Abercrombie & Fitch. Marketing Analysis

I. Table of Contents

1. Introduction

2. General Information

3. Macro Environment and competitive audit
3.1. PEST Analysis of Abercrombie & Fitch
3.1.1. Politics Factors
3.1.2. Economic Factors
3.1.3. Social Factors
3.1.4. Technological Factors
3.2. Abercrombie & Fitch Competitive Analysis
3.2.1. Top Abercrombie & Fitch Competitors
3.2.1.1. American Eagle Outfitters Company Description
3.2.1.2. The Gap Company Description
3.2.1.3. J. Crew Company Description
3.2.2. Competitive Forces Analysis- Five Forces Model
3.2.2.1. Threats of Rivalry
3.2.2.2. Threats of New Entrants
3.2.2.3. Threats from Substitute Products
3.2.2.4. Threat from Bargaining Power of Supplier
3.2.2.5. Treats from Bargaining Power of Buyers

4. Internal analysis
4.1. The value chain
4.1.1. Primary value chain activities
4.1.2. Support activities
4.2. SWOT Analysis of Abercrombie & Fitch
4.2.1. Strength
4.2.2. Weakness
4.2.3. Opportunity
4.2.4. Threat

5. Conclusion

II. Bibliography

1. Introduction

This report does not claim to be a complete analysis of Abercrombie & Fitch Co, but it provides a general overview of the situation of the company. It looks at internal and external factors using marketing tools like PEST- or SWOT-analysis. Because of the better data situation it focuses on the US market.

2. General Information

Abercrombie & Fitch Co. (A&F) is a stock exchange listed clothes company. In its 1,125 shops it sells high quality casual clothes, personal care items and accessories for men, women and kids. It consists of the brands Abercrombie & Fitch, Abercrombie, Hollister and RUEHL. Its headquarter is located in Albany Ohio (USA) since 2001.(Abercrombie & Fitch, 2009)

In 1892 David Abercrombie opened a shop called Abercrombie & Co which specialized in camping equipment. In 1904 Ezra Fitch joined the company and the name was changed to Abercrombie & Fitch (Pitzke1, 2007).

With a change in the management in 1992 Abercrombie & Fitch repositioned itself in the market shifting its main focus on young and casual lifestyle fashion with the main target group being 18 to 22 year-old college students, male and female With the brand Abercrombie launched in 1998 the Company extended its business and tried to reach boys and girls between seven and fourteen.

In 2000 it launched another brand called Hollister. With this brand A&F aims to reach youth between the age group 14 to 18 years of age. It offers a casual product range, based on the California surf lifestyle, on a price level under Abercrombie & Fitch. In order to reach a wider target group, in 2004 it launched REUHL’S which is intended to reach people aged 22 to 35 years of age This brand is a mix of trendy fashion and casual sportswear targeted on the modern post-college customer.

With its different brands and products which represent different lifestyles the Company tries to reach a specific type of customer: the cool, fashion-aware, trendsetting and sophisticated boys and girls, youth and young grown ups.

The represented lifestyles are reinforced by the use of visual presentation of merchandise, music, sales associates that are part of the target group and fragrances. The in-store marketing is designed to deliver each brand’s main element and personality. In order to do that the stores design, music and furniture are carefully choosen and used to create a totally different shopping experience.(Pitzke2, 2007) 3. Macro Environment and competitive audit

3.1. PEST Analysis of Abercrombie & Fitch

3.1.1. Politics Factors

Political factors can have a direct impact on the way business operates. Every decision made by the government can have a direct or indirect effect. (redOrbit, 2009).

Every country that A&F operates in has a free market-oriented economy with rules and regulations to protect patent and intelligent right from imitation. It helps companies to protect their property. (Abercrombie & Fitch, 2009). But there are also rules, regulations and laws A&F has to follow such as rights of employees, workers and shareholders. The effect employee laws have are significant, because of the labour intenseness of the apparel industry. Trade regulations play an important role too, as it is exposed to overseas competition from nations where their employees receive much lower wages (Bates, 2009).

3.1.2. Economic Factors

Like every business A&F is affected by booms and slumps of the economy as a whole. Furthermore factors like the oil price, inflation and interest rates affect A&F. 90 Percent of total expenditures consist of the major components like food, services, housing and apparel. Of these only apparel and service had a statistically significant change of a 6.2 percent decrease in 2003. (Bureau of Labor Statistics, 2006)

3.1.3. Social Factors

Population characteristics are called demographics. In other words statistics about age, sex, income, ethnicity, marital status and similar personal attributes on individuals in a region. Having a good understanding of this information can assist in determining whether a product has any potential or appeal to customers. (Barney, 2006)For instance, the population in the United States increased between 1990 and 2000 by 13 percent. Of the 284.1 million people, 143.4 million were female and 138.1 million male. 26 percent were 18 years old or younger and 62 percent were between 18 and 64. From 1990 to 2000 both groups grew about 13 percent. (U.S. Census Bureau, 2001)

Other growing trends are happening in the apparel industry. “Today's clothing needs to offer more than just a fashion statement--it needs to offer value and practicality. That's the thinking behind the growing industry of performance apparel”. Fitness and leisure-time clothing are the hottest segment of the performance apparel market today and by 2010, some 40 percent of all garments sold will have some performance apparel element to them.(Entrepreneur, 2006)

3.1.4. Technological Factors

Although there was a boost in the apparel industry due to innovative technology it still is expected to stay labour intensive. Computerized sewing machines reduce required training time and increase operators’ productivity. (Bureau of Labor Statistics, 2006)

Internet and Ecommerce offered new channels for sales and marketing. On the other hand it simplifies comparison and delivers transparency of the whole market to the target group.

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