How did Abercombie & Fitch Lose $5.6 Billion in 16 Years?

Did you know that Abercrombie & Fitch used to sell shotguns with interchangeable barrels as well?

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Founded in 1892 by David T. Abercombie, Abercombie & Fitch used to deal mostly in high-quality camping, hunting, and fishing gear.
The Focus was mostly on high end clientele who used to have adventure as a hobby
​David was joined by Ezra Fitch, in 1900, Fitch was a successful Lawyer and invested in the company, which is when the company got rebranded to Abercombie & Fitch.
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​The brand was built and grown on the idea of exclusivity and that extended to highly affluent social personalities as well like Emilia Earhart.

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Did you know that the brand styled some of the most iconic figures of the 20th century, including the likes of Ernest Hemingway and President Theodore Roosevelt !!

Unique Value Proposition

• Premium Quality: Their products were made with the highest quality raw materials and meticulous attention to detail, catering to serious explorers and professionals.
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• Personalised Customer Experience: Their flagship stores featured extraordinary amenities such as in-house shooting ranges, fishing pools, and extensive libraries on wilderness topics.
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• Exclusivity Impression: Customers were drawn to the brand not just for the products but for the lifestyle and status it represented. Especially due to its association with prominent figures such as President Theodore Roosevelt, aviator Amelia Earhart, author Ernest Hemingway, and polar explorer Roald Amundsen.

Business Success and Social Relevance

• Brand saw phenomenal growth between 1920s- 1930s, also called the Fitch years where Ezra Fitch is credit with the success if the brand.
• The Brand pioneered mail-order catalogs, reaching customers nationwide
• In 1960s, they reported annual sales exceeding $50 million, which will be equivalent to over $400 million today.
• Abercrombie & Fitch went public on the New York Stock Exchange (NYSE) in 1996, almost 110+ years after it was founed.
• By 2000s, Launched subsidiary brands like Hollister Co., Abercrombie Kids, and Gilly Hicks, which have become successful in their own right.

Brand Identity Shift After its Acquisition

• Abercombie & Fitch was acquired by "The Limited Inc.", which is also the parent brand of "Victoria's Secret".
• This marked a repositioning in the brand's identity, its shifted from an Outdoor brand to a beacon of trendy, casual apparel targeting teenagers and young adults.
• This also showed in their marketing campaigns where shirtless male models and provocative advertising campaigns, became quite the norm.
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Did you know the Abercombie only stayed in the company till 1907 but still the brand carries his name today even after he sold his entire share in the company?

This differentiated Abercombie & Fitch from competitors as it focussed more on Style & Exclusivity.

With New Fame, Came More Controversies

• Exclusionary Practices:
  • Faced lawsuits alleging discriminatory hiring based on looks and ethnicity.
  • In a 2006 interview, Jeffries stated that A&F was exclusionary, targeting "cool, good-looking people," which sparked public backlash.
• Cultural Insensitivity:
  • Sold t-shirts with racially insensitive slogans, leading to boycotts and demands for apologies.
  • Paid $40 million in 2004 to settle a class-action lawsuit over discriminatory practices.
• Brand Image:
  • Criticised for hyper-sexualized marketing aimed at teenagers.
  • Growing public disapproval affected brand perception and customer loyalty.
• Store Closures
  • The brand announced closures of over 100 stores due to poor sales and high operating costs.
  • As a result, brand started to focus on e-commerce and revamping remaining physical stores.

Brand Resurrection Attempts

Post the exit of CEO Mike Jeffries in December 2014, Abercrombie & Fitch faced key challenge of rebuilding its brand image and reconnecting with a disgruntled customer base.
The new leadership, led initially by Executive Chairman Arthur Martinez and later by CEO Fran Horowitz (appointed in 2017), implemented a comprehensive strategy to undo the damage from previous years and steer the company toward a sustainable future.

Some Key Positives here:

• Brand Image Overhaul
• Product Reinvention
• Digital Transformation
• Cultural Overhaul

5 Reasons Abercombie & Fitch Lost $5.6 Billion in 16 Years

1. Lack of Inclusivity: The company's previous focus on a narrow definition of "cool" excluded many consumers.
   Embracing inclusivity and diversity is crucial for building a broad customer base and fostering positive brand perception.
2. Resistance to Change: Provocative marketing became outdated as consumers gravitated toward authenticity and subtlety.
   Markets and consumer tastes evolve rapidly, hence the businesses must stay agile and responsive to remain relevant.
3. Ignoring Consumer Feedback: Abercombie & Fitch responded very late to changing consumer preferences and even took a longer time in acting on them.
   Prioritising customer experience and feedback should have been key from the beginning as it leads to stronger relationships and repeat business.
4. Toxic Leadership: New leadership acknowledged past missteps and actively worked to transform the company's culture and strategies.
   Its vital since Leadership sets the tone for company culture and strategic direction.
5. Adapting late to Digitalisation: Missing out for long, on investing in their online presence and social media, denied Abercrombie & Fitch to meet a large chunk of potential customers.
   Embracing e-commerce and digital marketing is vital for reaching today's consumers, who increasingly shop and engage with brands online.