Abercombie & Fitch, a leading specialty retailer, has four concepts – Abercrombie & Fitch, abercrombie, Hollister Co., and their newest addition, RUEHL. All merchandise is sold in retail stores throughout the United States as well as online and through catalogs. In 2004 the company had a good year; sales grew strongly, increasing by 31% including same store sales increase of over 16%[1].

The Concepts

Abercrombie & Fitch

     Designed for men and women aged 18 to 22, Abercrombie & Fitch has a style that can be described as comfortable, trendy, young, and sexy. Their clothing is basic and for everyday, featuring items such as jeans, tank tops and sandals. This season’s line reflects casual clothing that can be dressed up, including micro-mini denim skirts and sparkles on everything. The Indian theme is also apparent at Abercrombie & Fitch, shown mostly in large jeweled sandals and belts, as well as below knee-length flowing skirts.

     Abercombie & Fitch is also famous for their humor T’s, which have attempted to be copied by a number of companies including American Eagle and Old Navy. This season more so than ever, the humor T’s push the limits of sexual innuendo. They feature phrases such as “Cunning Linguist” and “Please Seeker,” which may be inappropriate for the younger, not-targeted, buyers of the clothing. Baby doll dresses and long t-shirts and tanks, mostly covered in sequence, are also hot this season at Abercrombie & Fitch.

    For the men, a causal surfer style is evident, shown mainly in cargo pants and board shorts. Humor T’s for men are also available, with phrases such as “Ill give you a rub down” and “No experience necessary.”

     As always, layering is a must, although it may be more of a ploy to increase sales than a fashion statement. Darker and more neutral colors give this season’s line a warm and sexy feel.

abercrombie

     Abercrombie & Fitch’s kids clothing line, abercrombie, features a similar style to the parent brand. A variety of skirts (long and short), sparkling tops and large belts are everywhere in the store. One notable item missing is the sexually-charged humor t-shirts, which have been replaced by more wholesome messages. Appropriate for their target audience, boys and girls aged 10 to 13, abercrombie t-shirts feature slogans such as “I love fun pretty sparkling shoes.” The boys line, similar to Abercrombie & Fitch, is surfer-chic, featuring mainly Hawaiian-inspired board shorts and T’s, as well as the usual jeans and sweatshirts.

Hollister Co.

     As much as Hollister Co. (Hollister) tries to differentiate itself from Abercrombie & Fitch, most notably by replacing “men’s and women’s” clothing lines with “dude’s and betty’s,” the difference is almost nonexistent. Sold at a lower price, and made of slightly lower quality material, Hollister’s clothing line is nearly identical to that of Abercrombie & Fitch’s. Their “laid-back California surf style” features the same shorts, t-shirts and skirts you would find at Abercrombie. Hollister also has its own line of humor t-‘s, slightly less racy than those at Abercrombie. Their shirts feature slogans such as “best kisser” and “think single,” obviously geared toward their high school target market. The “dude’s” clothing line features mostly polo t’s (branded with an eagle symbol, as opposed to the Abercrombie moose), surfer shorts and cargo’s.

     Hollister enjoys high gross and operating margins, and is often credited as Abercrombie & Fitch’s primary domestic growth vehicle[2]. Total net sales increased 84% this year, to over $579 million.[3]

RUEHL

     RUEHL, Abercrombie & Fitch’s fourth concept, was launched this past fall. It is Greenwich Village inspired, selling high quality leather goods, designer denim and casual yet sophisticated apparel.  It is targeted toward men and women aged 22 to 35, nearly a generation ahead of Abercrombie & Fitch’s other brands. There are currently 4 stores operating, with an additional 5 planed to open next year. Abercrombie & Fitch estimates RUEHL to breakeven by in 2007 by year-end, with a total of approximately 30 to 40 operating stores.

The Difference

     Abercrombie & Fitch’s concept of casual, trendy clothing is by no means original. Various competitors, such as American Eagle, Roots and The Gap have tried to copy Abercrombie & Fitch’s style and offer it at a lower price. With that in mind, the question remains, why does Abercrombie & Fitch continue to be successful year after year? The answer lies in Abercrombie & Fitch’s price and promotions strategy, as well as the lifestyle they have created.

Price, Promotions & Lifestyle

     All Abercrombie & Fitch concepts sell their merchandise at price-premiums. That is, at prices higher than their competitors’. This is even true for Hollister, which sells its clothing at prices generally 30% below the Abercrombie & Fitch brand[4]. Abercrombie & Fitch employs a full price selling/non-promotional policy. Only during transitional seasons will clothing be marked-down, and even then the savings are minimal. By refusing to negotiate their price-point and steering clear of promotions, Abercrombie & Fitch gives the illusion of exclusivity and superiority. This notion is further enhanced by the experience of walking into an Abercrombie & Fitch store and buying an article of clothing.

     Abercrombie & Fitch stores have a unique vibe that their competitors cannot seem to match. Whether it is the blaring music, dim lights or casually cool atmosphere (big leather couches and chairs), Abercrombie & Fitch stores are an experience to shop in. Parents rarely enter, in fear of the loud music, leaving the teens and young adults to fend for themselves. The shopping experience gives them a sense of independence and makes them feel at home. The experience is especially unique at Hollister stores, which are designed to emulate a tiki hut.

     The Abercrombie & Fitch lifestyle is further enhanced by the presence of “extras” on the concepts’ website. For example, www.abercrombie.com features free downloads of images and screen savers, and provides links to the hottest music websites. There is also a section under which you can watch episodes from A&F TV and get information about the quarterly magazine.        

     In general, shopping at Abercrombie & Fitch stores, or accessing the websites, gives the customer an “insider” feeling. The lifestyle developed by Abercrombie & Fitch has allowed them to develop a large, young and energetic customer base.

Growth Strategy

     At the end of April 2004, Abercrombie & Fitch operated 351 Abercrombie & Fitch stores, 167 abercrombie stores, 260 Hollister stores, and 5 RUEHL stores[5]. Reported in their presentation at Merrill Lynch in 2005, Abercrombie & Fitch announced plans to take part in international expansion. Although the country(s) of choice were undisclosed, one would bet that Canada has good shot. Taking note of the success of major U.S. retailers coming to Canada, such as American Eagle and Old Navy, Abercrombie & Fitch cannot deny the appeal of the Canadian market. Hollister is the brand for which Abercrombie & Fitch has the biggest plans, hoping to increase store locations from 260 to over 500, with international potential.[6] The company also plans to aggressively expand its newest concept, RUEHL, as discussed above.

Conclusion

     Abercrombie & Fitch has been hot for years, and there are currently no signs of slowing down. Even with recent legal troubles (such as the lawsuit won against the company for engaging in discriminatory hiring practices), sales have consistently grown. Abercrombie & Fitch is known as a trendsetter, with young people continuing to watch its styles for the next big thing. With plans to enter Canada in the near future, the popularity of the brand is growing. Their discrete marketing strategy, relying heavily on word of mouth, has helped the company build a loyal customer base. In the future, it is expected that Abercrombie & Fitch will continue to grow and prosper, especially if they take advantage of international opportunities.