Abercrombie & Fitch

Is it unethical to be exclusive?
Case Study
 Contents

Executive Summary.............................................................................................................................2

Identification of symptoms..................................................................................................................3

Problem Statements.............................................................................................................................5

Problem 1.........................................................................................................................................5

Problem 2.........................................................................................................................................5

Problem 3.........................................................................................................................................6

Fishbone analysis I..............................................................................................................................6

Fishbone analysis II.............................................................................................................................7

Fishbone analysis III...........................................................................................................................8

Identification and evaluation of alternatives.....................................................................................9

Recommended Course of Action.......................................................................................................12

Immediate (1 – 3 months)..............................................................................................................12

Short Term (3 – 12 months)..........................................................................................................12

Long Term (12 – 36 months).........................................................................................................12

Conclusion..........................................................................................................................................12

Appendix A.........................................................................................................................................13

References..........................................................................................................................................14
 Executive Summary

Abercrombie & Fitch was founded in 1898 by two partners named David T. Abercrombie and

Ezra Fitch in Manhattan Borough of New York City. Abercrombie Co. in its earlier days was

only targeting hunters and fishermen equipment for outdoor gear. In 1988, the company

bought a significant interest in the apparel business and started targeting three specific

demographic segments - Abercrombie Kids (ages 12-14 Years), Hollister Co. (ages 15-18

Years) and college students (ages 19-22 Years). A&F wanted to reinvent the brand and

establish a segmented target market as it was not going through a good phase. The company

hired Michael Jeffries as their new CEO with a vision to focus on a clearly defined market.

His strategy focused on using sex appeal (cool, sexy, younger) to revitalize the brand to

become the leader in the fashion world. The company did well for approximately 14 years

and it covered the global market with 1000 stores worldwide with annual sales of USD 4.5

billion [ CITATION Amy \l 16393 ]. d.

The main issue highlighted in this case was criticism from consumers for using this

segmentation strategy as it did eliminate the mass who were “not cool and good looking.”

Even though Jeffries was using this exclusive strategy to create a quality brand, this offended

the consumer. Secondly, it was body-shaming females who only fit into the plus-size or large

size clothes as the company was not offering large or extra-large size for females and the last

pant size was 10 in-spite of the fact that average US woman’s pant size is between 12 to 14.

The first recommendation to this problem could be including more sizes and varieties in the

same stores so that it can cover the entire segment in females rather than just focusing on one

particular segment. This will help the consumer to shift their perception about the company

from non-inclusive to inclusive. Secondly, the company can continue with a similar line of
products as if they shift their target market, they might lose their loyal customers as the

company stands out in terms of their cool and sexy exclusive strategy. Moreover, attracting

new customers is much costlier than retaining old and loyal customers. Thirdly, to avoid the

issues of controversies among the plus-size consumers and media, the company can actually

start online stores that can cater to larger markets and especially plus sizes consumers. This

will not affect the prestige of the company as the store will still serve those exclusive

customers and e-commerce can include other customers.

Identification of symptoms

1. A&F has clearly defined the target market for cool, sexy and good-looking people.
2. This exclusivity in terms of segmentation has mass appeal from people however, it is

also creating a negative impact on the brand reputation as it is offending the

consumers who are not within this target market.

3. The brand was offering apparel only for the slimmer youth and this created buzz in

media and consumers as there were people who wanted to be part of this brand but

they can’t because of their size.

4. Backlash from the celebrities like Ellen DeGeneres and Kristie Alley in media
regarding the sizing issue had negative consequences on the overall sales of the

company.
5. Consumers created bad memes against A&F on social media such as Facebook,

Twitter, Blogs and other news websites which led the company towards downfall in

sales by 10% and women apparel sales by 30%.

6. Furthermore, the company had a similar level of expectations from their employees

to look good, do makeup during their work hours. One of its employees was fired for

wearing a hijab and this created the wrong image and negative perception about the

company.
 7. There was criticism on Jeffries himself regarding body image as well as gender

stereotypes, that the ideal woman is tall, svelte and beautiful whereas the ideal man is

handsome and masculine which was promoted very wrongly in the market.
8. With an increased number of criticisms, it might affect the company’s market share in

the longer run.

9. Entering into a newer target segment and expansion of the range of sizes might attract

a greater number of customers which will result in increased market share and

popularity of the brand.

10. Targeting mass might decrease the value of the A&F brand and they might lose their

loyal customers as the brand will become average and will be no longer exclusive.
11. Companies like H&M who expanded their range and served plus-size consumers by

promoting plus-sized models and mannequins also got allegations for promoting

obesity in spite of the right intentions. There are high chances that A&F can face

similar challenges if they plan to expand their target market.

12. Also, larger sizes will require more investments in terms of purchasing more fabrics,

production equipment, etc. and this might lead to complex production systems and

reduced margins.

Problem Statements

Problem 1

A&F faced criticism from consumers for using sex appeal as their exclusive strategy

bases look (good looking, cool, sexy, slimmer youth) for their target market.

The company faced lots of negative comments and criticism for using this exclusive strategy

as it badly affected the brand reputation of A&F and due to which company also saw a

sudden downfall in terms of sales numbers. It insulted the consumers who were not slim and

can’t find clothes as per their size in the stores. This led to the rise of questions amongst the

media and magazine companies A&F going to use the same strategy in the near future.
Problem 2

Allegations from the consumer for body shaming and gender stereotypes.

The company was advertising its products by sending the wrong message to the consumers

that an ideal woman is svelte and beautiful, while the ideal man is handsome and masculine.

They also featured large men as cool in their advertisement but there was no large woman in

the ads. This exclusive target marketing practices created impractical and unhealthy

expectations.

Problem 3

If they maintain the same line, they are going to get backlash from consumers, media,

etc. and if they add full range the company is going to incur more cost, as well as they,

might lose some loyal customers.

Maintaining a similar brand image might blow up the issue by getting more media attacks,

negative reviews on social media and can cause outrage among the public. This in the long

run that will lead to protests, petitions that how the brand is affecting teens. On the other

hand, if they are going to introduce more sizes it will also cost more as the production

capacity need to be increased which can reduce margins, customization is required. However,

it might increase the market share if they attract the customers who were upset about their

target strategy.
 Fishbone analysis I

Body shaming Company’s Strategy

The company The company focuses on

doesn’t provide XL catering to customers who
and XXL sizes for are good looking according
women to the company

A&F faces Public criticism

The CEO made

statements about how Other brand took advantage
the target market is only of the weak moment and
good looking and sexy started promoting how
people inclusive they are

CEO Competitors
 Fishbone analysis II

Negative marketing Social media

The company is A&F is being trolled on

facing a lot of media and famous celebs are
negative publicity also criticising the company’s
due to its strategy strategy
and choices

Decrease in sales

The customer are

unhappy about the CEO Other brands target market
statements in media and is bigger, and they are taking
how they body shame advantage of the backlash
make sexist remarks

Customer Competitors
 Fishbone analysis III

Loyal customers Media attacks

If company changes
its strategy, they The media attacks will
might lose their loyal increase if they keep their
customers existing strategy

Strategic Dieleman
Making new sizes will
require the company to
put in extra costs and
might result in reduced
margins

Production cost
 Identification and evaluation of alternatives

1. Jeffries should apologize for this strategy and should consider and work

accordingly what mass market has to say.

Pros:

 This will help to frame the brand reputation as well as it will represent A&F as

a customer-centric organization.
 The customer might give some ideas which can be applied in the future and it

will further help in increasing the market share

Cons:

 This might upset the loyal customers as they are attracted to this brand

because of its focussed exclusive range apparel.

2. A&F must rebrand itself and its standards. To fix their outdated target audience,

one that only includes “cool people,” A&F must realign its priorities from the top

down. Everyone must be under the same understanding that the company is

aiming to be inclusive towards all customers of all sizes and appearances

[ CITATION Che16 \l 16393 ].

Pros:

 This will fix the identity and perception of the organization. It will reflect that

the company has good values and ethics.

 It will target a larger audience inclusive towards all customers of all sizes and

appearances.
 This will increase the footfalls of the customers in their store which will help

in gaining back the market share.

 Cons:

 Getting into newer segments will incur some costs related to changes in the

production style, hiring of more employees, equipment installation, market

research, etc. as well as lots of time and efforts.

3. The company can focus on eCommerce and online selling portfolios by especially

promoting plus sizes and markets other than the US.

Pros:
 This will promote the company’s focus in managing both the segments – plus

sizes and cool looking. And at the same time, they can retain their loyal

customers in the same brick and mortar as well as attract more customers in

their online stores.

 This approach will eliminate the allegations on the company as they will not

be counted as superficially appearance cantered company.

Cons:

 Expanding its network via eCommerce requires investments in the supply

chain, data management, research, network etc.

4. Increase in sales tapping into the market potential of about 130 million people in

the US that it currently does not cater to [ CITATION Tan18 \l 4105 ]. See

Appendix A for the 2018 US population chart.

Pros:
 This will increase company revenue which it can use to enter markets of

different segments which it currently does not exist in.

 Customer perception about the brand will change and those wearing A&F

clothing will present themselves as brand ambassadors. Rise in customer

loyalty.

Cons:

 The company will no longer be focusing on the “cool and good looking” niche

market.
  The brand will constantly have to reinvent itself to keep with its larger

customer base and needs.

Recommended Course of Action

Immediate (1 – 3 months)

Since the sales are on the decline, the Public Relations department should advise Mr. Jeffries

to apologize for his statement to manage the firm’s reputation. His statement should also

include a new plan to be inclusive which will re-brand the face of the company.

Short Term (3 – 12 months)

Individual departments of production, sales and marketing, R&D, human resources, and

finance need to work together to come up with a plan of execution. These departments will

need to work in conjunction with their Executive heads and a Project team to implement a

new line of products that includes “plus” size clothing. Once the plan is ready for execution,

Michael Jeffries will need to make another statement confirming timelines for the availability

of clothing

Long Term (12 – 36 months)

Depending on how well A&F has set up its supply chain to extend its line of clothing, new

clothing should first be available in their brick & mortar stores, so people can help revive the

brand through social media by stepping foot through their doors. In the next phase, the

clothing will be available through their eCommerce partners where the brand can now ship

their clothing not just nationally but also to the North American market.

Conclusion
The company has been receiving a lot of negative publicity. The statements coming from the

CEO are quite sexist. The CEO will need to take responsibility for his actions and apologize

in public for making sexist remarks. A&F also needs to change its strategy, have a wide target

market and rebrand itself. The lost sales can be recovered by eCommerce and with the help of

social media wherein, the company can promote its new brand. There needs to be a long-term

plan which will incorporate short term objectives of the company to ultimately have an

increase in sale and change its public image.

 Appendix A

References
Case study. (2019). Abercrombie and Fitch – A Case Study. Retrieved from
https://acasestudy.com/abercrombie-and-fitch-a-case-study/
Henry, T. A. (2018, November 26). Adult obesity rates rise in 6 states, exceed 35% in 7. Retrieved from
AMA: https://www.ama-assn.org/delivering-care/public-health/adult-obesity-rates-rise-6-
states-exceed-35-7

IESE Business School – University of Navarra. (2014, Oct). ABERCROMBIE & FITCH: A BUSINESS
ETHICS PERSPECTIVE IN THE FASHION INDUSTRY . Retrieved from
https://www.studocu.com/en/document/university-of-the-philippines-
diliman/organizational-management/mandatory-assignments/ba-101-abercrombie-fitch-
case-study/4034981/view

Lamare, A. (n.d.). The history of Abercrombie & Fitch, a brand searching for a new identity. Retrieved
from Thinknum Alternative Data: https://media.thinknum.com/articles/abercrombie-and-
fitch-hollister-history-relevancy-crisis/

Stromfeld, C. (2016, Dec). Case Study Report: Abercrombie & Fitch Co. Retrieved from
https://cstromfeld.files.wordpress.com/2017/03/af-case-study-report.pdf

U.S. Census Bureau. (2019, September 19). Google. Retrieved from Public Data: Population:
https://www.google.com/publicdata/explore?
ds=kf7tgg1uo9ude_&met_y=population&idim=country:US&hl=en&dl=en