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How Did Abercrombie Become Cool With Millennials?
Abercrombie & Fitch reported that sales jumped 35% at its flagship Abercrombie brand in the fourth quarter on top of a 14% gain in the fourth quarter of the previous year, continuing its unexpected turnaround.
With quarterly results regularly beating Wall Street targets, Abercrombie’s shares have surged over 400% in the last 12 months.
“There is no silver bullet,” CEO Fran Horowitz said on the fourth-quarter analyst call, responding to the hypothetical question on the company’s continued outperformance. “It has been about…executing a focused playbook every single day, one that is rooted intimately in knowing our customer and then meticulously building the product, voice and experience to match their needs.”
Taking over as CEO in 2017, Horowitz’s first major move was to reposition Abercrombie, a preppy status symbol for high schoolers during the 1990s and 2000s, to focus on younger millennials, particularly women. The shift provided differentiation from Hollister, its surf-inspired teen chain, while enabling Abercrombie to address a broader and less-targeted market.
“They are living their best lives,” Horowitz told WWD. “There’s nothing better than being a young millennial. They live for the long weekend. Monday would come along and the most important thing for them was what was happening the next weekend.”
The Abercrombie team mapped out a 96-hour calendar to address the needs of what its new target consumers were doing over that “long weekend” — whether heading to the gym or happy hour, traveling, or attending a bachelorette party, bridal shower, or wedding.
“We can actually make sure that we clothe them for those 96 hours,” Horowitz told WWD. “As simple as it sounds, and it was not simple, that was the turning point. That got the merchants, the designers, the marketing team all focused on what was important to them.”
In product, Abercrombie introduced blazers and suits for the office, dresses for weddings and other parties, and workout gear. Embracing a more inclusive approach, sizes were expanded, while looser fits and curvier jeans arrived. The product was positioned as aspirational at accessible prices.
Kristen Classi-Zummo, an apparel analyst at the market research firm Circana, told Fortune, “It’s the right assortment for a balanced lifestyle. Abercrombie is not trying to be super trendy: It’s offering classic silhouettes in classic colors, and it is really serving them right now.”
A focus on keeping inventory tight helps regularly bring fresh assortments to stores while boosting margins. Horowitz told Yahoo Finance, “Our biggest learning coming out of COVID is this discipline on inventory and making sure that we are lean and mean and that we are reacting to the business on a weekly basis.”
The Abercrombie chain’s real estate was streamlined with closures of mega-flagships and a focus on smaller, intimate spaces. Moving away from the perfumed, clubby atmosphere of the past, store updates brought in brighter lighting, white and cream paint, and sophisticated touches, such as wood paneling and glass chandeliers.
In marketing, Abercrombie’s ads now feature models of many skin tones and body types with a focus on real women and their experiences in a shift away from the sexually charged imagery of the past.
As the business began to turn by holiday 2019, the #AbercrombieIsBack hashtag began trending on TikTok. Paid advertising and unpaid posts on TikTok as well as investments in influencers across social media have helped create awareness about the reimagined Abercrombie.
Chief Marketing Officer Carey Collins Krug told the Wall Street Journal, “We have a huge army of brand advocates and creators that also create content for us and what we have found is that when you lean into content creators that are native to the platform, that media will perform significantly better than content that we create for those platforms.”
Discussion Questions
What lessons can be gleaned from the Abercrombie chain’s reinvention and recovery?
Do you see any threats to Abercrombie’s renewed growth trajectory?
Poll
Loading …BrainTrust
Sarah Pelton
Partner, Cambridge Retail Advisors
Karen Wong
Co-Founder & CEO, TakuLabs Ltd.
The main lesson from A&F’s stunning turnaround is to put a merchant in the top post! Fran Horowitz and her team are retailers, they understand how retail works and, most of all, they are completely focused on the customer. All of their plans and decisions have been taken with the customer in mind, which is why they have worked so well. I’d also point to the integrated vision. Changing products has been at the heart of the reinvention, but so too has retooling the supply chain to make it faster so the company can chase trends rather than try and predict them. Another example is looking at where and how products are sold, which has led to sensible decisions on downsizing stores and coming out of loss-making vanity flagships. This is a team that has a very firm grip on the business and on the market and has executed flawlessly. It is wonderful to see!
The challenge is to keep growth going even as the company laps tough prior year numbers. However, there are a lot of moves being made to generate incremental revenue: the new ‘wedding’ store, more internationalization, brand partnerships such as with F1, and more product innovation. There is enough energy here to keep the momentum going.
A&F management is simply brilliant. On its own, what they have done seems like an “of course”. But it is so much more than that. Other retailers would do themselves well to copy A&F, not the positioning, but the strategic process.
My Millennial kids loved Abercrombie & Fitch until they didn’t. They couldn’t stomach what was happening with the old regime, and like millions of others like them, abandoned the store.
Enter Fran Horowitz, an authentic retailer with big plans. Now, younger Millennials are experiencing A&F for the first time the right way, and older Millennials love that their favorite store is back. Kudos to Ms. Horowitz and her team for the outstanding turnaround!
Abercrombie & Fitch’s renewed success stems from its meticulous attention to detail in meeting customer lifestyle needs, enhancing brand experience, and implementing effective inventory control measures. These strategic initiatives have contributed significantly to the brand’s resurgence. By focusing on these key areas, Abercrombie has not only repositioned itself to cater to a new market but has also created a more compelling shopping environment for its customers.
Management’s emphasis on tight inventory management deserves special applause. The role of supply chain visibility and real-time inventory accuracy can never be underestimated. This is what allows the company to maintain optimal stock levels while responding swiftly to changing market demands. By leveraging technology and data analytics to support this strategy, Abercrombie can make informed decisions, reduce excess inventory, and minimize stockouts.
The big news now about A&F is the clothes, not its cultural identity. I have two Millennials and they want to look crisp and professional…that’s what they find at Abercrombie.
It’s a great lesson in how customer-centric strategy and good execution can turn around any brand. Still waiting for Gap to bottom out from the same trough.
Whenever I’m in a “vintage” store, makes me wish I kept all of my old Champion and A&F clothing from my youth. With inflation, many of the vintage prices today are higher than what I paid back then 😉
Pretty good numbers coming from Gap last week! Perhaps getting back to the basics of product creation, merchandising, and retailing really does work!
How? Two words. Listening. Differentiation. ANF has pulled off one of the most successful pivots and reinventions in recent retail history. There was a time when there was a blur between ANF, AEO, PacSun and Aeropostale. ANF was the most expensive, then AEO, then PacSun and Aero. Hoodies, t-shirts, jeans and cargos. There is now zero percent blur between ANF and the other brands. They have staked out their own aesthetic and attitude. They are distinctly different. And their focus on the 96 hour long weekend is a brilliant way of thinking about their range of wearing moments. ANF has done a great job of listening to both their customers and brand advocates. They have comingled the channels of shopping into a seamless experience for their audience. They’ve given the retail world a brilliant case study in executing in today’s market.
What I glean from their success is that it is important to understand your brand value proposition and how to translate it into every single touchpoint. So many have failed at this. The other interesting facet of the article to me is they’re gaining an understanding of the consumer over her “96-hours” and then figuring out how best to fit into that and help her. I would have thought this brand was dead-in-the-water a few years ago. It is amazing to see proof that such turnarounds are possible.
As for threats, consumers are fickle and new brands pop-up all the time. As those brands chisel away at the “96-hours”, A&F will have to continue to figure out how and where they can hold her attention and win.
They caught up to where their customer was and they continue to come out with a resonant, trendy assortment. They’ve done a phenomenal job demonstrating that they fully understand their target. Big best practice example here.
Sometimes we think we know what our customers want, but what they want is something different. It’s bad when you get it wrong. So, how do you get it right? Pay attention to them! Listen to them! Watch them! A&F’s management team nailed it!
From Abercrombie’s turnaround, I see the importance of knowing your customers intimately and aligning product offerings and experiences with their lifestyles. Their shift to cater to young millennials with a balanced assortment at accessible prices was pivotal in turning things around for Abercrombie.
Additionally, keeping inventory tight and embracing inclusivity in sizing and marketing further fueled their success. However, threats like shifts in consumer preferences or intense competition will always remain, so, Abercrombie must stay agile, continuously innovate, and adapt to changing consumer behaviors to maintain its growth trajectory.
Abercrombie is getting a lot of things right. Tight inventory is key. And if you look at the search experience on their website, you can see they’ve invested in more product attribute data which not only provides a better customer experience in terms of product discovery, but will increase forecast accuracy and help inform product decisions and maximize inventory turns. I have no doubt they’re now tracking a lot more customer attributes as well, and believe the hidden secret to their more recent success is the fact that they have truly become a data driven company.