You can’t beat H&M or Zara at calling the trends right & getting right items to market FAST! That’s ‘Fast Fashion’: on-trend ‘durable enough’ apparel, made with ‘adequate’ construction quality. You wear it a few months, then it’s out of style AND worn out. Defacto Disposable clothing. A trend that’s taking a toll on other fashion retailers:
What’s a fashion retailer to do to compete? Well, for one thing, not everyone wants Fast Fashion. And not everyone wants ‘adequate’ durability. There are segments of consumers who are less interested in being ‘leading edge’. There are others who prefer SOME items to be ‘trending’, but others to be more lasting. eg buy a few casual seasonal clothing items in latest styles, textures & colours- but buy WorkWear that will look better, longer.
Some of you will read about A&F and wonder if they can cut staffing, cut promotion spending, possibly reduce their footprint, etc. Cost cutting is an option- one that keeps the ‘chainsaw’ firms & ‘transition Exec’s quite flush.
imo cost cutting is rarely adequate over the long term. Growth is.
the firm I’m with http://www.spitfireglobal.com prefers growth over cutting & hacking. Retail brands might do worse than consider their situation, resources & risk tolerance (‘fit factors’) for some ‘classic’ paths to growth via NewUsers &/or NewUses?
1. sell online.
2. umbrella several generation-specific sub-brands eg A&F for GenX; Hollister for GenY.
3. Product expansion (American Eagle into undergarments; Starbucks serving alcoholic beverages in prime ‘night life’ locations);
4. Control Label &/or Brand Exclusives (Caution: this approach is contractually tough & raises Competition Act (legal) risks!);
5. Sign an on-trend Spokesperson (Burberry w Emma Watson);
6. all-out chain-wide repositioning (new targets for J Crew, Old Spice, Harley Davidson and, more recently, McDonald’s and Axe);
7. ‘Place’/ Geographic Expansion (Buick to China, Caplansky’s Deli to food trucks, Lego & Fashion brands to Flash retail).
8 Offer Services -eg Petsmart makes good money and generates more store visits (& loyalty?) by offering pet grooming & boarding (although Sears’ expansion into Home Reno Services ages ago was poorly overseen & less than a stellar success)
9. Rethink the Business Model- retailers who followed the ‘paradigm’ to own costly real estate are reassessing. eg Banks & Department stores are leveraging REIT’s and/or (aghast!) selling off ‘essential’ downtown corners. WestElm & other upscale Retail brands are plying their brand in the CONDO market.
imo the ‘secret sauce’ is savvy objective Situation Assessment that lets a consultant recommend the right option or the right blend of these. eg Lululemon expanded its product line to Women’s ‘day-wear’ items for use outside yoga studios- it worked. They also started to target Men’s apparel- imo the verdict remains out on that.
Can A&F be saved? Despite their past unfortunate management comments & weak PR efforts? The competition is tough. Very tough. Segment leaders Zara and H&M are adept @ acquiring right items @ right time @ right cost ie predict the trends, then getting product to market fast!
One path to growth I’d NOT recommend, is to try to mimic that strategy and hit’em head on. A&F needs to be smarter than that.