What the Fitch is Going on at Abercrombie?
Abercrombie & Fitch's first quarter results sharply missed already low expectations: Sales slipped 8.9% to $838.8 million and shares fell by almost 10% last week, trading at the bottom of the S&P 500. In its home market – the US, which accounts for more than 60% of total revenue – sales dropped by 17%. Luckily international sales increased by 10%, mostly coming from new store openings, to spare the company even more dramatic figures.
Due to a double-digit slump in same-store sales, the company issued a pretty cautious view for the remainder of the year. The company cited tighter inventory controls, the softness in the women's business as well as weakness in Europe as the official reasons for its significant shortfall and caution. Are those, however, the true source of worries at Abercrombie?
Already in recent quarters the company had been showing weaknesses. It seems that its fashion is more and more failing to resonate with teens and young adults. Or should we better say with "cool“ teens and with "cool“ young adults? Ever since its CEO Mike Jeffries made in a 2006 interview comments stating that he doesn't want "not so cool" kids wearing his company's clothes, Abercrombie has been in the public spotlight.
Besides a recently weaker assortment policy, the company's pseudo selective marketing strategy now seems to backfire. For the last few weeks the company has been (again) under severe attack as it is said to have offended customers with its "thin and beautiful" shopping policy. Abercrombie "succeeded" in a really "cool“ manner to withstand two weeks of high-profile backlash against its divisive sizing policies: it was accused of purposefully excluding plus-sized customers earlier this month ("plus" meaning for Abercrombie anything above women´s size "large“ and trousers size 10).
According to the market research company BrandIndex, as a result Abercrombie & Fitch skidded to its lowest perception with young people since October of last year. At the same time, both H&M and American Eagle – Abercrombie´s strongest competitor – have seen a small rise in their perception scores.
A&F, which prides itself on employing "good-looking people", obviously only wants "cool" people wearing its clothing. This is supported by a Salon interview from 2006, where its CEO explained:
...we hire good-looking people in our stores. Because good-looking people attract other good-looking people, and we want to market to cool, good-looking people. We don’t market to anyone other than that... A lot of people don’t belong [in our clothes], and they can’t belong. Are we exclusionary? Absolutely."
One might argue that Mr. Jeffries and his management team should better recall what Confucius already knew: “Everyone and everything has beauty, but not everyone sees it.”
Obviously Jeffries is under the false illusion that (today's) teenagers are only cool if they are thin and beautiful. It's irritating that a high-profile business executive – someone who is supposed to act as a role model – tries to define beauty by wanting to squeeze young people into the smallest possible clothing sizes. Even worse, with such an attitude, Jeffries is obviously sabotaging diversity and social integration in a weird attempt to market Abercrombie, Hollister & Co. as what he thinks a selective brand is expected to be.
Jeffries seems to have forgotten that successful marketing is built foremost on the principle of "respect" for customers and that selective brand positioning does not mean offending people. As a reminder, what "respect" stands for as defined by the Oxford dictionary: "A feeling of deep admiration for someone or something elicited by their abilities, qualities, or achievements."