
Abercrombie & Fitch is all in on the Gen Z consumer as it attempts to position itself as a go-to for young adult shoppers—and its strategy for doing so runs straight through the supply chain.
The retail group, which has had to rebrand following a period of beefcake marketing and logo heavy tees, outlined its plan for reaching $5 billion in annual sales during its investor day last week.
2017 sales for Hollister were up 11 percent to $2 billion and down 2 percent for Abercrombie to $1.5 billion.
Currently, the company said it is in the second phase of its three-step strategy to reach its goal. This year, the focus is on top and bottom line growth as well as modest gross margin improvement. To get there, A&F has established a new transformation management office to lead the charge.
Fran Horowitz, A&F’s CEO for the last year, said when she was considering joining the team, she shopped the market and noted the company had too much of the same product across its banners so her first goal was to balance out the assortments, taking cues from customer demands.
Horowitz said the company had what it took to better deliver on consumer trends—including longstanding partners and a global infrastructure—but A&F wasn’t capitalizing on those advantages. By unlocking those resources, the retail group has been better able to leverage its supply chain.
“We are better able to harness the inherent agility we have being able to act on the customers’ insights at speed with our chase and read and react capabilities to meet our customers’ needs,” she said.
A&F credits its use of fabric platforming, better read and react capabilities and the ability to chase goods for the company’s recent growth.
Now, COO Joanne Crevoiserat said, it’s time to build on that.
To improve speed and reduce its dependence on China, Crevoiserat said A&F has expanded sourcing to 18 countries. And it’s working more closely with factories to improve responsiveness. The company also is leaning into data as a means for creating assortments and allocating merchandise in the places where it will perform best. Aided by data analytics, A&F plans to roll out both size and price optimization tools later this year in a bid to boost sell through and improve AUR.
At Hollister, A&F’s $2 billion leading banner, the focus continues to be on “must win” and “must grow” categories. The former centers around core goods like denim, which is the brand’s largest category, and the latter on areas like swim and Gilly Hicks intimates, both of which nearly tripled sales last year.
Kristin Scott, president of Hollister, said speed is key. She said the holiday performance illustrated this when the brand was able to scoop up $10 million in sales after injecting the assortment with rose-themed apparel that hadn’t been in the plan but had checked well during a back-to-school test. To achieve more results like that, Hollister has begun testing new factories.
Scott was careful to note that Hollister has no desire to become a fast fashion house, churning out disposable goods.
Similarly, Abercrombie president Stacia Andersen is positioning the brand for both speed and quality.
“Our reputation was built on high quality products and our sourcing capabilities allow us to deliver the product our customer expects while continuing to increase our flexibility,” Andersen said, adding its global reach demands thoughtful allotment. “We are tailoring our assortment appropriately and can be nimble and responsive continuing to read the business and distort to the products and trends we see our customers responding to. We are taking full advantage of our speed to market capabilities reacting even faster to the trends we see in the business.”
Andersen credits the brand’s responsiveness for powering it to a 5 percent comp in the fourth quarter, it’s first positive performance in years. By example, she called out the team’s ability to expand on its outerwear offering after hearing from store staffers that its a go-to category for many shoppers, leading to double-digit sales growth.