How Successful Was Abercrombie and Fitch’s Rebranding of 2019

Introduction

Abercrombie & Fitch Co. was founded in New York 1892 by David T. Abercrombie and Ezra H. Fitch. According to its own marketing, A&F is “an iconic specialty retailer of high quality apparel and accessories.” (10)The two segments of the company include the brands Abercrombie & Fitch and abercrombie kids, and Hollister which was launched most recently, in 2000. For this analysis, the focus will be the brand Abercrombie & Fitch. Originally the company was a sporting goods retailer, A&F has travelled a long way from their original function. (8) Nowadays A&F is targeted towards 21-24 year-old customers, with 270 stores globally. They emphasize diversity and inclusion through an “effortless American style.”(10)

Background

The year 1992 marked another new beginning for Abercrombie & Fitch, when Mike Jeffries became the new CEO with a firm vision; sex sells. He is known as the creator of the modern brand image of A&F. Sales were growing, as the brand became more and more exclusive towards the attractive cool kids of America. Excluding a few complaints, the brand was in real trouble for the first time with CSR in 2002 when a protest was launched against their sex filled advertisements. During the same year, they were sued for racist t-shirts discriminating Asians. In 2006, Jeffries was interviewed by Salon about his feelings of A&F’s target audience. The globally known quote became the icon of Mike Jeffries, and therefore also Abercrombie & FItch; “In every school there are the cool and popular kids, and then there are the not-so-cool kids. Candidly, we go after the cool kids … A lot of people don’t belong [in our clothes], and they can’t belong. Are we exclusionary? Absolutely.” This infamous interview brought A&F into a lot of bad publicity, but it only spread online in 2013. (12) This is the year Abercrombie & Fitch’s sales began declining sharply. (13) Arguably, the bad reputation that had resulted from the interview played a key factor in the decline.

In 2016, A&F initiated a massive change in their marketing, in order to reform their disliked brand image. "Rather than buying clothes that symbolize membership in an exclusive group, today’s consumer celebrates individuality and uniqueness." – Fran Horowitz, president and chief merchandising officer of A&F. (11)) It could be said that this change was inevitable, taking in consideration A&F’s prolonged decline in sales, and popularity. However, whether the execution was successful or not is still debatable, and therefore the research question for this investigation is: “To what extent was Abercrombie and Fitch’s rebranding in 2016 successful?”

Social trends and social media

The rebranding of 2016, was a response to poor financial results of a few years.(1) However, it could also be considered a response to the developing social trends, which A&F had been ignoring in their marketing policies. H&M, one of its major competitors in 2015 had been emphasizing diversity, whereas A&F was going after the white “All- American kids”. In a video commercial published in 2016, there are models of different ethnicities, to highlight the change in their unpopular brand image. (4) Ironically, only a year earlier Abercrombie & Fitch had even been sued for rejecting an applicant for a job because of wearing a head-scarf. (5)

Social media can be a tool for all kinds of attention for companies. Abercrombie & Fitch used social media as a way to spread their reforms and new vision statement very effectively. They launched an advertisement video online, wiped clean their Instagram account and completely reformed their own website. (4) However, A&F had not struggled with too little attention online. In 2013, a blogger Jes Baker started a campaign online against Abercrombie & Fitch’s limited size availability policy against women. The aim of the “Attractive and fat” campaign was to challenge A&F’s branding efforts. "I challenge the separation of attractive and fat, and I assert that they are compatible regardless of what you believe," Baker, wrote in a public letter addressed to the former CEO, Mike Jeffries. (3) Body positivity is a social trend encouraging everyone to love and respect their own body the way it is. This is mostly associated with overweight women. Before the year 2013, A&F did not offer a size beyond 10 for women. An average American woman wears a size 14, so without doubt Abercrombie & Fitch was emphasizing their non-ethical exclusionary policy.(15)

Issue with stakeholders

For a company as large as Abercrombie & Fitch, customer satisfaction is in a very important role. Customers are one of the main groups of external stakeholders, and for A&F the satisfaction has been very poor. In 2015, the company scored the lowest results ever recorded on the American customer satisfaction index. ( ACSI) The results from 2016 are also low, but there is a 17% increase from the previous years’ results. The ACSI is published quarterly, so the results gathered from 2016 are from after the rebranding. (6) It is possible that the customer satisfaction results from 2015 had also been a trigger for the change.

From closer analysis of the ACSI, it could be concluded that according to this index, the rebranding was successful in terms of customer satisfaction. The latest recordings - from 2017- show that A&F is not the “most hated retailer in the US” anymore, and the results have gotten up from 2015. However, these results are limited, since the results are gathered from the US only, and only consumers interested in the topic have answered the survey of ACSI.

SWOT

A SWOT analysis is a business tool that assesses an organization’s strengths, weaknesses, opportunities and threats, to observe a business’s current situation. For this investigation I used a SWOT analysis to better understand A&F’s position and possibilities after the rebranding.

Strengths

• Global position, stores and awareness worldwide (10)
• Unique retailer (male models in stores)
• Well recognized logo
• A broad retail portfolio
• Strong heritage

Weaknesses

• Ethical issues in past (racism, sex, exclusion)
• Lost “coolness” amongst young customers
• Reputation for controversial management (Mike Jeffries)

Opportunities

• Rebuilding new brand image
• Entering new market
• Reaching new customers

Threats

• Competition from other fast-fashion trends that offer a cheaper option (HM, Zara, Forever21)
• Differentiation becoming difficult (16)
• Unstable brand image, if constantly changed
• Stores constantly closing (17)

Analysis from SWOT:

From the conducted SWOT analysis, it can be interpreted that despite the multiple strengths the brand has, their position in the market is quite unstable. As a mentioned threat, competition is major part of the difficulties the brand is facing after the rebranding. The market of upscale lifestyle apparel, which Abercrombie & Fitch entered is very broad. A&F began offering very similar products to its competitors, which are not typical A&F clothes, but the prices are still kept high. This put the brand in a position where competition is very intense.(19) Due to the competitive nature of the industry, differentiation has become very difficult as well. Since most brands seek for a unique selling point to stand out from the rivals, reforming a brand image will require the brand to create a new unique selling point to be differentiated. Therefore, as all brands aim for a unique brand image, it is becoming extremely difficult to stand out from all the other brands. (16) (20(358-360)) The difficulty of differentiation in the industry is closely related to another threat A&F is facing with the background of rebranding. They have a very unstable brand image. Ever since Mike Jeffries retired from his position as a CEO in 2014, the reforms have become more and more radical. How? prove!

However, the SWOT analysis also shows that the brand has multiple opportunities in the new market. Even though their brand image has been unstable during the recent years, it has its advantages. It gives the company a chance to create an enhanced brand image, which will surely get attention in the media due to the level of brand awareness they have reached. A&F also has a possibility to increase their sales, since they are reaching new customers by broadening their target segment from teenagers to older people. (23) In addition to broadening their target audience by age, it also became more inclusive towards customers by emphasizing diversity through models from different backgrounds. (24)

If we weigh the strengths and weaknesses analysed in the SWOT, it can be seen that A&F has many strong aspects to it, but is weakened by its controversial past. They have stores across 16 countries, so they are globally well known. Due to their unique heritage which dates back to 1892, they have achieved a strong position as a retailer. Their logo is well recognized and they offer a broad portfolio of apparel. (10) On the other hand, the well known logo and strong position has become one of their weaknesses as well, since it can still be associated with the infamous interview from Mike Jeffries in 2006. According to the Guardian, A&F lost its “coolness” among teenagers before the rebranding. (22) Thus, its reputation among its customers is constantly uncertain, since a sudden mass effect might bring A&F into bad light again.

Force Field Analysis

A force field is a business tool used to help weigh a decision. For this essay I used a force field analysis to see which conclusion it would support considering my research question.

Was the rebranding of A&F in 2016 a success?

Driving forces

• more ethical brand image 3
• better CSR 4
• better customer satisfaction 5
• expanding target audience 3
• financial?

Restraining forces

• No improvement in sales 5
• Loss of unique brand image/position 3
• Loss of loyal/old customers 2
• financial?

Since A&F’s reputation for a very niche market had gone viral in 2013, and caused issues in their success, it was quite predicable that a transition was incoming. When finally in 2016 A&F bluntly advertised a new beginning for the brand, it was seen as superficial by some customers. (26)

Table 2 illustrates the changes in Abercrombie and Fitch’s comparable sales quarterly from 2014 to 2016. Mike Jeffries retired from his CEO position in December 2014. (18) From this graph it is perceived that throughout the year 2015, the first year for A&F without a CEO, is positive progress. ) The comparable sales are negative, but they are decreasing. Several factors could have affected this. First of all, the controversial but iconic leader was gone. Even though Jeffries was obviously not alone responsible for the brand image of A&F, he was seen as a symbolic figure for the values the brand represented. Secondly, some changes were made to their marketing strategies. According to Businessinsider, teens were “growing tired of logos”. Thus, A&F responded to this by getting rid of large logos on all apparel. Also, music was tuned down and perfume was reduced in the stores to create a more open and inviting space, rather than an exclusive nightclub setting. (18) It is difficult to distinguish which changes most affected the positive progress of 2015, but it can be said that the sum of the reforms worked in terms of sales.

However, the sales from the first quarter of 2016 are 6% lower than the previous years’ recordings.

To evaluate the financial factors considering the research question, we must take a look at A&F’s success after the year 2016. As seen in table 2, Before the rebranding in the autumn of 2016, sales were in constant decrease. From Table 3 we can see the results from also the year 2017. Sales did not increase, but the percentage of decrease is smaller between the years 2016 and 2017 in comparison to for example 2015 and 2016.

CSR

Corporate social responsibility (CSR) refers to a company’s ethical behaviour in the benefit of the society. However, according to prindlepost, more and more companies are engaging in CSR for their own benefit, which makes stakeholders question the reasons for a company’s ethical behaviour. Abercrombie & Fitch’s CSR statement: “declares its support for human rights, diversity, communities, environmental sustainability, and responsible business decisions.” has been assessed for its veracity, since it is in contradiction with the brands past. (25) As been discussed, A&F’s former CEO was a very contradictory leader. Even though Jeffries has apologized and tried to explain himself, the brand still carries the burden of poor CSR. A year before the major changes of 2016 in A&F, some reforms were started already. However, in terms of redeeming their CSR, a whole new beginning was almost inevitable. Thus, since A&F was in a place where enhancing their CSR was mandatory for the success of the brand, stakeholders were put in a conflict where they had to weigh whether they though the brand was engaging in CSR for actually ethical reasons, or if they only acted in their own benefit.

CSR is challenging to execute without any suspicion from pressure groups, or other stakeholders. For Abercrombie & Fitch it is extremely difficult because of their past reputation for poor CSR, but reforming the brand image necessitated enhancing the ethical side of the brand as well. Overall, it may be said that corporate social responsibility as a factor in A&F’s rebranding emphasized and secured their position as a renewed brand, since it was such an influential factor in the brand’s past.