A&F Takes On London

Discussion
Apr 02, 2007

By Bernice Hurst, Managing Director, Fine Food Network

If there’s one lesson companies aiming to operate multi-nationally claim they have learned, it is that they must understand the cultural differences between countries. Selling pork in Israel, for example, is never going to be a profitable option. But not everything is that simple and you have to wonder sometimes, ‘What are people thinking?’

Take the new London flagship Abercrombie & Fitch opened in March near the extremely elegant Savile Row – the chain’s first European store.

London Times columnist Sarah Vine reported that the opening was preceded by “a very visible billboard campaign, featuring a muscle-bound young fellow, photographed from behind showing his bottom cleavage.” At the grand opening, the models came to life, greeting customers in nothing but jeans, flip-flops and “welcoming smiles”.

Ms. Vine said, “There is no question that sex is at the core of this brand… There is loud music, low lighting, lots of pretty boys and girls looking wholesome and happy. This is the sales staff, recruited for their looks and enthusiasm. The boys wear jeans, flip-flops, soft casual shirts draped nonchalantly over well-honed muscles. The girls are in shorts, mini skirts, pretty camis and snug-fitting zip-up hoodies. The hair is tousled, the teeth white, the skin smooth and make-up free. It is sexy, sure – but it is not sleazy.”

The trouble is the people passing the store aren’t anything like their young and hip staff. They are either tourists (lots of them, from all over the world) or business people. As Paddy Byng, chief executive of Smythson and former global marketing director of Dunhill and Ralph Lauren, told The Times, “You have to admire them for being so focused on their brand. The question is: Is there a market for this stuff here? Is the U.K. customer going to buy into this lifestyle? Despite all his high-end labels, Ralph Lauren’s core business is still casual wear – that would suggest that this is going to appeal. But this location is a bit of a risk: it doesn’t have a high rate of traffic, so they will have to make it a Mecca, a destination shop that people will travel to.”

On top of that, some customers have already noticed that prices are high, especially those familiar with the much lower prices on Abecrombie’s website. One commenting on The Times article claimed, “Polo tops that retail for $49.99 in the States are being sold here for £60 (U.S. $118).” The Associated Press says that the company expects the London store to generate sales of as much as $2,500 per square foot, compared with $400 in U.S. stores. Are higher prices the way to do it?

Discussion Questions: Do you think Abercrombie & Fitch has already made a misstep in the U.K. market by opening a store on Savile Row? Has it become tougher for American retailers to succeed in a pricey market such as the U.K. with prices easily accessible on the internet? What will it take for Abercrombie to succeed in the U.K.?

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14 Comments on "A&F Takes On London"


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Bob Phibbs
Guest
15 years 1 month ago

Of course this makes sense. It gets them in front of teenagers who are visiting the area with their parents. I’ve been nonplussed with Savile Row. Old…stodgy. Everything the Tourism Board wouldn’t want you to believe about the U.K. was there. I’ll take young, attractive and edgy over the field of bright sale stickers in the other shops and their windows any time. My guess is, so will lots of others.

Camille P. Schuster, Ph.D.
Guest
15 years 1 month ago

A lot of people say they understand cultural differences and have received some piece of advice that they found useful. In my experience very few businesspeople truly understand what cultural differences mean and how they impact business activities. The values of a culture underly decision making–whether it is consumer buying behavior, employee interaction, or management decisions. Unless top management understands local values and how they impact decisions in these three areas, they have not taken the local culture into account.

Mary Baum
Guest
Mary Baum
15 years 1 month ago

I’m going to take a wild leap here and guess that Abercrombie’s core demographic in the UK is as young and web-savvy as it is here–meaning that the right brand-building activities, most of them online, will indeed bring shoppers to Savile Row to see what all the fuss is about.

But if these young consumers have seen pricing at one level online and then see higher pricing in the store, especially if it’s higher after they consider shipping costs, I think the brand will have a problem.

Or, we may all learn that today’s kids will pay a significant premium for the privilege of getting his/her hands on something right now, instead of waiting to have it shipped.

David Biernbaum
Guest
15 years 1 month ago

Time will tell if Abercrombie & Fitch misread their potential marketplace on Savile Row, however, I don’t think it’s the style or fashion that will be a misfit in as much as there might be a mismatch with the atmosphere and the typically very young underpaid and unseasoned personnel that work in the stores. Abercrombie & Fitch does an incredible job sticking to the integrity and consistency of their brand and if they don’t try to expand too quickly in new foreign markets, they will learn in time whether or not their brand and concept has European and international appeal. I don’t see the internet market as the obstacle but more as a marketing ally in this instance.

Liz Crawford
Guest
15 years 1 month ago

Years ago, youth imitated their elders. Today, the reverse is true. Yes, there is a market for high end casual among several generational cohorts, here and globally.

Rather, the question is: Is anti-American sentiment too high to sell this cultural brand? American brands are suffering alongside the larger American national image. Will our politics dictate market shares in the future? Should we conduct ourselves differently in a truly global economy?

Joy V. Joseph
Guest
Joy V. Joseph
15 years 1 month ago

“The London store is likely to give staid retailers in nearby Savile Row a shock” said a news piece on UK’s fashion B2B website FashionUnited.com. I can see that happening with A&F’s blaring music in the middle of Savile Row, surrounded by very proper old style stores, staffed by men and women in pin-stripe suits. Maybe it does create a rebellious image for the company that identifies itself with an age group that does not like to do as told or as others do. With the right media support they might be even able to draw the attention of younger generations and get them to make the trip to London’s heart of business fashion. The problem might lie in how are they going to justify the prices necessary to get a return on investment on what I imagine would be premium real estate (assuming they are going to sell their standard products and not a premium assortment that may not be available online).

Dick Seesel
Guest
15 years 1 month ago

Americans have become accustomed to A&F’s “shock” tactics, to the point where A&F has toned down its act a bit over the past couple of years. A&F may feel that it needs to gain as much attention as possible for its market entry into London…and as much PR as possible, good or bad. The brand has to break through a lot more clutter (and a greater variety of strong competitors) than in almost any market in the U.S.

The location strategy is interesting, although I assume this is the first of many locations in London and the U.K. Again, from the perspective of gaining attention and press coverage, A&F probably achieved its goal. From the perspective of driving sales and locating where the target customer is, that’s another story. To use a parallel familiar to many U.S. shoppers, it’s almost like A&F opening a store in Atlanta’s Phipps Plaza and ignoring Lenox Square down the street…where its core customer and its competition are located.

Bill Bishop
Guest
Bill Bishop
15 years 1 month ago

It’s really too hard to tell whether Abercrombie & Fitch has made a mistake, and it will be important not to put too much weight on what the experts have to say until the shoppers have voted with their dollars.

Paddy Bing focuses on what seems to be the most critical question, given Abercrombie and Fitch’s clear focus on what their brand stands for. “Is there a market for this stuff here?”

It seems to me that the success or failure of Abercrombie & Fitch will have less to do with the neighborhood in which the store is located or whether or not they’re an American retailer and more to do with whether the brand really connects with U.K. shoppers, and if the market is large enough to make the store a business success.

Joel Mincey
Guest
Joel Mincey
15 years 1 month ago

Perhaps this is taking differentiation to the extreme. It is hard for me to believe that ready-to-wear Abercrombie & Fitch can “fit-in” in the bespoke environment of Savile Row. As has been mentioned before, is there a market for faded jeans, shorts and t-shirts among the pinstripe suits?

Ryan Mathews
Guest
15 years 1 month ago

I might be dead wrong here (not the first time) but I think (pricing aside) it’s a brilliant move. A&F’s brand has a strong “in your face” element to it and what better face to get in front of than the paragon of traditional British fashion? I also think it’s wise to remember that youth culture is a global culture and that A&F’s target is the young. Brits may not love the U.S. right now but peers love peers. There’s a reason German rock and roll posters are written in English. The only hitch in the whole plan is the unforgivable gap in online to physical store pricing. That doesn’t scream “young, hip and rebellious,” it screams, “old, cynical and greedy.”

Nikki Baird
Guest
Nikki Baird
15 years 1 month ago
This doesn’t sound to me like a cultural mis-step on the part of A&F so much as a huge location risk, or some very strange location analysis at the least. It certainly makes a statement about what kind of clothing quality they THINK they have. But of all the international locations that A&F could have chosen to open a store, starting with the UK seems the safest option to me. For American companies, operating in the UK certainly gets you on the learning curve of becoming a global retailer, but it’s not that much of a stretch. The cultural differences are there, but they’re not enormous, and the competition is well-defined and well-established. Certainly A&F will have to make some adjustments and tweak its strategy as it figures out who their UK customers are (and where they actually go to shop). To me, the more telling proof point for them will be if they take their one London store’s experience and use that as the basis for their entire European (or UK for that matter)… Read more »
James Tenser
Guest
15 years 1 month ago

At first glance, A&F’s “butt cleavage” does seem out of place on staid Savile Row. On second thought, maybe it’s just the “kick in the pants” that the district needs to assure continued relevance.

Todd Belveal
Guest
Todd Belveal
15 years 1 month ago
It was certainly a risky move for Abercrombie as it is not well received in the trade here and among the tenants on Savile Row. In fact, my friends there tell me the tailors started a campaign to keep the area purely tailoring. I read this as an expected response from a very traditional, and stodgy group of local merchants. It is shoppers that matter, and that of course remains to be seen. They might have chose Covent Garden or Oxford Street, but it should be noted that Zara is on Regent Street and just five minutes away. But for a lot of Londoners, this appears to be the wrong area and a lot of questions have been asked among the fashion press as to why they went there. Jill Sander was also in the location and it bombed. The upside benefit here is the any PR is good PR response the launch has gotten, and shoppers may be willing to make the short trip over there. I would have expected them to locate closer… Read more »
Mark Lilien
Guest
15 years 1 month ago

For many years, Levi’s in Europe were priced double and triple the US retails. If Abercrombie & Fitch has higher prices in the UK than the US, it might not hurt their profitability. Also, 17.5% VAT is included in UK prices, unlike America, where prices are quoted without sales tax.

Given the high visibility of the location, especially the major tourist component, the location may be an excellent choice. Real estate location second-guessing isn’t easy, because no one outside A&F knows the rent or the alternative rents and locations available or the multi-location growth plan. For example, it might be that A&F already has plans for Oxford Street, but the best locations won’t be available for a while.

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