Abercrombie & Fitch

An American Brand for the European Consumer

Proposing a Barcelona Flagship

Klaudia Gawryszewska  Daniella Jacobs  Julia Kirchhoff  Edward Mattos 0

REPORT CONTENTS
1.1 Company Background
1.2 The Fork in the Road
1.3 Company Mission
1.4 Brand Positioning
2.1 SWOT Analysis
3.1 The Proposition
3.2 The Competition
4.1 Implementation
4.2 Forecast

1.1 COMPANY BACKGROUND

Abercrombie and Fitch is the coolest of the top ten brands in America according to the TRU study of
Summer 20081. Marketed as a lifestyle brand, the company encompasses five branded concepts: the
namesake flagship brand Abercrombie and Fitch, Abercrombie kids, Hollister Co. RUEHL No. 925,
and Gilly Hicks 2. To date, Abercrombie and Fitch stores operate in the United States, Canada, the
United Kingdom, and Venezuela3.

1.2 THE FORK IN THE ROAD

Founder David T. Abercrombie established A&F in 1892 as an outfitter of sporting and excursion
goods. David T. Abercrombie was joined by Ezra Fitch in 1900 and the company officially became
Abercrombie and Fitch Co. In the late 60s the company faced financial struggles and was purchased by
the Limited in late 80s and repositioned into the Casual Luxury lifestyle brand we know it as today. 4
Today A&F has gained great financial success and the company has launched four brands over ten
years.

1.3 COMPANY MISSION

The mission of Abercrombie and Fitch according to their corporate relations’ website is as follows:
"We are committed to providing comfortable and long lasting clothes that look good."

Abercrombie and Fitch’s mission is a reflection of their philosophy which focuses on brand protection
to ensure long-term sustainability. Further, aspirational brand positioning as A&F pledges to produce
only the highest quality, the trend right merchandise, and emotional store experience. Finally, a
consistent strategy which means that the company will invest to maintain and refresh their current

1
http://library.corporate-ir.net/library/61/617/61701/items/217519/060606.pdf
2
http://www.abercrombie.com/anf/careers/brands.html
3
http://www.topshoppingcenters.com/retailers/retailers.php?menu=noticias&modulo=retailers1
4
http://www.portfolio.com/resources/company-profiles/Abercrombie--Fitch-Co-3375

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stores, invest in real-estate, IT, and home office for the international expansion, and brand right price
and avoid promotions 5.

1.4 BRAND POSITIONING

Of the five concepts, the flagship Abercrombie and Fitch is targeted towards 18 to 22 year olds. Rooted
in East Coast traditions and Ivy League heritage, A&F is the essence of privilege and casual luxury. A
combination of classic and sexy creates a charged atmosphere that is both confident and provocative.
Idolized Abercrombie and Fitch is timeless and always all American cool6.

Abercrombie and Fitch not only a designer and confectioner of high quality fashion apparel with
merchandising points being its superior quality, trend right fashion, full price selling, casual luxury
position, and added value. The positioning and added value are aggregated by the lifestyle brand
dimension. Abercrombie and Fitch is in fact the prototypical lifestyle brand as they have created a
lifestyle based on preppy and young Ivy League which is reflected through their retail outlets’ luxurious
store environment, admirable store associates (referred to as live models), and their famous black and
white images depicting young people living the Abercrombie lifestyle. Through the lifestyle brand,
A&F has created an outlet for those who lead or wish to lead this lifestyle. Abercrombie uses a
magnetic marketing technique that transforms its brand into a magnet that attracts people with the
certain philosophies and lifestyles to buy the produces that the brand promotes. The brands philosophy
and lifestyle create an emotional connection with the individual. A&F has a very powerful magnetic
field based on the strength of the brands position in the mind of the American and increasingly
International consumer 7.

The lifestyle brand is achieved principally through the store environment. The most common store
layout is defined as the Canoe setup which features white molding and louvers on the exterior. The
main marketing image lies against the front wall facing the store entrance. The interior is highlighted
with dim ceiling-lights and spot lighting. The distinguishable aspects are the lingering scent of the
Abercrombie and Fitch fragrance and the very loud electronic dance music. 8 Corporate store policy
places the volume of the music between 80 and 90 decibels, comparative to heavy construction
machinery. 9 The employees serve as live models featuring the apparel in designated combinations and
serve as a live reflection of the marketing images 10.

5
http://library.corporate-ir.net/library/61/617/61701/items/307407/AF_Sep_08_Goldman_Conf.pdf
6
http://library.corporate-ir.net/library/61/617/61701/items/249197/Piper_June_2007.pdf
7
http://library.corporate-ir.net/library/61/617/61701/items/307407/AF_Sep_08_Goldman_Conf.pdf
8
http://articles.latimes.com/2006/sep/10/magazine/tm-abercrombie37
9
http://www.abc15.com/content/news/investigators/story/High-Volume-Sales-A-hazard-to-your-
hearing/hj32SEI8QEipUa3VTMsWyA.cspx
10

http://www.dallasnews.com/sharedcontent/dws/fea/lifetravel/stories/082708dnmetabercrombie.4027698.htm
l

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The Abercrombie and Fitch marketing campaign is based on the sensual black and white photographs
of Bruce Weber. This photographer is known for his sexual photography for other lifestyle brands
Calvin Klein and Polo Ralf Lauren. 11 Abercrombie and Fitch does not advertise in mass media yet still
has a very strong brand recognition and logo recognition.

2.1 SWOT ANALYSIS

Strengths
The brand is heavily protected through patents and intellectual property rights, this protection
ensures long-term sustainable growth.
Abercrombie and Fitch has strong brand recognition by name and by logo both in the United
States and abroad as foreigners have returned to their home countries with the coveted apparel.
In addition, the product is available internationally through online purchase.
A&F’s mission and philosophy is recognized by the consumer who values the quality and right
fashion products.
The advertising expense is limited consisting primarily of in-store photographs and as well as
photo-shoot costs and is not adapted for international markets.
As a manufacturer, Abercrombie may benefit from economies of scale.
A&F has a much defined strategy and clear focus through its business model. The business
model is based on 6 points: Commitment to the mission and philosophy, top line growth in the
double digits as a result of new store opening and modest sales increases, gross margins, S&D,
MG&A, and long-term earnings goals.
Aspirational brand positioning demands higher prices. Abercrombie charges up to 35% more
than market and still is considered in the top 3 American brands for young people.
Abercrombie has demonstrated no sensitivity to macro economic factors having a proven track
record of 55 consecutive quarters of earnings growth.
Abercrombie is a magnetic, lifestyle brand which results in a highly loyal consumer.
Merchandise is available online for purchase.
Consistency, not only on the balance sheet, but also in the positioning strategy and final
product.

WEAKNESSES
Ease of counterfeit; products can easily be replicated by appearance, but not in quality.
Past legal issues and negative publicity related to discriminatory hiring practices as A&F hired
in according to the lifestyle brand image—ivy league Americana.
A&F is defined as an American brand as reflects preppy East Coast lifestyle that the
international consumer may identify with entirely.

11
Reichert, Tom; Jacqueline Lambiase (2005). Sex in Consumer Culture. Routledge. pp. 330-331

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OPPORTUNITY
Abercrombie faces strong demand by the international consumer that currently is fulfilled only
through online catalogue purchase. Many foreign consumers visit the United States and return
to their home country with extremely coveted merchandise.
Opportunity for expansion is Europe, Asia, and South America.
The current Barcelona Market does not provide a product similar to that offered by
Abercrombie and Fitch.

THREATS
International trade transaction may potentially create a legal and/or distribution barrier.
Market specific regulations may be difficult to manage without insider information from local
experts.
Emergence of substitute products, other Americana lifestyle brands, or homegrown products.
Shift is consumers tastes and preferences away from Abercrombie’s positioning
Potential inability to create magnetism in the international market due to lack of comprehension
or inability to identify with the brand’s positioning. This is key for lifestyle branding and is the
heart of Abercrombie and Fitch.

3.1 THE PROPOSITION

It is proposed that Abercrombie and Fitch press on the European expansion by opening a flagship store
in Barcelona, Spain.

3.2 THE COMPETITION

The potential competitors Abercrombie might face in the Barcelona market are Levis, Guess, and
Replay none of which are competitors in the United States. None of these brands share a common
positioning; however have a similar pricing strategy.

Levi Strauss Signature Brand has found a comfortable place in the Spanish market as a denim product
with premium positioning. The American Levi product may reflect some aspect of classic American
denim, however does not emote any strong emotion of a lifestyle brand. The purchasing point is
product cut and design that is well adapted to the Spanish market. 12

GUESS, Marciano, and G by GUESS are the three GUESS brands present in the market that
Abercrombie aims to enter in Barcelona. Overall the goals of guess align in the fundamentals by
pledging to distribute high quality products that reflect the brand concept and image. GUESS represents
the sexy adventurer and is a genuinely American look with a touch of international style. This is the
brand that may compete most with Abercrombie’s Americana appeal, however GUESS does not have

12
http://www.levistrauss.com/Heritage/

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the same east-coast focus, tending towards more west-coast American glamour. Marciano is the guess
brand that is sophisticated, feminine, and sexy. Finally G by GUESS characterizes its wearer as
independent, audacious, confident, vivacious, and distinguished. Abercrombie and Fitch does not make
a great parallel. Overall the GUESS products are distributed in through multi-brand retail locations
unlike A&F. The advantage of the in store experience that indoctrinates the buyer, teaching them the
Abercrombie style and attitude, is not harnessed by Guess. Finally, comparing the product by design,
the two brands are distinct, primarily in degree of “casualness.” 13

Replay, an Italian denim outfitter is Abercrombie’s most threatening competitor in the Barcelona
market. Replay uses a single-brand store concept like Abercrombie. Reviewing the catalog, they offer
similar apparel, distress, rugged, masculine/feminine, premium. However, Replay does not have a clear
brand focus as Abercrombie’s lifestyle branding message, and it competes on a higher price scale.
Replay is also undergoing International expansion in the Americas and Far East.14

Inditex and H&M are much larger retailers than Abercrombie but have a very different focus with
offerings for all ages and even home products. There is no comparison to Abercrombie and Fitch,
especially in business strategy or philosophy. In the Spanish market, the sensation is that American
clothing is cheap due to the exchange rate parity, of high quality, and very functional. 15 16

4.1 IMPLEMENTATION
It is proposed that an Abercrombie and Fitch Spanish flagship store be opened in Barcelona by late
2009. The shop will located on Paseo de Gracia due to high foot traffic and shopping tourism.
Abercrombie flagship stores are considered tourist stores and experience sales much higher than the
regular shops.

The product catalogue will remain the same as will the marketing strategy. This is the correct approach
as there is an existing demand for the product as available in the existing market indicating that there is
foreign market appeal.

The product’s price will modified as shipping, taxes, and customs will be factored into the ticket price.
This should not affect the consumer due to the pricing parity, heavy demand. In the future, the hopes
are that the Abercrombie lifestyle takes root in Barcelona creating an extremely loyal clientele.

The promotion strategy will consist of the flagship inauguration based on the provided by corporate.

13
http://www.guess.com/About.aspx?subsec=brands
14
http://www.replay.it/replay/en/newsletter.php
15
http://www.elblogsalmon.com/2007/09/01-abercrombie-desembarca-en-espana
16
http://www.cincodias.com/articulo/empresas/Abercrombie-proyecta-entrar-Espana-competir-
Zara/20070830cdscdiemp_11/cdsemp/

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4.2 FORECAST
Abercrombie and Fitch has long proven success in North America. There is an existing, unfulfilled
demand in the European market. The introduction of the Abercrombie product does not require any
modification in design or strategy. In fact it is imperative that the design and strategy remain intact as
they are the demand catalyst. In the Barcelona market there exist related products but no close
competitors. Overall, the cards are in Abercrombie’s favor, and an opening by mid or late 2009, as
tourism peaks, would result in instant success.