Abercrombie & Fitch Co.

Case analysis
Prepared by: Jaswanth Gogineni

Agenda

Company Overview Business Description History Industry and competitors SWOT analysis Unique Sales strategy Recommendations and Conclusion

Company Overview

Specialty retailer that sales casual apparel Operates under 5 brands: Abercrombie & Fitch, AbercrombieKids, Hollister and RUEHL and Gilly Hicks: Sydney brands. The company operates in the US, Canada, UK. Operates 1039 stores worldwide (February 2008) 80,100 employees

 What

Abercrombie and Fitch brands are you familiar with?

Abercrombie

Established July 1998 7-14-year-old age group 170 stores in US Classic cool theme Logo Moose

Hollister Co.

Established July 2000 14-18-year-old schoolers 455 stores in US and Canada Theme SoCal Logo Seagull

Abercrombie & Fitch

Established June 1892 Targets 18-22 year-old age group 357 stores Theme Casual Luxury Logo Moose

The RUEHL

Established September 2004 Targets 22-35 year adults Operates 22 stores Logo French Bulldog

Gilly Hicks: Sydney

Established January 2008 Operates 5 stores Targets 18 and up Logo Koala Theme Australia

History

David T. Abercrombie established Abercrombie Co. on June 1892 In 1904 wealthy Ezra Fitch became a co-owner In 1909 issued and mailed 50,000 copies of 456page catalog In 1917 A&F became the largest retailer in NYC that sold sportswear In 2006 A&F opened its first store in Canada, In 2007 first store in UK

Industry and Competitors

Retail Industry (Special Lines) 40,000 companies operate 90,000 stores Summarized annual revenue $130 billion Dominance of large companies Slowdown in spending on clothing Labor-intensive industry, high demand for qualified and skilled sales reps Two main sales seasons- fall (main for A&F) and spring

 What

are Abercrombie and Fitch main competitors?

Industry and Competitors

Gap, Inc., The Target Corporation Gap, Inc., The Limited Brands American Eagle Outfitters, Inc. Benetton Group SpA

Tommy Hilfiger Corporation Urban Outfitters, Inc. Wet Seal, Inc, The Aeropostale, Inc.

Competition
Abercrombie & Fitch Established
Revenue (billion USD) Number of stores

American Eagle The Gap 1904

2.8 697

1892
6.91 1039

1969
16 3139

Employees
Scope of operation

80,100
US, Canada, UK

20,600
US

150,000
More than 19 countries

SWOT Analysis

Strengths
Strong brand portfolio Strong financial performance Robust balance sheet

Weaknesses
Low inventory turnover ratio Limited geographic reach

SWOT Analysis

Opportunities
Expansion in new markets Investment in infrastructure Development of new concepts Increasing online sales

Threats
Counterfeit goods Increasing rental rates in US Slowdown in the US economy

Unique Sales Strategy: IMC

High integration of Marketing efforts Recruits high energy brand reps largely from college campuses who dress in A&F Issues subscription catalog A&F Quarterly (350,000 Americans has subscribed) Issues magalogs

Unique Sales Strategy

Emphasis on high level of service, quality, brand image

Targets Generation Y Positioning strategy involves the use of overt sexuality advertising appeal
http://www.youtube.com/watch?v=9dqEcKcadUE&NR=1

Unique Sales Strategy: Publicity

Positive
18-22-year-olds Controversy surrounding its ad campaign has added allure and exclusivity 34 consecutive quarters of record sales and earnings

Negative
Parents Organizations Legislators Playboy for kids

Unique Sales Strategy: Store Layout

comfortable armchairs designed Large photos on the walls extremely loud, energizing trance and dance songs dimmed light unique A&Fs scent in the store

Unique Sales Strategy: Web site

Allows to download music, e-post cards Provide useful information, FAQ Shop online Watch Abercrombie TV Create ANFMail accounts

Recommendations and Conclusion

Long-term recommendations
Open a discount clothing store Invest in overseas expansion (Europe, Japan)

Short-term recommendations
Sponsor college events Strengthen rebellion and controversy image Emphasize on online shopping Review the choice of magazines where A&F places ads

Thank You For Attention