‘Change is inevitable.’ A fact that stares right in our faces… whether we like it or not.
There have been many mega brands which have perished just because their CEOs and boards of directors failed to accept changes.
And Abercrombie & Fitch, which is hitting the media headlines for all the wrong reasons these days, is a classic example.
Lesson #1: Realizing and accepting new trends and changes save businesses.
Those who fail to realize this fact are sure to face dire consequences.
Gone are those days when we swept all the failures under the carpet and highlighted only the success in order to not scare away the startups or the budding entrepreneurs.
The new trend that has been taking rounds these years ‘bringing the pitfalls and lapses of a business out into the open so that those who have been in the clouds may come to feel the realistic hard ground and escape any such hard luck.’
We never plan a vacation when we know beforehand the weather is going to be bad, do we?
Lesson #2: It’s hard to get to the top; it’s harder to stay at the top!
The Past Glory & The Pass Over:
A & F, Abercrombie & Fitch, is not a startup. It was founded in 1892 in Manhattan, New York, by David Thomas Abercrombie and Ezra Fitch as a maker of elite sporting and outing goods, especially noted for its best shotguns, fishing rods, fishing boats and tents.
However, in 1977 the company went bankrupt and in 1978, Oshman’s Sporting Goods, a sports goods retailer owned by Jake Oshman, bought A & F with its mailing list worth one and a half million and relaunched it as a mail-order retailer in hunting wear and novelty goods.
Once again it changed hands when in 1988, Oshman sold A & F to The Limited, a clothing retailer chain in Columbus, Ohio. That was when A & F directed its focus on young adults and gradually grew to be one of the largest clothes lines in the world.
In its heyday, Abercrombie & Fitch was a $5 billion worth company with about a 1000 stores in several countries.
Lesson #3: Teens and young adults change fast in body and in mind.
The Publicity Strategy That Made All The Difference… Either Way:
A & F’s publicity strategy hit the bull’s eye. The stores all had the same dark wood shutters and played loud dance music with b&w photos of robust young men hanging. Torso exhibiting young men with well-formed bodies stood at the entrances of most of the stores and at launching events. Young adults thronged at the stores to have their photos taken with those ‘warrior-like young men’ outdoors and the beautiful damsels with desirable body shapes and long flowing hair indoors.
The negative publicity of this sexual exhibition and the clothes whose sizes were made to fit only the slim bodies played well on the minds of the teens. This unspoken statement made it clear that the A&F clothes were only for the ‘slim’ and ‘attractive’ bodies, and it boosted the sales.
Teens were the main feeders of A & F in those heydays and it was ok for the kids to have a splashy logo and an unwritten negative tag attached to the clothes on their bodies. They felt rebelliously satisfied when they wore those expensive A & F brand lines!
However, during the first few years of this century, especially during the recession, consumers in general and young consumers in particular, were forced to change their shopping habits. They were hard pressed for cash, but were not ready to give up fashion. Naturally, they look for something that is cheap, yet trendy.
As a result of this philosophy, A&F saw a sharp decline in its sales, showing steep downward index.
They discard any fashion when they sense it’s getting old or too common. Next wave of kids, by nature, don’t like to follow their seniors and so go for a different way of expressing themselves, usually by having their hair done differently and wearing different style clothes and accessories.
Lesson #4: Businesses need to update their products to suit the changing times.
Letting The Competitors Sneak In:
A & F failed to see the changes. It totally missed the logic that every business needs an inflow of new customers. You need old customers to stay, but you need new customers to join… more and more. As they grow older, the old customers usually would lose interest in a particular product and might go for another product or the circumstances they were in might force them to change. Their financial position or their study or job requirements might alter their way of life. A high school student can’t wear the same type of fashion clothes when they go to university or take up a job at a place where dress code is a prerequisite. But A & F ignored this important point.
H & M, Hennes & Maurtiz, a Swedish international fast-fashion clothing brand, and Forever 21, originally ‘Fashion 21’, an American fast-fashion clothing brand, are the two close competitors of A & F, besides Zara dominating all three of them. And the other three and some other brands of the same market value realized the changing trends and acted accordingly, and successfully lured A&F’s customers to their stores.
In her “Abercrombie & Fitch’s Decision to Ditch Its Logo Is Unlikely to Revive The Brand” for The Guardian (2014), Nicola Carter made it very clear by saying: — A failure to move with the times — that brands are living entities that need to constantly evolve but A&F has barely updated its brand or products since the early 90s. And there are many more critics that corroborate Nicola’s observation.
Lesson #5: Lapses, not addressed in time, grow into huge problems, and consequently, the down trend in sales and profits set in.
(In ‘Who’s Running Your Startup’, you see that it is the customers that run a business.)
Too Rigid Policies Often Hurt The Business in The Long Run:
In addition to its employment policy that got it in trouble with the law and the public quite often, A&F had clothing size issue on its lap: A&F did not make oversized clothes.
In her writeup (May, 2013) for Business Insider, Ashley Lutz expressed her concern over the ‘size’ issue in her “Abercrombie & Fitch Refuses To Make Clothes For Large Women.” She pointed out that A & F didn’t stock XL or XXL sizes in women’s clothing because they didn’t want “overweight women” wearing their brand but wanted only the ‘cool kids’. This policy, Nicola lamented, has many of A&F’s potential customers buy their clothes elsewhere. How damaging! It might have been a shot in the arm in the past but not now when the competition is heavy and operational costs are high. How come the think-tank at A & F fail to see this simple logic, experts wonder.
H & M, being a teen favorite, has dresses even for full-term pregnant women!
On the other hand, the ‘cool kid’ marketing strategy became a ‘red hot’ issue. In 2011, A&F introduced a swimsuit line for girls aged 7 and 8. Nothing wrong in kids wearing swimsuits, is there? No, there isn’t… if they are normal. The line A&F brought into the market had paddings and they are called ‘push-up triangle’. There was an outcry.
Claire Shipman, contributor to the Good Morning America, in ABC News, in her “Padded Bikini Top For 7-year Olds Draws Parents’ Ire” discussed this issue in length quoting that parents’ reaction was unanimous — no one would buy one for their child! Though A&F renamed the line as ‘striped triangle’, they kept the padding intact. How insensitive!
Lesson #6: Sticking rigidly to one’s policies may give fruitful results at the initial stage, but may not go on working wonders in the long run.
Mike The Fall Guy?
There is always a lone wolf or a flock of sheep that takes the blame for any mishap, and in A&F case it was Michael Stanton Jeffries, ‘Mike Jeffries’ in short, the CEO for 22 years.
Now in his 70+, Mike was employed by The Limited which bought the ailing A&F from Oshman Sports back in 1988. The shrewd businessman Mike made A&F ‘sizzling with sex’ and throughout 1990s, kept his A&F in par with the other high-end fashion brands. Teens loved to wear A&F.
However, in bringing in the bold reforms, he had to face many accusations. He was branded as stubborn, racist, unorthodox, indecent, shy and so on. He did not consider changes, nor did he follow any suggestions.
He was rigid in his policies and that attitude got him and his company into trouble with the law and the activists of every kind, making the company pay huge amounts in lawsuit settlements. He was so adamant that he refused to lower prices or offer discounts even during the recession though the company posted losses for about 16 consecutive months.
In December 2014, the death knell was sounded for Mike Jeffries and he was unceremoniously ousted from his CEO post, but kept as the Chairman — no swan song, no golden handshake, no emotional goodbyes, no hugs or pats… nothing. One fine morning, he just did not turn up at his office. In January 2015, he was asked to step down as the chairman, and a 22 year long career and all the great achievements had all gone with the wind!
Lesson #7: There is competition in every business and there are lapses in every strategy, but one has to strive to keep ahead of the others and mend the lapses in time to make profits.
It’s Never Too Late To Mend One’s ways:
At last, in December 2014, after Mike had stepped down, the investors showed interest and the Board of Directors started mending the damaged reputation.
The bashful logo presence is cut to minimal or bearable. The half-naked ‘boys’ and ‘girls’ at the entrances are clothed modestly. Employment policies have been relaxed. Store appearance has been changed, those trademark dark shutters are pulled off and music low-keyed. Clothes include all sizes. College students replace teens. Pricing has been altered, with some discrepancies, though.
However, Laura Northrup in her “Abercrombie & Fitch Puts Shirts On Male Models, Tries To Reinvent Itself” on Consumerist (January 14, 2015) mentioned some analyst’s opinion that even a ‘massive brand revamp is not enough to bring Abercrombie back.’ She quoted Robin Lewis telling ‘Racked’ that she did not think the brand (A&F) would last unless it took the refresh even further and changed its name entirely.
Katie Smith, contributor for EDITD a market leader in retail analytics, showed her grave concern over the fate of A&F in her “How To Get Abercrombie & Fitch Back On Track” (Jan 2015). She pointed out that ‘A&F were simply emulating fast fashion in an attempt to appeal to more customers, which, she felt, was a big mistake, and elsewhere she added that in order to recapture value, Abercrombie must cut back on discounting and focus on quality garments.’