Name: How Abercrombie Pulled Off One Of Retail’s Biggest Comebacks
Uploaded: 2024-06-19T21:01:10.000Z
Duration: 10 min 34 s
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Shares of Abercrombie & Fitch have been a huge winner this year, more than doubling.

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Abercrombie may end up just being the standout of all the retailers.

Shares of Abercrombie & Fitch are up more than 500% over the last year, even beating out tech stars like Nvidia and Meta.

The company's annual sales have grown by nearly 30% since 2017, and it's posting its highest profits in more than a decade.

When the U.S. apparel market shrunk by 4%, Abercrombie & Fitch managed to grow annual sales by 16% in 2023.

And the run isn't slowing down anytime soon.

On May 29, 2024, the company posted its highest first quarter ever.

But just a few years ago, the situation was very different.

Back there, we're looking at about three and a half here.

Abercrombie was deemed America's most hated retailer, ready to be sold off.

So how did Abercrombie pull off one of the biggest comebacks in retail?

And the question is, can they keep it up?

In the late 90s and into the 2000s, Abercrombie & Fitch was the hottest teen retailer on the planet.

Teens were obsessed with its graphic tees, short skirts, and branded hoodies.

And former CEO Mike Jeffries used sex appeal to win them over.

I hope Abercrombie feels very sexy for a 20-year-old.

I think the magazine, it's individuality, diversity, that type of thing.

This used to be the hottest teen brand in the world.

Yet under Jeffries' recent leadership, Abercrombie & Fitch has become practically irrelevant.

It might sound a little simple, but great retailing all starts with great product.

And CEO Fran Horowitz knew that when she stepped in in 2017.

They took a look at what people were wearing and they took a look at what they had in their store.

And it was very, very narrow and very limited in terms of merchandise selection for what today's customer wants.

Horowitz is what the retail industry refers to as a merchant.

Before she took the helm of Abercrombie, she spent her career in merchandising.

Her job was to know what customers wanted and how to sell it to them.

You can be great with finances, but you have to understand merchandising.

You have to understand assortment planning, assortment mix.

You have to understand our supply chain and how it works.

But if you don't understand the psychology of a customer, good luck to you.

Abercrombie started conducting exhaustive market research so it could figure out who its new customer was and what that shopper wanted.

Getting close to that customer, understanding what they're looking for is the win.

When you put out there a great product, fashion and an equation that they're excited about, they're willing to spend.

Within a couple of years, the assortment was completely changed.

Heavily branded t-shirts and jeans were swapped for a range of sophisticated essentials.

It's now a brand that's focused on millennials, and obviously they stretch across quite a large age range.

And what those customers wanted was something that's fashionable, but also comfortable to wear.

Something that's not too stylish, not too over-logoed, but that actually still has nice embellishments and twists, and they feel good in wearing those products.

Abercrombie started offering an athletic apparel line in more categories like dresses and matching sets.

Part of the reason why Abercrombie's comeback has been so remarkable is because they did it at a time when consumers were cutting back on things like new clothes.

Take fellow apparel retailer Gap, which lost market share last year.

Executives blamed it on so-called product acceptance challenges, which is a nice way of saying that Gap made clothes that people just didn't want to buy.

A growing backlash this morning against the retailer Abercrombie and Fitch.

The popper-style chain accused of discriminating against overweight customers making clothes only to the thin.

Under Abercrombie's former CEO, Mike Jeffries, the company only marketed to a certain type of person.

Super skinny, blonde, young, preppy, beautiful.

The brand became at one point extremely toxic.

In 2006, Jeffries told Salon Magazine that Abercrombie was only for good-looking, cool kids.

He said part of the business model was based on excluding others that didn't fit in with the brand's image.

The comments resurfaced in 2013, causing a major fiasco for the brand.

It was seen as being very exclusionary at a time when the whole market was moving to a more inclusive model.

It's great to target a specific narrow audience, but if you're going to do it at the expense of earning revenue and profits, well, what you're doing is you're destroying your own brand.

In 2021, the company started offering a curve-love fit in a range of extended sizes.

It was also an early adopter of TikTok, working with an army of influencers to help its free brand go viral.

Has made some decent strides in becoming a more equitable brand.

I'm just an average chick who loves and appreciates the new Abercrombie clothing.

The affiliates and the influencers are a very big part of our business.

That user-generated content that they create is something that really resonates with our consumer.

People count on and believe their friends and their peers more than they believe what a company is telling you.

So that's a very important part of what we do.

We have a creator suite where many people advocate on behalf of our brand.

There's lots of different ways to approach it.

Kristen Dolan has spent nearly 15 years in the advertising industry, most recently in influencer marketing, helping big brands like McDonald's, Hilton, and Free People reach a wider audience.

She says that authentic marketing, not just splashy billboards and magazine spreads, was critical to communicating Abercrombie's rebrand.

Nine out of ten consumers trust influencers over brands.

And influencer ads deliver 44% higher attention metrics and six times higher return on ad spend on average compared to social benchmarks.

People want to see themselves represented in content full stop.

And when people feel represented in content and messaging, that leads to better business outcomes.

With the right product and marketing in place, the back end got a fix too.

She closed stores that were unprofitable.

She got out of many of the international markets.

She took a look at how inventory was being ordered and sourced.

Like other retailers that were big in the 1990s and 2000s, Abercrombie had hundreds of stores and malls across the country.

Many of those shopping centers have shut down or are dying.

Since 2010, Abercrombie has closed more than 700 locations.

They're opening stores again of a smaller square footage with a different look and feel than it had in the past.

The newer stores are light. They're bright.

Everything is laid out very cleanly and clearly.

And they're actually very engaging places to shop.

The company now has about 760 stores worldwide with 60 new store openings planned this year along with 65 remodels.

While Abercrombie's store footprint is down by about 10% compared to 2019, productivity per square foot is up by 18%.

Abercrombie also revamped its supply chain and stopped relying on promotions to drive sales.

It's now seeing its highest profits in more than a decade and beating rivals like Urban Outfitters, Gap, and American Eagle.

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How Abercrombie Pulled Off One Of Retail’s Biggest Comebacks

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