In the world of business, change and adaption is necessary for success no matter the industry. A stagnant business that refuses or is unable to conform to the changes in the market whether it be consumer behavior, trends, or new and stronger substitute businesses, will no doubt fail. This is the case of Abercrombie & Fitch, according to the Business Insider article by Ashley Lutz. The long-time standing teen clothing retailer has been on the downhill spiral since the surge of substitute retailers such as Forever 21 and H&M. Why the surge you may ask? Externally, it is because Forever 21 and H&M have taken advantage of changing consumer demands and taken action in changing their value propositions. Internally Abercrombie’s business model, when under scrutiny, has many obvious flaws.
Firstly, shoppers are much more price conscious than ever before and this trend is predicted to carry over even if the economy becomes better. For Abercrombie, there average price point is still much higher than their leading competitors despite attempts to cut prices. This is troubling because they are not able to provide the same value proposition as businesses such as H&M. Competitors have realized that consumers want to try out new styles without a major financial investment. In addition, Abercrombie struggles to pinpoint a specific target segment that they are focussing. Their store is a mix between ” classic, preppy fashions and high priced fashion”. In other words, it is hard to tell what type of audience Abercrombie is trying to attract. Gone are the days where Abercrombie was the only place for teens to buy clothing from. Rival businesses have pinpointed specific consumer segments to focus on and have found immense success, which further shows the importance of knowing which audience to target. Having a good target segment is important because Abercrombie can then utilize it to make essential decisions on other parts of the business model. For example, if Abercrombie decides to have a family oriented target segment, then this must be represented in their stores and in their advertisements. Their customer channels should align with who Abercrombie are targeting. Instead of a store sprayed with a strong cologne and a dark nightclub vibe, the stores could take on a brighter and energetic approach. Instead of racy advertisements, Abercrombie could have more family friendly and approved type advertisements. These are just very simple examples of how customer channels can change to better suit the target segment.
When was the last time you shopped at Abercrombie?
For Abercrombie to stay relevant in the fashion retail industry, it must re-evaluate its business model and ensure that key aspects of their business model canvas compliment each other, in addition to aligning with current market demands and preferences. Business model should alway be changing and revolving, something that Abercrombie’s business model has obviously not done.
SOURCE:
http://www.businessinsider.com/abercrombie-store-photos-and-problems-2014-11
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