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Why American Eagle CMO Says Stores Represent a ‘Long-Term Play’

American Eagle Outfitters Inc. is thinking local when it comes to customer engagement.

Kyle Andrew, executive vice president and chief marketing officer, said that when the company re-imagined how it would engage with its teen base, that thinking also evolved how it viewed the reason for its stores to exist.

“The company believes in stores. Our Gen Z customer likes to shop in stores,” Andrew said at the Future of Retail Conference on Monday in Manhattan, co-hosted by UBS and XRC Labs, on “The Evolution of the Store: How Physical Stores are Reimagining Customer Engagement.”

“We invested in different store formats [and] we see [stores] as an amazing way to connect with customers,” Andrew added, describing brick and mortar as a “much cheaper way” to acquire new brand loyalists.

Looking at stores differently also meant engaging with customers in a different way, Andrew said, emphasizing that for American Eagle, stores are a “long-term play,” while the new way to engage with customers also meant that the format has to say “this is my store.”

The teen retailer isn’t afraid to “try and fail,” the CMO said, noting that the process is still valuable because it provides “so much information from investing and trying.”

Learnings so far? While store design should be sophisticated and reflective of modern aesthetics, it also should include more ways for teens to interact so they feel a part of the environment. “That’s the one that’s working,” she said.

Another insight is that “digital has to be part of the experience that you’re trying to create,” she said, explaining that putting a large screen on a wall doesn’t necessarily work and that it’s also not an approach that can be scaled effectively.

One of the early “lab design” test concepts called AE Studio is the American Eagle freestanding store in Manhattan at Union Square, which opened November 2017. The store, near the New York University campus, includes free use of washing machines, an events space and a study area where students can plug in laptops. The thinking was that students can do their laundry and look at what’s new in the store while they wait on their washing, she explained.

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American Eagle is reviewing how to scale the idea and expand to other locations, Andrew added. An adapted mall version of AE Studio opened a year later in August at the Northshore Mall in Boston.

According to Andrew, American Eagle localizes stores to fit the community, and then “unleash[es] the store associate to personalize the experience through interactions with the customer.” The company also works with the local community where the store is based to help host events.

American Eagle sees its purpose as empowering customers use the brand platform to voice what matters to them. “Today’s customers want to be involved. It’s not like back in the heyday where American Eagle and Abercrombie [& Fitch] tell you what you should do,” Andrew said.

The teen retailer’s Youth Council helps the company learn what customers want. Andrew described the group as a “mini board” that, unfiltered, communicates to the company what they think so it can be better understand and cater to its customer.

According to Andrew, American Eagle’s business model is changing, which means investors need to view the company differently and evaluate it using modern metrics. Measuring sales-per-square foot or traffic patterns in the physical store aren’t effective gauges anymore as the best and most valuable customers shop across all platforms and channels.