Abercrombie and fitch market segmentation

For this assignment, read “Abercrombie and Fitch Co.: Looking to the Future,” on pages 87–89 of your textbook. Then visit the Abercrombie and Fitch website for the most up-to-date information about this retailer. In a two-page essay, evaluate Abercrombie and Fitch’s market situation and the company’s opportunities for growth. Be sure to discuss these factors in depth, citing sources to support your position. Your essay should relate to concepts discussed in your textbook, as well as other scholarly resources.

Your essay should include the following information:

Develop a SWOT analysis for Abercrombie and Fitch based on the outline in Chapter 3. Use the sample on page 75 as an example.

Based on your SWOT analysis and the information you have learned about the company, what recommendations would you offer the company for future growth?Part 1 Comprehensive Case Abercrombie & Fitch Co.: Looking to the Future* * The material in this case is adapted by the authors from Trefis Analysis for Abercrombie & Fitch Co. (Boston, MA: Insight Guru Inc, May 26, 2011). Reprinted by permission of Trefis.com. Introduction Abercrombie & Fitch Co. (www.abercrombie.com) is a specialty retailer that operates stores and Web sites that sell casual sportswear apparel, including knitted and woven shirts, graphic T-shirts, fleece, jeans and woven pants, shorts, sweaters, outerwear, personal care products, and accessories for men, women, and kids under the Abercrombie & Fitch, Abercrombie, and Hollister store names. It also has stores and a Web site selling underwear, personal care items, sleepwear, and home products for women under the Gilly Hicks brand. Company Background Abercrombie & Fitch Co. (A&F) has three main store divisions. Its Abercrombie & Fitch stores are more valuable than Hollister stores and Gilly Hicks & abercrombie kids stores for the following reasons: • • • • Hollister stores are more in number, but A&F stores are larger in size. Hollister has about 1.5 times the number of A&F stores, but the average size of an A&F store is around 1.3 times the average size of a Hollister store. Abercrombie & Fitch stores are positioned as a premium-priced brand, targeting women in the upper income segment. The company views the “in-store experience” as the primary vehicle for communicating the spirit of the brand. To ensure this, the company is acquiring larger retail spaces for its new stores as well as remodeling some of the existing ones to increase their retail space. The average revenue per square foot for A&F stores was $451 as of 2010 compared to $368 for Hollister stores and $317 for Gilly Hicks & abercrombie kids stores. As the economic environment improves and consumer spending increases, we expect revenue per square foot for A&F stores to cross pre-recession levels and reach nearly $550 by the end of our forecast period of 2017. Abercrombie & Fitch stores have profit margins of 15 percent or more, which are considerably more than profit margins for Hollister stores or Gilly Hicks and abercrombie kids stores. The unique identity of the A&F brand as being premium—as well as exclusive—enables it to sell products at higher price points than the Hollister brand, thus obtaining higher profit margins. Key Trends Declining Apparel Demand Due to Economic Downturn The apparel industry witnessed a short-term decrease in demand because of the economic downturn during 2008–2009 that led to a considerable fall in consumer spending. This significantly impacted the revenues of major specialty retailers such as Abercrombie & Fitch, whose revenues declined at an annual rate of 11.6 percent of from 2007 to 2009. Increasing Competition from Department and Discount Stores In the competitive apparel industry, the local department stores and discount store chains have been scaling up their operations.