OC&C, 2019). Understanding where Gen Zers is, what it wants, and where it’s going, is a powerful clue to predicting the future of the online world (WP Engine, 2017). According to A.T. Kearney, the Global Future Consumer Study (2017) consumer brands and retailers can appeal to future consumers and take advantage of new technology-enabled ways to influence and sell. Indeed, their ability to engage consumers in the digital world will become more critical than ever. The study also revealed that the mass market of the future will thrive on three fundamentally different principles: trust, influence, and personalization. As a result, building trust via strong brand identity and developing its digital presence across all channels should be a core of the company’s future strategy.
References:
Donnan, D., 2017. Influence Vs. Affluence: The Changing Menu Of Food Choices [online]. A.T. Kearney, the Global Future Consumer Study. atkearney.com. Available at: https://www.atkearney.com/documents/20152/815769/2017+The+Consumers+of+the+Future-+Influence+vs.+Affluence.pdf/6efbcc9a-2b1c-8269-daf8-593e47155886 [Accessed on 2ndApril 2019].
Dassu, I., Warschun, M. and Shield, N., 2017. The Consumers Of The Future: Influence Vs. Affluence [online]. A.T. Kearney, the Global Future Consumer Study. atkearney.com. Available at: https://www.atkearney.com/documents/20152/815769/2017+The+Consumers+of+the+Future-+Influence+vs.+Affluence.pdf/6efbcc9a-2b1c-8269-daf8-593e47155886[Accessed on 2ndApril 2019].
Euromonitor Passport, 2018. Abercrombie & Fitch Co In Apparel And Footwear (World). euromonitor.com. Available via: Euromoniitor [Accessed on 2ndApril 2019].
Globe Newswire, 2018. Abercrombie & Fitch Co. Reports Third Quarter Results. globenewswire.comAvailable at: https://www.globenewswire.com/news-release/2018/11/29/1658851/0/en/Abercrombie-Fitch-Co-Reports-Third-Quarter-Results.html[Accessed on 3thApril 2019].
Viga and OC&C Strategy, 2019. A Generation Without Borders: Embracing Generation Z. occstrategy.com. Available at: https://www.occstrategy.com/media/1806/a-generation-without-borders.pdf[Accessed on 3thApril 2019].
WP Engine, 2017. The Future Of Digital Experiences: How Gen Z Is Changing Everything. wpengine.com. Available at: https://wpengine.com/wp-content/uploads/2017/12/WPE-EBK-LT-GenZ-AUS_v04.pdf[Accessed on 3thApril 2019].
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