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Abercrombie & Fitch aims to recoup losses with new loyalty, merchandising strategy

March 12, 2014

Abercrombie & Fitch's iPhone app

Abercrombie & Fitch hopes to get some of its mojo back with a new focus on college students who are more in tune with mobile loyalty programs and lower price points than fickle teenagers.

The teen retailer is reportedly switching from targeting teenagers to focusing more on college students with new marketing, merchandising and prices. Additionally, the company’s Hollister brand is eyeing a bigger role in the fast fashion space.

“Once Hollister and A&F make changes to their merchandise plan, they must think mobile-first,” said Sheryl Kingstone, Toronto-based research director at Yankee Group.

“Customers will chose to shop at a business, which offers mobile loyalty programs for rewards and in-store engagement with value added information on products,” she said. “H&M and Kohl’s do this very well while also offer a strong merchandising plans.”

Ms. Kingstone is not affiliated with Abercrombie & Fitch. She commented based on her expertise on the subject.

Abercrombie & Fitch did not respond to press inquiries.

Turning around business
The teen retailer began switching around its organizational structure in January after repeat poor financial results.

Abercrombie & Fitch separated its CEO and chairman roles to downplay CEO Mike Jeffries’ control of the company and also elevated Jonathan Ramsden from chief financial officer to chief operating officer.

Abercrombie & Fitch’s net sales during the fourth-quarter of 2013 were down 12 percent year-over-year.

In February, Abercrombie & Fitch hired tech firm First Insight Inc. to help the retailer better understand its shopper.

First Insight’s technology leverages online data to determine which products are best for a retailer to offer. The idea is that Abercrombie & Fitch could potentially eliminate some promotions by understanding which products are most popular in product categories.

Abercrombie & Fitch’s app

With a new focus on the college market, Abercrombie & Fitch may be able to crack into a demographic that is more likely to turn into loyal brand advocates than fickle teenagers.

Honing in on loyalty could also potentially help Abercrombie & Fitch gain some footing in mobile.

A report from LightningBuy in November named Abercrombie & Fitch as a top retailer with the fewest clicks to buy on mobile (see story).

However, solely focusing on commerce for a demographic that does not have a lot of buying power money is not likely to get Abercrombie & Fitch ahead of the competition.

Instead, the teen retailer would benefit from including some in-store exclusive features to its app, similar to Urban Outfitters’ app.

Urban Outfitters leverages in-app news feeds, rewards and social media to connect with teenagers (see story).

Fast merchandising

Abercrombie & Fitch-owned Hollister is also mixing up its marketing strategy to make up for slow sales.

Hollister will now switch over to a fast fashion brand to compete head-on with H&M and Forever 21 and other retailers who have won over millennials by continually rolling out new products at low price points.

Mobile plays a key role in how these consumers interact with the brands beyond on-device sales and conversions.

For example, H&M’s app enables consumers to receive exclusive promotions and offers and lets consumers share content via social.

Forever 21 includes in-app puzzles, games and photo contests to keep fans continually interacting with content.

Additionally, mobile could help improve inventory and shelf problems to drive down operational costs and improve customer service.

According to Ms. Kingstone, Hollister’s app has steadily been losing active users. One of the ways that the brand can make up for its loss with features such as look books, offers and social shopping.

“When Hollister launched their mobile app, there was strong demand,” Ms. Kingstone said.

“However, activity quickly dropped off,” she said. “Active users dropped significantly way below industry average. I can infer that there was little in-app engagement and value added information.”

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York 

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