A&f Analysis

    The article I chose to write about for this assignment is “Modesty Is the New Abercrombie” (By Lindsey Rupp, May 22, 2014). Founded in 1892, Abercrombie & Fitch (A&F) is a famous retailer focusing on casual wear for teenagers.

    I feel the news is interesting because before I came to the US, I actually thought A&F was so successful and famous that a lot of Singaporeans were wearing it, with its conspicuously big logo. And back in China, although there were only 2 retail stores, people were even crazier about it and there were countless imitations online. So it surprised me that A&F is actually suffering from huge customer loss in the US.

    A&F was a prime name in the apparel and accessories industry a decade ago, because during Mike Jeffries’ tenure, he employed several strategies that worked very well at that time, but lately resulted in the company’s downfall. For example, the strategy of not offering plus-sized clothes worked very well initially, but now faced significant media criticism. Therefore, A&F is implementing new strategies to regain some of its lost brand value.

    This story relates back to the topic of strategy. In order to create competitive advantage, an organization needs to have core competences, and more importantly, the strategy must match with the environment. A&F did have core competencies, including its marketing tools like attractive male models, its interior designs like dim lights and perfume, which all made it unique and outperform competitors a decade ago. But now the environment has changed, as the generation that liked it has grown up and the new generation like shopping either in fast fashion stores or online. So wearing A&F is not something that can show off among teenagers, and its price is still that high. Its strategy didn’t change with the environment, and that’s why it’s suffering from the sales loss.

    The scarce resource in this industry, I think, is to catch the trend and know what exactly your target customers need. Jeffries identified the target and their need, which brought A&F to success, but now he failed to do so. Therefore, in the value creation cycle, it is broken between the competitive advantage and obtaining scarce resources.

    In terms of four levels of strategy, first of all, at functional level, A&F is still highly differentiated in sales and marketing, and now it is improving on research & development and HR management. Secondly, at business level, A&F is still specializing in the teenager segment, which could focus all of its resources on this segment. But facing its rivals, A&F now has to lower its price, which needs to lower costs at the same time. Thirdly, at corporate level, however, in its new strategy, A&F are not going to expand into new areas or businesses. Lastly, in terms of global expansion, A&F is going have more geographic locations, especially in Asia. A&F opened its Singapore flagship store in 2011. In April 2014, Shanghai flagship store was opened, and just four months later, the second store in China was located in Chengdu, and A&F is going to have more in China. I think global expansion is a good strategy for A&F because Asian people are still very interested in it.