The reversal of fortune of youth apparel brands Aeropostale and Abercrombie & Fitch is serving is unfolding as one of the most visible case studies of what is working with today’s customer. Aero has not only been posting consistent double digit gains during the recent economic downturn, while A&F has seen its sales drop at the same pace, but analysts point out that Aero appears to be gaining share of mind based on online traffic and social presence.
Aeropostale continues to be the bright spot in apparel sales with steady growth. The retailer reported record May sales results, boasting a 30% increase in total net sales. In a recent sales call, the company noted strong customer reaction to its summer collection, and its merchandise margins for the month have increased over 2008.
On the flipside, Abercrombie & Fitch, a young apparel retailer recognized for its brand identity, experienced a 22% decrease in May sales. Although A&F finally budged on its full-price strategy with summer clearance offerings, the effort may have been too little too late. “A&F’s problem, going into early 2008, was simply higher prices and perhaps too many stores, although overall store productivity was generally stable thanks to high margins,” says Richard Hastings, Consumer Strategist, Global Hunter Securities, LLC.
For these two retailers in the same sector, strategy and price seem to have made all the difference. Aeropostale has been aggressive with email marketing and steep discounts, while A&F sought to stay true to its repertoire of full-price or bust. It seems that a result, Aeropostale is flying high with a bigger chunk of market share. “The contemporary clothing shopper never went away, and the industry that makes this concept was never as badly damaged as some other consumer products,” says Hastings. “This is the foundation for success, and the rest is just fashion timing and execution, and lost of inventory at affordable prices.”
Global Hunter Securities monitors online traffic every month assessing online traffic and social-branding awareness, which, Hastings says, are integral aspects of the overall package of indicators for branding power, sales momentum and competitive trends.
Aero’s May online unique visitor flow was a powerful 1.45 million visitors, up 43% year over year, against Abercrombie’s 774,025 visitors, but down 12% year over year according to Compete. “Not only is the Aeropostale traffic bigger by far, but it’s growing while the other is shrinking, something that has to be contained before it spills over into other loyalty and conversion and traffic issues,” notes Hastings.
Hastings notes that although Aero and A&F are not the same business, there are overlaps between the two. “…In A&F, the concept is a coherent lifestyle and store experience, and all the pieces fit together. In Aeropostale, you have a looser structure and, therefore, more flexibility in the marketing of the business, whether reaction or proaction. So… Aeropostale is really doing its thing better than ever, and the current environment favors them, so long as they executive and stay right on track. So far, this is the case, so the sales outlook remains favorable.”
“We do not see the longer-term market share situation as being a function of management here: the A&F concept is a tightly integrated package of store experience, product, lifestyle, and demographics and income,” says Hastings. “It is powerful when conditions are right, but perhaps not so flexible when conditions are not so right, and they are certainly not so right—right now.”
Due to the economy, it is no shock that pricing is the top priority, specifically for younger shoppers. “There is sufficient evidence that casual clothing shoppers generally are looking for price, fashion, value and look,” says Hastings. “Store experience and the integrated lifestyle experience are a bit secondary right now. A&F was able to achieve a strong following for years without getting too deep into specific, narrow fashion trends. The concept was and remains cohesive and integrated. Aeropostale right now has solid fashion timing in casual, and it is successful with younger shoppers ages 9-18, in a situation where price matters very much.”
A&F, meanwhile, is apparently committed to sticking to its full price strategy. A&F Chairman & CEO told The Columbus Dispatch Thursday, “We will continue to drive bottom-line performance and improve operating efficiencies, but we will not sacrifice the long-term positioning of our brands for short-term results.”