Abercrombie and Fitch Analysis

Abercrombie and fitch Analysis1. gateThe following typography explores the community Abercrombie foumart at heart its US and UK commercialize. Key external factors incur been explored such as gent, SWOT, TOWS and the companies competitors, as well as Porters generic wine strategies and Ansoff matrix. brightness Objectives solelyow because been formulated considering each(prenominal) of the above factors and then a strategic Plan, Implementation Measurement of each cause to be perceived Objective has been created.1.2 go with BackgroundAbercrombie and skunk were founded in 1892 by David T Abercrombie and offered prestigious degenerate and outdoor enclothe for masculines and womanishs. Today the troupe is an upmarket US bearing retailer striving to offer their consumers casual luxury to the 18-22 stratum elder market segment. The family has all(prenominal)place 300 gillyflowers in the US and is besides situated in the UK, Japan, Canada and Italy. They alike consent ongoing plans to expand into separate impertinent markets such as Asia in the near future.Abercrombie foulmart view three subsidiary sister companies consisting ofAbercrombie very similar to the principal(prenominal) give out-of-door nonwith patronageing for children elder 7-14Hollister Co for teenagers 14-18 offering lower priced products to Abercrombie foumart further very similar in lookGilly Hicks offering lounge wear, under habit and a body c atomic number 18 effigy for people aged 18+.Abercrombie foumart also had a subsidiary fraternity called Ruehl No.925 which offered clothe products to the 25+ age segment, however the write out in c sufferd at the beginning of 2010 as it did not prep be off.2. External Analysis- PEST FactorsT commensurate 1 PEST2.1 Political/Legal deduction Duty As Abercrombie foumart fictionalisation their products within the USA and Asia, products that argon imported into the UK accrue an import duty. Import du ty is calculated on the type of right(a)s, their value and the country of origin. (Business necktie 2010) If the product is made up of 20% or more(prenominal) of separate from otherwise countries then this has to be verbalise to the countries customs as this whitethorn carry on the price of the import duty.Labelling As Abercrombie polecats products are imported from the US to the UK the phoner needs to get wind that all their clothing products meet the UK labelling requirements stated in the Textile harvest-times (Indication of Fibre Content) Regulations 1986, to ensure that they are in ossification with the law.Employment law The UK has very strict employment laws against disagreement. Abercrombie polecat were lately faced with a law suit in June 2009 when an employee was allegedly told that her prosthetic limb was not in accordance with the companies look policy. The employee aimed to sue the bon ton for 20,000 for discrimination against her disability. It is im portant for Abercrombie Fitch and their employees to be aware of UK legislations as lofty schooler(prenominal)-pitched profile law suits could affect their moving picture leading to bad publicity.2.2 scotchThe Recession Although some reports whitethorn state that the recent recession may be drawing to an end, Abercrombie Fitchs latest Fiscal-fourth quarter earnings (Talley 2010) paint a different picture as they fell 31% (Talley 2010) repayable to the proceed decline in their sales. This is due to the company not being wide-awake to abbreviate their prices during the recession, forcing their customers to look for cheaper competitors (see rivalry Audit for detailed list of competitors).UK go steady Abercrombie Fitch are constantly striving to maintain and promote the prestige image they flip boomingly created in the US in the UK. barely when the UK flag broadcast entrepot in capital of the United Kingdom opened in 2007 the company was criticised for everywhere pricing, as the products cost double those offered in the US salt aways. This could pick out had a major impact on the companys success in the UK. However, so farther they mystify found that their consumers assume had vigorous brandmark loyalty to them and get to been go outing to pay the price for the products. Although as mentioned above, the companys earnings have been touch on by the recession.2.3 Socio-CulturalSexual Imagery Over the forms Abercrombie Fitch have been attacked about their sexually explicit advertising within their advertising campaigns and every quarter instrument. It is against some different religions values and beliefs for ideal the Muslim religion to order sexual or naked imagery within advertisements. wherefore Abercrombie Fitch need to be aware of the different values and beliefs different communities and religions have in order not to offend anyone. grocery research should be under taken as to what the trounce form of advertising is for any sore campaigns and to root what type of imagery should be utilize. However in many westernised countries, breach advertising works well and this is what they use. The company strives to be different and stand out in any which way they can.Ageing Population With smorgasbord magnitude life expectancy and an aging population prominent across the foundation, it is foolish for Abercrombie Fitch to continue into their future just counseling on consumers aged 18-22. With the recent failure of their high end brand Ruehl No.925 which focused on consumers aged 25-35 a outline to re-brand and reinvent Ruehl may be a smart decision for the company.2.4 TechnologicalInternet online purchasing With the ever change magnitude popularity of the internet and consumer online purchasing, it has meant that Abercrombie Fitch have been able to advertise their products to consumers via their website and also allowing the consumer to get products, if they wish to, most the world. Onl ine advertisement is an excellent way to take up a younger fag audiences attention.Improvement of Transport Transport has changed dramatically over the past 50years. passageways have improved and with many more flights take off each day from large airports, companies are seeing speedy delivery times for products that are sent by sea, road and air. This is good raw(a)s for Abercrombie Fitch as their products are reaching consumers quicker. As the companys products overlook a lot of time in transport, some of the manufactured goods are imported from Asia then dispatched around the world to their many stores.3. External Analysis- Competitor AuditAs Abercrombie Fitch are situated in many different global markets the following competitor audit leave focus on Abercrombie Fitchs main competitors in the UK and the US.3.1 US Competitors3.1.1 American Eagle OutfittersAmerican Eagle Outfitters is Abercrombie Fitchs main competitor in the US. Like Abercrombie Fitch they stain 18-22 year olds, offering young airable products to their consumers. They have a bigger contrive of products than Abercrombie Fitch but are not seen to be as prestigious. Unlike Abercrombie Fitch, some consumers find the American Eagles shopping experience more than more pleasant, as the music is quieter and there is more lighting. The company recently opened a store in the UK in capital of the United Kingdom.3.1.2 AeroposteleAeropostele is cheaper than Abercrombie Fitch, however it is placid seen as one of their main competitors as they target the homogeneous market segment. Like American Eagle they have a large site of clothing products and accessories for the male and womanly markey which Abercrombie Fitch do not offer.3.2 UK Competitors3.2.1 turd WillsLike Abercrombie Fitch whoreson Wills target segment is 18-22 year olds. The company call themselves the University Outfitters and often situate their stores in University towns. Although Jack Wills call themselves this charge under 18s are also found to be keen Jack Wills wearers. However the company do not have a strong market tract in the UK as they are seen to offer, like Abercrombie Fitch specialised clothing.3.2.2 Urban OutfittersUrban Outfitters offer branded clothing to a unique market. Unlike Abercrombie Fitch they offer edgy, different styled shape products to their competitor, targeting the same age segment. Urban Outfitters is a very popular US company and is very up and coming in the UK in London.3.2.3 HollisterAlthough Hollister is a sister company to Abercrombie Fitch, there seems to have been some inter-company competitiveness in the UK. Abercrombie Fitch have only one store in the UK situated in London whereas Hollister have ten stores situated around the country. Although in the US Hollister targets 14-18 year olds, many older people in the UK have been article of clothing the brand due to accessibility of the store, as travelling to London to purchase Abercrombie Fitch c lothing is not an option for some people they engage to wear the next best thing which is clothing from Abercrombie Fitchs sister company Hollister.4. SWOT Analysis4.1 StrengthsStrong portfolio of brands other than the main Abercrombie Fitch brand likable to consumers aged 9- 24Annual Abercrombie Fitch Challenge which raises capital for charities and organisations, raising their profileSponsor of the Elite Racing TeamIn 2007 offered $75,000 scholarships to the National Society of High School Scholars involution plans in Canada, europium and AsiaThe ability to capture 18-22 year olds attention and condition them into wanting the brands productsIn 2007 the company had a 2.3% market share of the US clothing retail market which put them at 3rd largest market share.In 2008 Abercrombie Fitch started modifying and upgrading their information systems4.2 weaknessesMoney being lost to counterfeit products high society portrays a sexual image, this is not acceptable in some countries an d societiesLook policy often seen to be too strict by employeesWith the recent layover of Ruehl No.925 there is no longer an Abercrombie store that appeals to consumers aged 25+ high-priced prices in the UK compared to USMany law suits have been seen due to discriminationMany of the loyal customers feel that too many people are now wearing the brand and it is starting to lose its prestigious imageThe recent upgrading and modification on information systems within the craft is a long process and could affect day to day running of the business4.3 Opportunities credit endorsements plus brand sentiencyNew range of products for pre 9 year oldsReinvent Ruehl No.925 and recapture the 25+ market segmentIncrease market shareIncrease sales outside of the two main selling seasons of August and November/DecemberCompletely new product propelFemale jewelryRecapture prestigious image with new rangeLarger coats virile and egg-producing(prenominal) watchesIntroduce real looking models (mod els size UK 12+) as it is not how the clothes look on the individual, it is how they fetch the individual feelIn store music album visible(prenominal) to purchaseChange shopping experience to include, more lighting, quieter music, clothes more readily lendableCompletely rebrand company image from casual to refreshing wear e.g. suitsExpansion into Eastern Europe4.4 ThreatsThreat of substitution due to high pricesImport tax revenuees may trainPiracy in foreign waters, potential threat of loss of stockEconomical/political change in countries in which Abercrombie Fitch operateLaw suits against company for causa acts of discriminationExchange rates could affect companies profitabilityChange in fashion trendsThe availability and price of raw materials could affect the cost of manufacturing callable to global warming unforeseeable weather changes could affect consumer preference on products5. SWOT to TOWSTable 3 SWOT to TOWSInternal elementsExternal elementsOrganisational Strength sOrganisational Weaknessesstrategic OptionsEnvironmental Opportunities(and risks)Strengths into opportunitiesStrong portfolio of brands other than the main Abercrombie Fitch brand appealing to consumers aged 9-24. so Abercrombie Fitch have the brand power to be able to introduce other product ranges into the existing marketsAnnual Abercrombie Fitch Challenge which raises funds for charities and organisations. The Annual challenge could be made bigger, therefrom raising more money for charities. The Annual event could even be brought into other countries in which the company are impersonate to raise money for their charitiesSponsor of the Elite Racing Team, this is not widely known that they donor the team. Therefore awareness could be increased thusly enhancing brand awareness of the companyIn 2007 offered $75,000 scholarships to the National Society of High School Scholars. Scholarships could also be offered in other countries in which the company are position in to simi lar schoolsExpansion plans in Canada, Europe and Asia means that sugar are to increase as well as brand awarenessThe ability to capture 18-22 year olds attention and condition them into wanting the brands products. Abercrombie Fitch have the ability to condition their customers into needing their products, because if a limited sport range of products were to be realised, consumer would respond to this wellIn 2007 the company had a 2.3% market share of the US clothing retail market, thus reservation them the 3rd largest market share in the US. Having the 3rd largest market share in the US gives the company the opportunity to strive to have the fleck largest or even beat the Gap and have the largest market share. Abercrombie Fitch should also look to increase their UK market share as presently they are not seen to be strong competition to UK brandsIn 2008 Abercrombie Fitch started modifying and upgrading their information systems. This therefore means that the company give s oon have stronger information systems thus meaning smoother and easier running of the companyWeakness into opportunitiesMoney being lost to counterfeit products. Abercrombie need to ensure that all products have copyright and anyone who counterfeits their products have a law suit brought upon themCompany portrays a sexual image, this is not acceptable in some countries and societies, therefore Abercrombie could look towards toning down the sexual imagery within countries and societies that find this distastefulLook Policy often seen to be too strict by employees. The company should therefore hold in store meetings to gather information as to what the employees find strict about the policy, then this should be raised in the Annual conferenceWith the recent closure of Ruehl No.925 there is no longer an Abercrombie store that appeals to consumers aged 25+. Therefore information by the means of market research should be gathered from consumers as why they felt the brand failed. As wel l as information from store staff and stakeholders. The company could then formulate strategies to rebrand Ruehl No.925 thus penetrating the 25+ age market in one case againExpensive prices in the UK compared to US. Consumers are currently prepared to pay the higher prices that are at present in the UK, if the situation changes then the company should investigate the price of merchandise the clothes into the UK against the price they are charging and the profit that is being made. If profit is high then the company could look towards lowering their UK pricesMany law suits have been seen due to discrimination. Increased awareness should be made about discrimination within the work place and more minority groups should also be introduced into the company.Many of the loyal customers feel that too many people are now wearing the brand and it is starting to lose its prestigious image. Therefore a new prestigious range could be introduced to encourage state consumers back to the brandEnv ironmental ThreatsStrengths used to minimise threatsThreat of substitution due to high prices. However one of Abercrombie Fitchs strengths is that they have the ability to catch their target audiences attention and make the consumers feel they need the productsImport taxes may rise. However the company are constantly expanding therefore profits should rise thus meaning if import taxes should rise it should not affect the company substantiallyChange in fashion trends. As Abercrombie Fitch have a strong market share within the US, it would be wise to assume that they have an excellent team of fashion forecasters that would be able to foresee this potential threat. This strength can also be used for the threat of, due to global warming unforeseeable weather changes could affect consumer preference of productsStrategies to deal with weaknesses and threatsCompetitive pricing should be brought in to reduce the threat of substitution due to high pricesImport taxes may rise. As mentioned in the previous box, if import taxes do rise then the company should be okay as they are continuing to expand thus increasing profits, which overall should even out the rise of import tax if it should occurLaw suits against company. Abercrombie Fitch need to ensure that the company is ceaselessly running professionally to ensure that further law suits do not ariseExchange rates could affect companys profitability. The company need to be constantly aware of exchange rates and understand that stock being sold in an unstable political and economical market could lose valueThe availability and price of raw materials could affect the cost of manufacturing. Therefore Abercrombie Fitch need to ensure they are obtaining their raw materials at the best price available6. Porters Generic StrategiesDiagram 1 Abercrombie Fitch and Porters Generic StrategiesAbercrombie Fitch nowFocusAbercrombie Fitch for the futureMiddle of the Road specialityCost LeadershipPorter (1980) identified four typ es of generic strategies for a company to be competitively successful. The four strategies consisted of Cost Leadership, Focus, speciality and Middle of the Road. Abercrombie Fitch are currently using the generic strategy of Focus as they have a small range of clothing products focused on a specific market segment of 18-22 year olds. For the future the company should aim to move not entirely away from focus but slightly towards Differentiation, thus enhancing their products durability and perception7. Ansoff MatrixTable 4 Abercrombie Fitch Ansoff Matrix genuine proceedssNew ProductsCurrent foodstuff antheral and Female clothingswimwearbeltsrubber flip flops trounce flip flopsFemaleclassic scarveshandbagssignature totessignature scents, 8, Classic, 41 (perfume) and Wakely virileboxer shortsunderwearnecklacesbraceletssignature scents, Fierce, 41 (cologne) and ColdenWomens jewelleryMale and Female watchesMusic C.D of in store musicA range of male and female winter shoesBags for ma lesPyjamasNew MarketExpansion into foreign market for example Eastern EuropeAbercrombie Fitch catalogue in which products can be ordered similar to Next Directory or Littlewoods catalogueProducts available in large department stores within the UK for example John Lewis, House of Frasier, Selfridges and Harrods.A range of smart male and female clothing productsHair care productsAbercrombie Fitch bottled waterSurf boardsMale and female clothing for age group 25+Larger sizes8. SMART ObjectivesAbercrombie Fitchs SMART preys run over the limited period from 2010-2013. In the world of Beauty and Fashion 3-6months would be considered a shot term prey. 12-25 months a medium objective and 36+ months a long term objective. This is a very different time frame to other types of businesses, as fashion and beauty trends move very quickly, usually with the seasons. Therefore companies such as Abercrombie Fitch need to be thinking quickly about fashion changes.The following SMART objectives a re listed in hierarchy, with the first objective being the objective that Abercrombie Fitch should definitely consider proceeding with if they had to choose one. assumption the present economic climate, it may be in Abercrombie Fitchs best divert to wait until the end of the recession is completely in sight forrader producing any new products as bringing out a new product is a high risk.SMART ObjectiveTarget member gamble1) Introduce a range of womens jewellery complementary to the companies style of casual luxury, consisting of 15 pieces by inaugural November 2010Women aged 18-22, educated, with sensibly halcyon incomeMedium Risk2) Launch a new prestigious clothing range to re-capture higher end income consumers by initiative may 2011 men and Women aged 18-22, educated, with high incomeLow Risk3) Trail introduction of larger UK womens sizes 12-16 for clothing products in London flagship store by 1st adjoin 2013Women aged 18-22, educated, with reasonably golden income, that could not shop at the store before due to the size Large actually being the eq to a UK 10High RiskIf objective 3 is successful then4) Trial introduction of integration of 2 real models within advertisements and in store staff within London flagship store by 12th June 2013Men and Women aged 18-22, educated, with reasonably comfortable income. The advertisements and new models exit aim to attract real size women in the UK sizes 12-16High Risk9. Strategic Plan, Implementation Measurement of SMART Objectives9.1 SMART Objective 1SMART ObjectivePorters schemaMarket Segment/ Ansoff1) Introduce a range of womens jewellery complimentary to the companys style of casual luxury, consisting of 15 pieces by 1st November 2010Between Focus and DifferentiationWomen aged 18-22, educated, with reasonably comfortable income.New Product/Current MarketProductThe jewellery give be in the companies style of casual luxury, items such as bead bracelets, necklaces and earrings will be designed in ac cordance with market research results and offered to consumers in store and onlinePriceMarket Skimming Strategy high price offered and only gradually loweredPlaceProducts will be available in all Abercrombie Fitch gladiola ship stores around the world and on website. If successful will be brought into all other storespublicityDirect Marketing- idiot box adverts, magazine advertisements, in store advertisement.Celebrity endorsementPhysical pointThe Abercrombie Fitch logo of the Moose will extend presentprocessProducts will be sent from the manufactures to doubt office then distributed to the Flag Ship stores around the world nationAbercrombie Fitch already make male jewellery, therefore a female specialist will be employed and work alongside the male specialist in order to create male and female jewellery products that work in harmonyMeasurementSmall targets should be find in order to ensure the successful completion of the Objective. As the objective is short term, monthly meetings should also take place to ensure targets are being met.9.2 SMART Objective 2SMART ObjectivePorters StrategyMarket Segment/ Ansoff2) Launch a new prestigious male and female clothing range to re-capture higher end income consumers by 1st may 2011FocusMen and Women aged 18-22, educated, with high incomeNew Product/ New MarketProductA range of male and female clothes aimed at recapturing the wealthier consumers offering them a prestigious brand once again. Once market research has be undertaken then this will determine the types of clothing products needed.PricePricing to reflect product differentiation- price will be higher than the standard brands productsPlaceProducts will first be launched in the flag ship stores around the world and then brought into all other stores if found to be successful packagingDirect Marketing- television advertisements, magazine advertisements, in store advertisement.Celebrity endorsementPhysical EvidenceThe Abercrombie Fitch logo of the Moose will remain presentProcessProducts will be sent from the manufactures to Head office then distributed to the Flag Ship stores around the worldPeopleRuehl No.925 employees will be interviewed and asked why they feel the brand failed. Constructive criticism will be taken away and applied to making the new prestigious range successful. A person with strong knowledge of prestige brands and turn around strategies would be usefulMeasurementOnce market research has been undertaken a target should be frozen as to when the first designs will be available for viewing. Then more targets set as to when the collection will be finished. Monthly meetings should be undertaken to ensure that targets are being met and to run by dint of any problems that may arise that could affect the objective being met on time.9.3 SMART Objective 3SMART ObjectivePorters StrategyMarket Segment/ Ansoff3) Trail introduction of larger UK womens sizes 12-16 for clothing products in London flagship store by 1st March 2 013Between Focus and DifferentiationWomen aged 18-22, educated, with reasonably comfortable income, that could not shop at the store before due to the size Large actually being the tantamount(predicate) to a UK 10New Product/ New MarketProductAs well as the usual 0-10 UK womens clothing sizes being produced the company will also introduce sizes 12-16. These sizes are the most common female sizes in the UK and should be greatly acceptedPriceMarket Skimming- high price offered and only gradually loweredPlaceThe new sizes will be introduced into the UKs London flagship store. If found to be successful then new objectives will be set for the introduction of the sizes across the worldPromotionSmall in store advertisements within UK London flag ship storePhysical EvidenceThe Abercrombie Fitch logo of the Moose will remain presentProcessProducts will be manufactured then distributed straight to UK flag ship store in order to cut out the middle man (The US head office) Products will have to be checked in order to ensure that they are ascorbic acid% before retailingPeopleSomeone with strong knowledge on female sizing in the UKMeasurementTargets set and meeting undertaken to ensure that procedures are running smoothly to meeting the objective. In the first year 4 meetings will take place and then one every month in the years to follow until the object end pick up9.4 SMART Objective 4SMART ObjectivePorters StrategyMarket Segment/ Ansoff4) Trial introduction of integration of 2 real models within advertisements and in store staff within London flagship store by 12th June 2013Between Focus and DifferentiationMen and Women aged 18-22, educated, with reasonably comfortable income. The advertisements and new models will aim to attract real size women in the UK sizes 12-16New Product/ New MarketProductIntroduction of real size models sizes 12+ within companies Marketing/Advertising campaigns and in store staffPricePrice will be base on price of advertising campaign and co st of new in store staffPlaceAdvertisements with real size models will be trialled in the UKs London flagship store. Real size models will also be hired alongside the skinny in store staffPromotionLarge advertisements including real size models within direct marketing such as, magazines, television advertisements, internet and in store. As well as London busesPhysical EvidenceThe Abercrombie Fitch logo of the Moose will remain presentProcessreal size models casted for advertisement and for in store staffPeopleSomeone who can sympathise with the fact that clothes should not be about what you look like in them, but how you feel in them. And understand that not everyone is a size 0 model. Bring realism to the companyMeasurementSmall targets should be set in order to ensure the successful completion of the Objective. As the objective is long term, 4 meetings will take place in the 1st year and then monthly meetings will take place in the second and thrid year to ensure targets are bein g met.10. ConclusionIn conclusion after considering Abercrombie Fitchs external environment as well as Porters Generic strategies and Ansoff Matrix, four SMART Objectives have been formulated and a Strategic Plan, Implementation Measurement of each SMART Objective has also been created.If Abercrombie Fitch should decide to implement any of the SMART Objectives suggested in the near future, then the current external environment should be examined as different situations may have arisen.