Abercrombie Kids (left); Hollister (right) – Photos: Abercrombie & Fitch
How did Abercrombie pull off its comeback?
Abercrombie & Fitch just scored its highest operating margin in over a decade with 2022 expected to show greater annual net store openings than closures for the first time since 2008.
On its fourth quarter call, Fran Horowitz, who replaced Mike Jeffries as CEO in 2017, said the improvement reflects “substantial foundational changes” outlined on its 2018 Investor Day, including:
- Optimizing its global store network,
- Enhancing digital and omni capabilities,
- Increasing speed to market,
- Improving customer engagement.
Ms. Horowitz said Abercrombie shuttered 23 percent of its store base, including most large locations, since 2018 to reduce annual occupancy costs by 31 percent. Newer stores are 30-to-50 percent smaller than heritage locations “and better reflect the modern Abercrombie & Fitch to clean and open sight lines and improve functionality that supports the digital nature of our customer.”
Hollister’s updates likewise “open up and brighten the store front and interior.”
Stores have been designed to embrace localized preferences. Ms. Horowitz said, “We no longer take a one-size-fits-all approach.”
Abercrombie has worked to significantly upgrade the quality of the product with better fabrics, zippers and buttons. The mix now features more down-to-earth looks and refined basics, replacing the oversize logos and low-rise jeans of the past. Extended sizes have been added for a more inclusive approach.
Ms. Horowitz said, “We refined our design calendar, re-balanced our vendors and expanded countries of origin. This has enabled us to move quicker and further improve the quality of our product.”
From an engagement standpoint, “the most critical steps thus far have been clearly defining the purpose and competitive positioning of each brand,” said Ms. Horowitz.
Abercrombie, now repositioned around younger Millennials, has ditched its shirtless male model greeters, dimly-lit stores and sexualized marketing. Hollister is centered around Gen-Z.
Newer examples of engagement include Abercrombie’s rollout of a Best Dressed Guest franchise to take advantage of an expected record number of weddings this year, Hollister’s gaming partnership with Fortnite’s Bugha and the work both brands are doing with social influencers. Ms. Horowitz said, “With the DNA in positioning solidified for each of our brands, our marketing teams are authentically engaging with their respective customers on a channels that are most relevant to them.”
- Abercrombie & Fitch Co. Reports Fourth Quarter and Full Year Results – Abercrombie & Fitch Co.
- Abercrombie & Fitch Co (ANF) CEO Fran Horowitz on Q4 2022 Results – Earnings Call Transcript – Seeking Alpha
- Meet the CEO who miraculously made Abercrombie & Fitch cool again – Fortune
- Abercrombie & Fitch is cool again, after years as the most hated retailer in the US, because it caught up to what millennials and Gen Z want – Business Insider
- Abercrombie & Fitch’s Brand Reinvention — Download the Case Study – Business Of Fashion
- How Abercrombie & Fitch Became Cool Again – Teen Vogue
- The teens who hated Abercrombie are the adults shopping there now — and they can’t believe it either – The Washington Post
Discussion Questions
DISCUSSION QUESTIONS: What has most impressed you about Abercrombie & Fitch’s turnaround? Does Abercrombie’s fall and rise offer the most lessons around marketing, merchandising or product design?
Poll
Loading …BrainTrust
Lee Peterson
EVP Thought Leadership, Marketing, WD Partners
Georganne Bender
Principal, KIZER & BENDER Speaking
When you think of what Abercrombie & Fitch once stood for and how deeply embedded views of the brand were, the turnaround is very impressive. A great management team led by Fran Horowitz deserves credit for focusing on both the proposition and on operations. On the operational side, the biggest change has been reinventing stores, reducing the fleet and downsizing shops while ramping up e-commerce. Pre-COVID-19, increasing the speed of the supply chain so that new designs reached the shop floor faster also paid benefits. On the product side new designs with a focus on quality – super soft fabrics, better stitching, nicer embellishments like buttons – rather than overt-branding, helped people reassess their view of A&F. All in all, this is a masterclass in how to reinvent and reinvigorate a retail brand.
Funny how you can sum up years of hard work in one word sometimes — turnaround. This effort took years of restructuring, new designs, a new brand promise, new stores — I mean, they completely changed the brand from what it was. With many mistakes along the road, I’m sure, but they got there. Hats off to Fran and team and perhaps — just maybe? — they can show their playbook to Victoria’s Secret.
Much of what A&F has achieved is based on improved operating fundamentals: Lower occupancy costs, better supply chain management, more sophisticated data management, and so forth. All important steps, but it really comes down to the relevance of the product for the target customer.
Today’s A&F shoppers may have loved the store while teenagers — 20 years ago — but is now in their late 20s and 30s with a completely different mindset about the importance of “cool” versus “a brand that understands me.” It looks like Abercrombie has made that merchandising leap, and the operating gains are the icing on the cake.
It’s really hard to win back the favor of Millennials so kudos to the team at A&F. Ms. Horowitz had addressed the business top to bottom, which is what was needed to pull them from the ashes. For their target, marketing is what got them paying attention again. However better product is what will keep them coming back. My kids were turned off of the old A&F as “frat boy clothes” – now they are paying attention again.
Abercrombie was able to successfully modernize its brand – they acknowledged that certain aspects of the brand identity (such as the sexualized atmosphere) were no longer working. Simultaneously, they went back to their core by improving product quality – which is the most straightforward way to attract old and new consumers.
As a shopper at Abercrombie in my younger years, the brand was a lot of things – but it wasn’t bad quality until later.
it appears to me that Abercrombie looked their customers in the eyes and made some very important and proper decisions. When you really think about it, shouldn’t all retailers have these “come to reality meetings” more often? Our competitive world does not stand still. Think about all the change forged by adventuresome retailers after learning lessons from their customers.
I worked for A&F back in the ’90s, long before the “cool kids” rise and fall. Watching the evolution of the brand over the years has been quite a show. The A&F team deserves a lot of credit for the patient overhaul they have executed. They basically changed everything. The aesthetic and attitude of the apparel. The marketing. The store footprint and ambience. It’s been five years and is still a work in progress, but A&F is giving us a great example of the patience required for a brand overhaul. JCP would have benefited from that kind of patience. Now the question is, for brands and retailers needing an overhaul in this market, how patient will customers and competitors be?
You used the word “patience” three times. That is one thing that too many retailers don’t understand.
What a great success story! A testament to persistence, tenacity and a deep understanding of your customers. I wish them continued good luck!
Having competed against A&F while at AEO, there was a clear difference in brand image and positioning. It is amazing how far things have evolved for the A&F brand persona over the past 10+ years. The hot guys and girls imagery defined it. For Hollister the surfer vibe was in with the wearer presenting themself as hip, cool and a lover of sea and sand. In the end, you buy based on how the jeans fit your body type and the quality as well as style of the clothes. A&F was sold at a premium price vs. the competition. Time will tell if this “comeback” is real or imaginary.
A&F always struck me as a company totally out of control. It never had a real direction in stores or product.
Today’s discussion on how this company turned around should be a primer for any turnaround or, in fact, any company. The strategy is simply optimizing, enhancing, increasing and improving in a thoughtful manner and avoiding the temptation to institute the next silver bullet.
Understanding social shifts is probably the biggest lesson. The fact that A&F survived cancel culture is the biggest shocker after its founder’s comments quite some years ago. Maybe that’s why they’re targeting the younger Millennials perhaps with shorter term memory. The efforts towards inclusion have certainly helped as they first needed to understand that exclusivity and shaming would not work with the new younger generations.
My BrainTrust colleagues have all hit the operational nail on the head as to all the reasons Abercrombie was able to turn around its business. But from a teen consumer perspective there are two other things that made this brand cool again: authenticity and inclusion. The new Abercrombie hung an invisible sign over the door that welcomed everyone.
My kids shopped at Abercrombie when they were in their teens. Even without the ear bleeding music and choking fragrance it was a miserable experience for parents and their credit cards, but that was the point. The sales floor had an obvious “are you cool enough to shop here?” vibe that everything about the brand gave off.
Thankfully, that’s all in the rearview mirror and Hollister finally has a store front sign. Big kudos to CEO Fran Horowitz and her team for doing what most analysts thought was an impossible job.
Great comments — the Hollister store was so darkly lit you could barely see your way around the store. It made no sense to me, selling clothes with a color palette and you couldn’t tell yellow from green!
Hollister not having an exterior sign always got me. No mall retailer is that cool.
If you told me five years ago that I would be shopping at Abercrombie & Fitch again, I never would have believed it. As a teenager, I remember being intimidated by the extra low-rise fits and super tiny sizes. Now, in 2022, I find their styles and sizing to be much more approachable. Behind the scenes, Abercrombie has done a lot to improve the quality of its clothes, aesthetics, and operational logistics.
From a marketing standpoint, TikTok has been one of the best things to happen to Abercrombie. Viral try-on and haul videos have brought the brand back in front of former customers who may not have otherwise thought to give the store another chance. And, to Abercrombie’s credit, they seem to be really listening to the reviews and feedback from these videos.