Strategic Plan for Abercrombie & Fitch - Case Study Example

Strategic plan: Abercrombie & Fitch Table of Contents Table of Contents 1 Situation analysis 2 SWOT Analysis 2 Objectives 4 Identification of Consumers 4 Overall strategy 5 Controllable variables 5 Uncontrollable variable 5 Response to environment 6 Control 7 Evaluation 7 Works Cited 8 Strategic plan: Abercrombie & Fitch Situation analysis Abercrombie & Fitch (A&F) concentrates in providing casual wears to the young generations. The company is headquartered in Ohio and presently owns more than 400 stores in the United States (US). The company first opened its retail stores in 1892 in New York City (“Company Mission Statements - Complete List of World’s Largest Retail Missions”). A&F operates under three offshoot brands namely Gilly Hicks, Hollister Company and Abercrombie Kids. The mission of the company is to develop innovative and high quality merchandise that has the ability to satisfy customers and style them appropriately. They also aim at discovering new styles so that they can distinguish themselves from the competitors. The sales of personal care and apparel through the stores are extremely competitive as there are numerous participants in the retail industry. However, the company has diversified its products by innovating new trends in clothing and has adopted the changing demands of the consumers better than their competitors. It has developed and maintained a strong brand image in United States by marketing its products to the different parts of the diversified demographic markets. A&F undertakes aggressive promotional activities without harming the inspirational nature of the brand equity (“About Us”). SWOT Analysis Strength 1) A&F has become well known worldwide and has good brand equity. 2) There are more than 9000 employees working in the company, who are involved in perfect craftsmanship. 3) They are regarded as one of the largest retailer of casual clothes, which owns a number of subsidiary brands. 4) They employ unique sales strategy and excellent promotional strategies, which have the ability to make higher brand recall. Weakness 1) They do not have strong direct-to-consumer sales channels. 2) The direct-to-consumer operation is subject to a number of risks, which have the ability to affect the sales figure of the company. 3) Failure to successfully implement few growth strategies pertaining to material handling. 4) Fluctuation of sales based on seasons. 5) Inability to protect the company trademark can affect the brand image negatively and limit the scope of penetrating new markets. Opportunity 1) Online retailing is gaining importance with the passage of time. 2) They have the opportunity to expand to untouched markets and great global foothold. 3) The company can enter new markets through franchise and take over. Threat 1) Huge variations in foreign currency exchange rates impact the sales of the company. 2) Threat to information technology can disturb the operation of the company. 3) Extreme weather conditions changes negatively affects the operation of the company. 4) Market share affected by the increase in competition and pricing pressure. 5) Interruptions in flow of merchandise from the main vendors and manufacturers can discontinue the process of production. 6) Exposed to risks arising from credit card fraud (“Company Mission Statements - Complete List of World’s Largest Retail Missions”) Objectives The sales objective of the company is to create string direct-to-consumer sales channels so as to facilitate growth. A&F believes in increasing sales by innovating and creating new casual wears are preferred by the younger generation. Though, the changing taste and preferences of the individuals have affected the company sales to a great extent, the company has tried its best to meet the demand of the market. A&F positions itself as a premium brand, which focus on its styles. Its main objective is centered on revenue and growth, which is achieved through sales. The brand name enables the company to grow and create endless opportunities for growth. It also employs the most talented youths around the globe. It permits higher profit margins and encounters lesser risk for entering into new business concepts. It encourages innovation and ensures profitability through it (“Investor Presentations”). A&F prides in creating classic, casual and “All-American lifestyle brand of clothing” (“What Abercrombie & Fitch Can Teach Us About Brand Positioning Strategy”). The company employs a proactive approach in order to combat against the challenges. The customers praise our brand as it not only gives them comfort but also satisfy them by fulfilling their demands (“Investor Presentations”). Identification of Consumers A&F believes in concentrated marketing as its target customers are young population, who are cautious about fashion (“What Abercrombie & Fitch Can Teach Us about Brand Positioning Strategy”). The company employs good looking staffs in the stores so that they can attract cool and good looking customers. A&F manufactures cloth for plus size customers also. During May 2013, it was observed that the company stopped manufacturing clothes for sizes XXL and XL (“Abercrombie & Fitch Refuses To Make Clothes For Large Women”). However, with the increase in demand of the same, the company concentrated in manufacturing plus size clothes so that they can fulfill the desire of fat ladies too (“Abercrombie & Fitch targets plus size customers as sales decline”; “Investor Presentations”). Overall strategy Controllable variables Goods: A&F aims at serving the young population by providing them the All American style of clothes that are presently popular in United States. The fashion trend of the company is design driven and it promotes the Premium Jeans. Price: A&F clothes have premium price and it is the highest in the youth clothing industry. The prices are double in the international stores than in America. Place: The Company serves the American market and fulfils the demands and desires of the younger generation, who are conscious regarding the fashion trends. Promotion: The Company spends extensively after promotional activities. It advertises the brand in television, radio and magazines. It gives promotional discounts in store and online, which helps the customers to get the best brand at a lower price (“Investor Presentations”). Uncontrollable variable Consumer environment: A&F targets the younger population who are fashion conscious and makes premium clothes which are of higher prices. It also offers discounts on online sales and in stores so that middle income group can also afford the clothes and experience the brand. The demand of these consumers is changing at a high pace, which is a big challenge for the company. Competitive environment: There are many participants in the retail clothing industry, which have the ability to threat the existence of A&F. The competitors of A&F in the US market are American Eagle Outfitters and Aeropostele. Legal environment: The retail clothing industry is subject to many law suits. A&F have often encountered challenges from the government when it has neglected the law suits. Economic environment: The price of A&F products is expensive as a result recession can affect the sales of the company. Technological environment: Internet and online purchasing have become prominent in the few years. It has encouraged A&F to advertise their products in their websites so that the customers can purchase it online. Response to environment A&F have gained prominence since its inception by providing premium clothes to the young generation and making them trendy and fashionable. However, the company has to encounter a number of challenges, which have the ability to decline its sales (Investor Presentations”). Recession is a huge threat to the company as it sells higher priced products. In order to respond to the economic environment, A&F should aim at providing lower priced products so that their sale does not decline drastically during any uncertainty. The company distinguishes itself from its competitors by providing its customers premium branded clothing, which has high quality. Control Evaluation A&F have encountered huge fall in business ranking as they could not respond to the changing desires and needs of the customers. Its consequence is fatal to the company as it lost its position in the market (“Abercrombie & Fitch's brand value falls in ranking”; “What Abercrombie & Fitch Can Teach Us About Brand Positioning Strategy”). Works Cited “Abercrombie & Fitch Refuses To Make Clothes For Large Women.” Business insider. Times Internet Limited, 2013. Web. 6 Oct. 2014. “Abercrombie & Fitch targets plus size customers as sales decline.” The independent. I100, 2013. Web. 6 Oct. 2014. “Abercrombie & Fitch Under Fire for Outdated Brand Image.” brandchannel. Brandchannel, 2014. Web. 6 Oct. 2014. “Abercrombie & Fitch's brand value falls in ranking.” The Columbus Dispatch. The Dispatch Printing Company, 2014. Web. 6 Oct. 2014. “About Us.” Abercrombie & Fitch. Abercrombie & Fitch, 2014. Web. 6 Oct. 2014. “Company Mission Statements - Complete List of World’s Largest Retail Missions.” About money. About.com, 2014. Web. 6 Oct. 2014. “Investor Presentations.” Abercrombie & Fitch. Abercrombie & Fitch, 2014. Web. 6 Oct. 2014. Web. 6 Oct. 2014. “What Abercrombie & Fitch Can Teach Us About Brand Positioning Strategy.” Codeless. Codeless Interactive, LLC, 2014. Web. 6 Oct. 2014. Read More