Abercrombie & Fitch Is Getting Its Mojo Back, But A Little Differently

Abercrombie & Fitch is apparently cool again. Taking cue from Zara ’s and Forever 21 ’s book of success, the once preppy retailer has now replaced its loud logo merchandise with subtle classic clothing with minimalist designs. It has dialed down the “sex-appeal” aura in its stores, and is striving to revamp its back end to improve the speed-to-market. In the bigger picture, Abercrombie is aspiring to be the new “fast-fashion” brand in the town, which considering the present market landscape, is a very good idea. The company is even beginning to see some promising customer response.

It may be a little surprising that in a country where consumers love to shop for apparel, a number of retailers are continuously reporting declining sales. American consumers buy about 68 clothing items per person every year, and apparel sales have grown moderately by 3% annually over the past three years. Growth in the market has been slow because consumers are increasingly buying a higher volume of cheaper clothing. And yet, Abercrombie, American Eagle Outfitters, Aeropostale, and Gap Inc have not had the best time. Apart from several specific problems, the inability to compete with fast-fashion brands on design, pricing and speed-to-market have left these retailers struggling. Abercrombie, however, seems to have made a comeback.

Our price estimate for Abercrombie & Fitch stands at $28, implying a significant premium to the current market price.

See our complete analysis for Abercrombie & Fitch

Abercrombie’s strategy of excluding a particular demographic from its target customer group and its sluggish inventory management had driven customers away. Its loss was fast-fashion companies’ gain. and these players have now built a strong brand loyal customer base for themselves. In the present scenario, why would a shopper spend $40 on a top featuring ANF logo, when she can buy a cheaper and trendier dress at Zara or H&M . In fact, it makes sense to say that trendy clothing is cheaper than ever and cheap clothing is trendier than ever. Almost all casual apparel retailers have realized that, but their strategies to adapt to this change have not been impressive.

To this end, Abercrombie is several steps ahead of its counterparts. After one year of rigorously transitioning its product portfolio, the retailer finally has a merchandise range similar in nature to Zara and Forever 21. It is redefining “cool” with classic and laid-back designs and shopping experience, which earlier were somewhat preppy and steamy. Even the in-store and marketing themes have gotten much lighter than before. The image below provides an idea about Abercrombie’s then and now positioning.

With its updated classic and comfortable look, Abercrombie is beginning to draw a lot of customer attention. Its contemporary designs are resonating well with women buyers and the brand recently received an encouraging review on one of the famous fashion blogs – Man Repeller. Abercrombie seems to have taken care of one of the three most crucial aspects of fast-fashion retailing (design), but it still needs some work on pricing and speed to market. Its merchandise updates will not work well, if inventory isn’t replenished at a much faster rate than before, and there remains a notable price difference from Zara and Forever 21.

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