How Aerie Built a Great Brand, its Strategy for Success
With Aerie’s revenues up 12% in the third quarter of 2023 to reach $393 million Aerie continues to perform well. So what is Aerie doing differently to continue to prosper? It starts with several strategic decisions it made many years ago. One of those is a focus on diversity and inclusivity. While this is a buzz word in 2024 Aerie stepped out and made a decision to use more diverse models ten years ago back in 2014.
Aerie has also taken on the role of retailer turned activist. Aerie goes much farther than the average retailer when it comes to social issues. Instead of simply paying lip service Aerie has created a platform for young activists to have a voice. By taking a look at Aerie’s strategy it is easy to see that Aerie is not your average retailer and this is one of the reasons for its success in the competitive clothing sector. If you would like to emulate Aerie’s strategy then consider these five factors for success.
1. A true focus on diversity and inclusion. There are companies that talk about diversity and inclusion and others that walk the talk. A decade ago in 2014 Aerie launched its first #AerieReal campaign featuring models that were not re-touched. Speaking about the campaign a spokesperson for Aerie said: “we left beauty marks, we left tattoos, what you see is really what you get with our campaign,” Some of the other “flaws” that are not retouched are: lines, dimples, fat, puckering and slight stretch marks.
In 2019 Aerie took its focus on realness a step further when it began featuring people with disabilities and illnesses on its website. In a step away from the models brands typically use, Aerie showcased a model wearing intimate apparel in a wheelchair as well as a model with crutches. "As a brand, Aerie has been a leader in empowering women and celebrating inclusivity and body positivity since our launch of #AerieREAL in 2014. Our newest bra models are part of our brand's ongoing commitment to show real, authentic and unretouched women, who are at the core of everything that we do," said Jennifer Foyle, president and executive creative director of American Eagle & Aerie
Gen Z is the most racially and ethnically diverse generation in American history. 25% of Gen Zs in the United States are Hispanic, 14% are African American and 6% are Asian. This is the generation that embraces same sex marriage, broader definitions of gender as well as interracial marriage. Overall, instead of dividing, this generation seeks to unite.
This generation not only seeks authenticity it demands it. Forget about the photoshop and show models that look like real people. A study found that 79% of Gen Zs will trust an organization more if the brand uses images that are not photoshopped. This generation is growing up during a body positivity movement. It isn’t the generation that sees Victoria’s Secret models as the definition of beauty but instead flock to brands like Aerie which use models that feel more like a true representation of themselves and their friends. “It’s not easy to grow a brand today,” Foyle says. “It has to have a purpose. And I think with the authenticity that we deliver in Aerie, the community just wants to be part of it. And the community is our customer.”
2. A retailer turned activist. Aerie see itself as much more than a retailer selling cute bras and t-shirts. Its brand ambassadors are called #AerieREAL Role Models. As described on Aerie’s website “#AerieREAL Role Models spread the brand’s mission to love your real self—inside and out. They empower and inspire the Aerie community to be the change they want to see in the world through leadership, advocacy, workshops and philanthropic partnerships. As one of the fastest growing brands in the apparel industry, Aerie is equally committed to creating exceptional merchandise collections for its customers while positively influencing the way women see themselves and treat others.”
Instead of getting the hot model of the day to become one of its Role Models Aerie chose to focus on young activists. One of these Role Models is Aly Raisman the world class gymnast who courageously spoke out about the sexual abuse she suffered while being treated by her former physician, Larry Nassar. By going down this route Aerie is turning its retail business, popularity and customer base into a platform to elevate important causes. Another example of this was the first ever AerieReal Summit which took place in 2020 on International Women’s Day.
The Summit brought together AerieReal ambassadors and customers in a single location to have powerful conversations and workshops about causes that are important to women. Holding a summit is a move that Goop, another popular brand, took when it held its first In Goop Health Summit in 2017. That is a health and wellness summit that brings conversations about important health and wellness topics to life and it quickly sells out. Events like these are a great way for brands to connect more directly with their customers.
“We have been discussing this dream of doing a summit for years. I’ve been part of the brand for six years now, and I’ve seen the growth from Aerie. It has turned into such a huge movement. [Being part of the brand] has changed my life, and it has changed the industry,” says Iskra Lawrence, one of the original #AerieReal brand ambassadors. Stacey McCormick, senior vice president of brand marketing at Aerie echoed this sentiment when she said: “now that we’re putting the role models in front of the community more and allowing people to meet and talk with them, it’s a game-changer.” “It just gets everyone more involved. The community wants to meet the role models. They want to meet them; they want to talk to them; they want to hear more about how they’ve owned their voices, how they can be more like them.”
The cost of a ticket to the AerieReal Summit which had capacity for 300 attendees was only $25. In another ode to Aerie’s growing activism ticket sales from the event were donated to the National Eating Disorders Association. Events like these do not even have to have large audiences to drive significant word of mouth and increase one’s affinity to a brand.
In 2020 Aerie took its activism even further by setting aside $400,000 to award 20 young people who are activists within their own communities. The funds were supposed to be used in support of the winners’ platform for change. “We believe everyone has the power to be a changemaker. Together with our incredible Role Models, we cannot wait to award $400,000 to 20 fierce and inspiring members of the #AerieREAL community,” wrote the brand on its website.
“To know that what we’re doing has shifted the culture in a much bigger way — much bigger than marketing, much bigger than retail — that’s the reward for us,” said McCormick. “It’s very exciting and it’s very challenging, because we’ve shifted the culture and now we need to maintain it.”
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3. A deep focus on Gen Z. By 2026, there will be 82 million Gen Z consumers, more than any other generation. Aerie has focused on the Gen Z consumer for some time and now has a foot in the door which it can capitalize on for many more years as these consumers age and their disposable income increases.
To ensure it fully understands this demographic Aerie conducts extensive research including focus groups. “We’re gathering feedback from customers at every step,” says Jay Schottenstein, American Eagle Outfitter’s CEO. “We’re reading comments on social, we’re getting feedback in stores.”
Gen Z has also taken on social causes such as protecting the environment at a young age. And not only are they focused on these causes they want companies to be more socially responsible as well. For example, 90% of Gen Z consumers believe an organization should be responsible for addressing social and environmental causes and would pay more to shop at organizations that are civic minded. Aerie’s civic mindedness is a natural fit with the desires of this young generation.
4. An ability to stay ahead of the trends. An ability to spot trends early and act on them is critical to the success of any retailer, ask Amazon. One of the trends Aerie focused on before it became trendy to do so was casual and comfortable clothing. Over time what we wear has become much more casual. Silicon Valley ushered in the hoodie and said goodbye to the suit and tie. For years women complained that intimate apparel from stores like Victoria Secret is uncomfortable and is not targeted at women at all. Aerie acted on these trends and became the go-to place to buy comfortable clothing, first in intimate apparel then more broadly in tops and bottoms. Jumping on this trend early and becoming known for this type of apparel was a game changer for the retailer.
It takes a lot of foresight and more importantly courage to focus on an emerging trend before anyone knows for sure it’s going to work out. Look at lululemon. That company came to fruition not five years ago, not ten years ago but 26 years ago because the founder, Chip Wilson, had a hunch there would be market for technical yoga wear. An idea that is a clear winner today but at the time no one had heard of. Now lululemon is one of the leading apparel retailers in the world. It speaks to the importance of taking risks and following your intuition to get a foothold in a market before everyone else comes rushing in.
5. A continued focus on multi-channel retailing. By the end of 2021 36% of American Eagle Outfitter’s sales (Aerie’s parent company) came from digital. Despite success within this channel Aerie is still focusing on stores by opening 100 new Aerie and Offline (Aerie’s activewear brand) stores in the 12 month period ending September 2022. "We know that stores generate increased brand awareness, expand customer reach, and raise average spend in underpenetrated markets," said American Eagle Outfitter’s chief operating officer Michael Rempell.
Another reason for opening stores is that they are a “highly profitable” channel says Schottenstein. eCommerce can be a good and a bad thing all at the same time. The revenue is welcomed but eCommerce can be the most expensive channel as tasks like picking, packing and delivery are shifted from the customer to the retailer. The best model is really a combination of brick and mortar stores and digital sales. Having this combination is one of the reasons why Walmart and Target have had such strong performance over the last few years.