It seems like a fantasy college with the coolest campus ever, appropriate for a brand that made its fortune by selling clothes to the coolest kids around. That’s the headquarters of Abercrombie & Fitch. There are no suits here, nor have there ever been. Just casually dressed young people in flip flops or tennis shoes striding purposefully — or gliding on scooters — past carefully placed trees, through well-kept meadows, over rustic plank bridges. Inside one building is a lecture hall, crowded with row after row of old-fashioned wooden classroom chairs. Nearby, a canoe hangs from a ceiling, with leather arm chairs underneath, awaiting a late-night bull session with a friendly dean — maybe the one in jeans and a casual shirt who sits barefoot, on the phone, waving at you.
The dean here is CEO Mike Jeffries and in the past year, he and the student body on this campus have seen some big changes. The changes have extended from the organization of the executive staff, through the structure of the corporation divisions, down to the look of the stores and, ultimately, to the size, shape and color of the clothing on the shelves. Public controversy, once something Abercrombie courted for its too-cool-for-you aura, rocked the retailer. In the most visible case, protests erupted after comments by Jeffries eight years ago resurfaced in which he candidly acknowledged the brand deliberately excluded some potential customers and doesn’t make plus-size women’s clothing. “I do think it’s important to say that Mike did go on record saying he was sorry,” said Jonathan Ramsden, chief operating officer of the New Albany-based company.
“People inside the company were upset because the image that was being presented didn’t reflect our values as a company.” Jeffries was a convenient target while Abercrombie was struggling to adapt to changing times, but “he’s just a brilliant visionary,” said analyst Thomas Filandro of Susquehanna Financial Group, which is a market maker and owns some Abercrombie stock. “He gets a lot of bad publicity, but he’s created a lot of magic,” Filandro said. “I don’t think Mike gets enough credit for taking something that was like the store that Indiana Jones would have shopped at, and making it what it is today, and what it was at its peak. That’s just staggering.” The company’s profile went even higher in December, when Abercrombie investor Engaged Capital pushed for the board to replace Jeffries “and reverse the years of disappointment to which shareholders have grown accustomed.”
The company fought back, splitting some duties from Jeffries, naming a new non-executive chairman of the board and naming four new independent members of its board of directors — all women, making the board 30 percent female, twice the national average. Suddenly, Abercrombie had gone from a laggard in corporate governance to a trend-setter. “Our investors recognize we’ve made the journey,” Ramsden said. “One of the reasons why we hope it’s behind us is it is distracting. It’s not helpful. It consumes a lot of management time.” By coincidence, the governance battle was occurring at the same time Abercrombie was concluding a top-to-bottom review, with all employees examining where its two biggest chains — Abercrombie & Fitch and Hollister Co. — should be headed, how to make each unique, and how to respond to their customers’ desires. “It was a very open-minded process, and it wasn’t just change for change’s sake,” said Billy May, who is the head of digital, e-commerce and customer-relationship marketing at Abercrombie.
“We sought to maintain our core, make it unique and better connect with consumers. The whole process was worthwhile. It was a good debate.” Out of that came a new approach — among employees, in the company’s store designs and in its fashions. “We want to retain core brand DNA that made some of the most iconic brands, but expressed in a more modern way that is relevant to a new generation of consumer,” said Craig Brommers, marketing director at Abercrombie. “Over the course of last year, we’ve also done a better job of brand differentiation.” Abercrombie & Fitch is now aiming for a consumer who is slightly older than the retailer’s old high-school crowd, targeting a demographic of about 21 years old and offering “that effortless, all-American style,” Brommers said.
Hollister, which in the past had essentially been a more affordable version of Abercrombie, now aims for consumers who are 16 and offers fashions inspired by “the southern California fantasy,” Brommers said. Both chains are moving toward being more trend-sensitive, cutting the time it takes from designing a fashion to selling it in stores. It’s something that H&M and Forever 21 do well. “Not fast-fast, but we needed to be faster and (have) more depth,” said Meredith Laginess, group vice president of conceptual design. “It used to be, seven years ago, there were certain cities — Paris, New York, London — where trends were hot and then spread out from there,” Laginess said.
“Now, trends that are hot are hot all over. You can be living in Kansas or Ohio and know what’s going on without being in Paris. “I know my team is inspired by teens on the street all over the world,” Laginess said. “Not just what they’re wearing, but who are the popular bloggers.” A big part of the brands’ recent fashion evolution will be the downplaying of logos on the retailer’s clothing. Contrary to some reports, however, the logo won’t go away entirely.
“I think it’s been over-interpreted,” Ramsden said. “There’s a distinction between getting rid of the logo across the chest and the more subtle logos that will still be there. We still expect some form of logos on men’s clothes, and on women’s, even less. “But nothing that big, that stretching across the chest. That goes to changes in consumer behavior.” Younger consumers have changed since the original heyday of Abercrombie in the 1990s and early 2000s. Partly because of the recession, “it’s now very cool to be thrifty,” Laginess said. Abercrombie’s current generation of customers also now curate their own look. Rather than wearing everything from one brand, they will pair cheap shoes and T-shirts with expensive jeans, for example. “It’s more of a buy-now, wear-now climate,” Laginess said.
“That speaks to why it’s so important to have newness throughout the month. It’s less about ‘Go shop all at once for the next three to six months,’ and it’s more about constant shopping.” It is “definitely the right move if they want to generate business from the millennial crowd,” said Jason Parks, a Columbus-based digital marketer who specializes in targeting millennials. “The trend for people in their 20s has been to shop at retailers like Urban Outfitter and H&M because they don’t necessarily care whether or not there is a logo on their shirt,” Parks said. “Generation Y enjoys the flexibility of being able to select from a variety of different brands and constant changing styles.” To help run the chains more efficiently, the company has created two new positions — brand presidents. In June, British retail executive Christos Angelides was named head of Abercrombie & Fitch and abercrombie kids chains; and just recently, former Express executive Fran Horowitz was named president of the Hollister Co. chain. “For a long time, we believed cross-branded was the way to go,” Ramsden said.
“We’d gotten to be a big company with a single (profit-and-loss) sheet. This will support greater internal accountability and help differentiate the brands.” Even before those hirings, however, Hollister stores were undergoing massive changes, installing all-glass storefronts and large video screens by the entrance doors — a drastic switch from the old beach hut look that famously hid the interior of the shop rather than exposed it. The change has helped bring customers into the store, Ramsden said, citing increased sales figures from test stores that have held up months after the changes were instituted.
Online changes have come fast, too, a significant point for a company whose customers are heavily engaged in all things digital. Four years ago, online sales were about $300 million. This year, the company projects online sales to hit $900 million. To satisfy those customers, Abercrombie — unlike many other businesses —is now building its mobile page designs first, designing the website for larger computers afterward. “We know that 75 percent of our email is opened on mobile,” May said.
“So we would argue most of our business is on mobile, and therefore we have to make it mobile-centric. At same time, we have to make a more expansive experience on desktop. We’ve been very conscientious about it. “If you look back 15 years, we had 50 million touch points, all through malls,” May said. “Now, there are potentially 1 billion touch points through (text messaging), e-commerce and mobile. All these things make a more dynamic selling experience, but the consumer has to allow you to be part of it.” The retailer’s efforts online have been noticed among millennials, Filandro said, “and there’s a higher percentage of consumers viewing them more positively.” Abercrombie has done “a great job recently through their social media accounts, especially Instagram, in trying to relate more toward 20-somethings,” Parks said.
“Social media will be an outlet that they will have to hit a home run with in order to bring millennials back.” Many on Wall Street believe that all the changes will make a positive impact, Filandro said. “We are bullish,” Filandro said. “We do think there’s true change occurring at this company. It’s important to recognize this doesn’t happen overnight. Both brands have an ingrained mindset about what they are. “I think instilling brand-specific leadership and accountability will further enable both brands to set their own paths. The lack of differentiation has really had a negative impact,” Filandro said.
With the crucial holiday season coming up quickly, the company believes it is in a good position to regain its position as the coolest retailer with the coolest fashions — and campus — in the world. But the consumer again will be a tough sell. “The environment is promotional,” Ramsden said, referring to consumers’ expectation of discounts. “It’s not easy to reverse that. The market is tough. “But we’ve been on a journey. We aspire to be best practices in everything. We have great brands, great people, great culture. That’s not a bad starting point.” ( By Tim Feran from The Columbus Dispatch – www.dispatch.com )