by James Brumley | February 3, 2014 6:00 am
If it seems like your nearby American Eagle Outfitters (AEO), Abercrombie & Fitch (ANF), or Aeropostale (ARO) stores are a little less crowded than they were a couple of years ago, you’re not crazy — they are drawing smaller a crowd.
Contrary to the picture these retailers are painting, however, the fix isn’t just a simple matter of a new season’s fashions or a tweak in the way these shops advertise. These clothing stores are off the mark in several ways, and may be set to struggle no matter how drastically they try to overhaul themselves.
Where does one begin to describe the plethora of problems these teen-apparel retailers are facing? The most apparent one isn’t necessarily the biggest one, but it’s one well worth mentioning: Blatant contempt for its potential customers.
Case in point: Abercrombie & Fitch CEO Michael Jeffries was already pushing his luck on the “creepy” scale, but when a comment he made in an interview way back 2006 resurfaced again last year, somehow it rubbed people the wrong way — and got more attention — the second time around:
“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. We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don’t belong [in our clothes], and they can’t belong. Are we exclusionary? Absolutely. Those companies that are in trouble are trying to target everybody: young, old, fat, skinny. But then you become totally vanilla. You don’t alienate anybody, but you don’t excite anybody, either.”
Wow. It’s bad enough that Jeffries said this at all, but it’s even worse that he’s never given the impression that he shouldn’t have said it — even after the uproar. Though most threats of boycotts rarely result in a boycott, his true colors may have caused enough of a stir to keep at least some A&F regulars from visiting since then.
Its second quarter (2013) same-store sales plunged 10% following the comment’s proliferation, and the third quarter’s same store sales were off 14%. A dip that big can’t be solely attributed to a weak market.
Whether it’s fair or not (and it isn’t), American Eagle Outfitters and Aeropostale have been lumped into the same category as Abercrombie & Fitch.
Shoppers are steering clear of them, too, with consumers wondering if the Abercrombie CEO’s vile words were in line with unvoiced thoughts by the folks running things at Aeropostale and American Eagle. Guilt by association is still a powerful force.
That being said, a gaffe isn’t the only thing plaguing these teen-fashion stores.
The details are so ubiquitous they’re tough to nail down but in simplest terms, malls are dying. From 2010 to 2013, the number of visits made to shopping centers during the all-important November/December shopping season basically got cut in half.
Overall retail spending is still decent, but different. The proliferation and mainstreaming of online shopping has hit stores like American Eagle and Aeropostale where it hurts the most. The casual browser isn’t walking past their doors anymore, not even giving the retailers a chance to convert a looker into a buyer.
Without a significant online operation to re-create the potent in-store experience (pulsing music, chipper sales people, and lots of subtle encouragement to buy), these shops just don’t compete as well in the online world.
But even that’s not the biggest reason stores like American Eagle, Abercrombie, and Aeropostale are hitting a wall…
To give complete credit where it’s due, Jezebel’s Erin Gloria Ryan summed up Abercrombie’s and its peers’ problems perfectly, saying:
“Mall stores that sell clothing that looks like it was designed for use by a horny prep school ski team snowbound in Aspen or doomed to starve on a sailboat adrift off the Cape — American Eagle, Abercrombie, and Aeropostale — are suffering hard. According to the Huffington Post, it’s because teenagers’ tastes have changed. That’s between-the-lines talk for ‘they’re not cool anymore.'”
Harsh? Yes. Snide? A little. Accurate? Definitely.
If you look closely, the current Abercrombie apparel lineup looks a lot like the lineup from 1994 … and the lineup from 1997, and 2000, and 2004, and 2009. You get the idea. The large-lettered hooded sweatshirts and plaid button-downs remained in style far longer than most clothing fads do, but time has finally caught up with the label. Nobody wants that look anymore.
Instead, the teen crowd Abercrombie & Fitch is… er, was catering to is now spending its precious dollars on “fast fashion”, or cheaper clothing that moves from fashion shows to sales floors to kids’ closets in a matter of weeks rather than a matter of months, or years.
With fast fashion, apparel is fun, and not a competition, and the current class of teens isn’t nearly as apt to use a clothing label as a weapon in status warfare. Again, Abercrombie is being deemed the biggest victim of the new apparel-buying mindset, but American Eagle and Aeropostale are hardly immune.
There’s no need yet to write an obituary for the teen retailers’ once-relevant powerhouses, but they clearly have challenges they’re not equipped to deal with.
It can take years to shake off the damage caused by a heartless insult (intentional or not), and even if Michael Jeffries manages to stay under the radar, if he and his design team can’t let go of the 90s look they seem to love so much, the gaffe will be the least of the company’s problems.
The same goes for Aeropostale and American Eagle, even if to lesser degrees. Meanwhile, with a trip to the mall now more of a chore rather than a treat — spurring more and more online shopping — these stores are at the losing end of a shopping paradigm shift that isn’t going to reverse course anytime soon.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
Source URL: http://investorplace.com/2014/02/hey-abercrombie-fitch-90s-called/
Short URL: http://invstplc.com/1fsRjWj
Copyright ©2017 InvestorPlace Media, LLC. All rights reserved. 700 Indian Springs Drive, Lancaster, PA 17601.