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Abercrombie & Fitch Co is a US-based apparel and footwear retailer. It operates the Abercrombie & Fitch, Abercrombie Kids, Gilly Hicks and Hollister brands. The company has been struggling in recent times, with global sales declining by 5% in 2016. As fast fashion players and e-commerce giants disrupt the retail landscape both in the US and globally, the company has been left behind with a vast fleet of poor-performing physical stores, a brand image that no longer resonates with its consumers and a product assortment that is perceived as overpriced and unfashionable.
Both Hollister and Abercrombie & Fitch have strong brand equity as instantly recognisable brands globally, despite their limited presence overseas. In addition, the company has made progress in developing an efficient omnichannel operation, including services such as clickand-collect, reserve in store and free returns – important for its consumer group.
Sexualised marketing, elitist attitudes and an unfavourable brand image has resulted in bad publicity and a myriad of challenges in returning the Abercrombie brand to growth. Brand overlap is also hurting the company. Both the Abercrombie & Fitch and Hollister brands target a similar demographic, with little price and product differentiation; however, progress is being made with the repositioning of Abercrombie.
Abercrombie & Fitch’s brand awareness creates opportunities for further overseas expansion. Asia Pacific and the Middle East hold significant room for long-term growth. Additionally, Hollister’s relaxed, Californian approach to design would lend itself well to the athleisure trend, while Abercrombie’s premium position may benefit from a technical sportswear offering.
The shopping habits of Millennials continue to evolve, with share of wallet becoming stretched as experiences and technology become as important as apparel. Another threat is the company’s overreliance on the US, which makes it vulnerable to share erosion from rivals such as H&M and Inditex.