Abercrombie & Fitch’s Turnaround, Why its Working
Source: Abercrombie & Fitch / Facebook
How easy is it to turn a brand around? Not very. The retail sector is littered with companies like Sears, Lord & Taylor, Forever 21, Ann Taylor, J.Crew and Blockbuster that couldn’t keep up with the times. Abercrombie & Fitch looked like it would face extinction as well. After growing for decades Abercrombie & Fitch’s revenues peaked at $2.1 billion in 2012. Then sales declined for years.
By 2017 with sales still in decline Abercrombie & Fitch appointed Fran Horowitz as CEO. Charged with task of turning the brand around Horowitz made sweeping changes at Abercrombie & Fitch and they are working. With sales of $1.5 billion, 2019 marked the first year Abercrombie & Fitch experienced an increase in sales since 2012. Sales have continued to grow with Abercrombie & Fitch bringing in $1.6 billion in sales in 2021 surpassing pre-pandemic levels. Since turnarounds aren’t easy here’s what Abercrombie & Fitch did to revitalize its brand.
1. Diversity and inclusion. In Abercrombie & Fitch’s heyday of the 1990s and the 2000s it was well known for marketing what it called an “all-American” look that featured mostly white models. These models featured prominently in Abercrombie & Fitch ads and this aesthetic carried on though Abercrombie & Fitch’s stores where mostly white employees were often recruited from nearby sororities and fraternities.
During that time Mark Jefferies, the CEO of Abercrombie & Fitch from 1992 to 2014 made a number of controversial comments about the brand including when he said that: “Abercrombie is only interested in people with washboard stomachs.” Jefferies also said that Abercrombie & Fitch would only hire attractive employees “because good-looking people attract other good-looking people, and we want to market to cool, good-looking people.” The brand’s discriminatory behaviour did not go unnoticed and in 2003 Abercrombie & Fitch was sued for racial discrimination by a group of employees and rejected job applicants. Abercrombie & Fitch would later settle the case for $40 million.
While Abercrombie & Fitch continued to rise in the 2000s it began to lose its cool in the next decade. Competition from fast fashion retailers and the rise of athleisure lured customers away. At the same time support began growing for brands that are more inclusive. For example, Aerie made a decision in 2014 to use more diverse models, brands like Fashion Nova embraced extended sizes and curvy figures and Fenty Beauty’s huge success after launching of 40 shades of foundation in 2017 made retailers across the board realize they were leaving a sizeable opportunity on the table.
Today Abercrombie & Fitch is more like a modern brand. Once known for only carrying sizes no larger than a size ten customers can now find sizes at Abercrombie & Fitch up to a size 3XL in certain styles. Its models are also more diverse. But if you were to peruse the Good American or Savage X Fenty websites you would find a much greater degree of diversity and inclusivity. And while Abercrombie & Fitch touts its larger sizes there are only a handful of styles offered in 3XL.
If you have noticed that Abercrombie & Fitch looks different now than ten years ago you are not imagining things. The brand has made a concerted effort to distance itself from its past with Horowitz saying that "we own and validate that there were exclusionary and inappropriate actions under former leadership," but now Abercrombie & Fitch is "a place of belonging." "We've evolved the organization, including making changes in management, prioritizing representation, implementing new policies, re-envisioning our store experiences and updating the fit, size-range and style of our products."
If this strategy of more diversity and inclusivity sounds familiar it is. It’s the playbook many apparel retailers are using today. From Universal Standard to Victoria’s Secret everyone is trying to be seen as the brand that caters to all. But some are doing a better job at this than others.
2. More inviting stores. If you went to an Abercrombie & Fitch store a decade ago you might have wondered if you were really inside of a nightclub. Stores were dark, played loud music and smelled like someone had walked through the store and sprayed it head to toe with cologne. Horowitz decided if she was going to turnaround the brand she would need to fix the store experience. Now Abercrombie & Fitch stores are brighter, quieter, aren’t drenched in the brand’s cologne and the shirtless greeters are gone.
Speaking about moving away from male models with six pack abs, Horowitz said: “that was a big bold move.” “And I'm not going to tell you there weren't moments where I needed to take a deep breath.” Abercrombie & Fitch is also focusing on updating its floor layouts so they are more accessible for customers with disabilities.
The former ambiance of Abercrombie & Fitch stores fit right in with the brand’s past exclusivity. Many people felt uncomfortable even entering the store as they would have to pass the shirtless greeters to get in. Those stores were on brand, a brand that was determined not to cater to the masses but to a select group of people.
Changing a store experience that defined a brand for decade is not easy to do. Think about it. How many of your favourite brands have dramatically changed the look and feel of their stores? Don’t all Starbucks stores kind of feel the same? Don’t you feel just a bit a déjà vu when you walk into a Gap store? The reason why most companies don’t change their store experience or their merchandise even when they are struggling is because they are afraid of alienating their existing customer base. There were customers that shopped at Abercrombie & Fitch precisely because they liked the club vibes and feeling like they were one of the cool kids.
But making bold moves is a risk you have to take to evolve and a lot of retailers aren’t willing to do that. That’s one of the reasons so few turnarounds work. Companies tend to stick with what used to make them successful instead of trying something new.
3. Social media. One of the changes Horowitz made when she got the top job at Abercrombie & Fitch was to create a larger distinction between Abercrombie & Fitch and its sister brand Hollister. A buyer would often buy for both brands which led to little delineation between the two. Horowitz decided Abercrombie & Fitch would focus on a young millennial consumer while Hollister would focus on a teen consumer.
To reach these young consumers Abercrombie & Fitch decided to leverage TikTok. With this in mind last year Abercrombie & Fitch started working with consultancy IF7 to increase its presence on TikTok. Since then Abercrombie & Fitch has collaborated with fashion influencers, dancers, chefs and comedians on TikTok. “We moved budgets [to TikTok] for advertising and talent,” said Megan Brophy, senior director of marketing at Abercrombie & Fitch. “It takes time for customers to rediscover the brand and to trust that [the transformation] is authentic and will stick around,” said Brophy. “This has been a several-year journey that people have started to notice more recently.”
“Brands are turning to TikTok to appeal to a different audience,” said Danielle Wiley, CEO of influencer marketing company Sway Group. “It gives them the opportunity to change their image. If they were considered stuffy, their presence on the platform can change that perception and project a brand image that is more fun and youthful.” “People are tired of the ‘perfect’ influencer,” says Wiley. “They want more authenticity and realness. TikTok helps to convey the image that a brand is for everybody and not only the ones that are ‘perfect.’”
Abercrombie & Fitch’s strategy appears to be working with the hashtag #abercrombiehaul generating nearly 100 million views on TikTok. “TikTok has democratized the haul video, the outfit video,” said Rebecca Jennings, a senior correspondent at Vox. “If you were posting that on YouTube or Instagram, you would’ve had to build an audience and already be a content creator. But on TikTok, anyone can do that . . . [so] we’re seeing a lot more regular people’s clothing. It can spread fashion trends really, really fast.”
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4. Updated merchandise. Abercrombie & Fitch’s turnaround would not be complete without fixing the product. In the past Abercrombie & Fitch’s merchandise was logo heavy, preppy and clothing only went up to a size ten. Today logo heavy clothing is out and bodysuits are in. Clothing is available in extended sizes and jeans come in silohettes for curvy bodies. Overall the clothing is of a higher quality than a decade ago.
“As our new assortments begin to set in late December [2021], you’ll see us continue to expand the size and fit offerings across denim as well as bring that focus to the entire outfit through our most popular tops, dresses, and outerwear,” says Carey Collins Krug, Abercrombie & Fitch’s head of marketing. “Inclusivity is so much more than the models you cast for a photo shoot... It also means weaving considerations for gender, body shape, size, height, and ability into your designs.”
The changes are resonating with consumers with a plus size influencer named Ashley Lopez having this to say about Abercrombie & Fitch’s Curve Love line of denim: “I literally have a 15-inch difference between my hips and my waist.” “But I have to be real: they [Abercrombie & Fitch’s Curve Love line] are my favorite brand of jeans right now.”
Abercrombie & Fitch has come a long away from its controversial past proving that it is possible for a brand to reinvent itself.