Once upon a time in US retail there were four As – Abercrombie, American Eagle, American Apparel and Aéropostale.
Between them they dominated the young fashion market. Abercrombie was the cool kid; its carefully curated brand appealing to the wholesome American teen – with a bit of raunchy thrown in. American Eagle was the kid that didn’t quite make the cut for the college football team, but was still pretty cool in a free-spirited kind of way.
American Apparel was the rebel, always up to some kind of mischief or provoking a controversy. And Aéropostale – often called Aero for short because Americans are not keen on strange accents over letters – was the quiet kid; the one that everyone saw, but no one really knew.
Some time around the late 2000s, the four As found themselves in a spot of bother. The market, which had been growing strongly, stopped expanding. Indeed, for a number of years spending on teen fashion shrank.
“American Eagle was the kid that didn’t quite make the cut for the college football team, but was still pretty cool in a free-spirited kind of way”
Neil Saunders, Conlumino
One of the culprits for this change was another ‘A’ – Apple. Almost everyone loved Apple – it was geeky, yet cool; accessible, yet sophisticated; and expensive, yet great value. Teen spending changed. Money spent on clothing was diverted to buying technology.
The numbers tell the story. Back in 2000, about 28% of teen spending was on clothing, 4% was on electronics. Last year 21% went to clothing, 9% went to electronics. Such shifts may seem small, but combined with a shrinking teen population and big changes in brand preference they put a dint in the fortunes of the four As.
The brand part is important and was something the four As failed to fully appreciate.
Abercrombie’s once macho image while still relevant to some, alienated a new generation of more inclusive, sensitive shoppers. Such shoppers also eschewed heavily branded products emblazoned with logos, which was bad news for American Eagle.
Meanwhile, American Apparel’s various stunts, including its controversial marketing, raised more eyebrows than it did laughs. Then there was Aero, its rather middle of the road range simply became one many could live without.
As this was happening, a new generation of retailers, such as H&M and Forever 21, were in the ascendancy. These were popular, mostly because they combined fashion with low prices, which allowed teens to get their clothing fix while still keeping money for other things. They also suited the more democratic tastes of the modern younger shopper.
The response of the As to these challenges was telling. Abercrombie, which had the buffer of strong margins, adapted by toning down its image and becoming more inclusive. It made its stores easier to shop and widened its appeal to older demographics. American Eagle also widened its appeal, and put more emphasis on style and design over brash logos.
“A new generation of retailers, such as H&M and Forever 21, were in the ascendancy. These were popular, mostly because they combined fashion with low prices”
Neil Saunders, Conlumino
American Apparel’s management fell out with its founder and, laden with debt, the firm went into bankruptcy protection where it tried to reinvent itself. True to form, American Apparel wasn’t going to adapt without making a big rebellious splash.
Quiet Aero seemed to lose its confidence, preferring to slash prices rather than reinvigorate its brand. When that didn’t work, it simply cut prices some more. But, as the issue was product rather than price it lost out – over the past five years shopper numbers have fallen by more than 2 million and market share has almost halved.
Unsurprisingly, Aero now finds itself in bankruptcy protection. This will buy it time – but unless it gets to grip with the new teen landscape and adapts accordingly, it will not buy it a happy ending.
- Neil Saunders is the managing director of Conlumino