SEPTEMBER 2005 :: MARKETING

May I Help You?
To Revive Sales, Abercrombie & Fitch Drops the Attitude

By Stephanie Kang
Staff Reporter of The Wall Street Journal

Long known for their sexy and snobby ambiance, Abercrombie & Fitch stores are trying something radical: being nice.

When Alison Delaney wanted to try on jeans at an Abercrombie & Fitch store in Los Angeles recently, a young employee quickly ushered her into a dressing room and said: "Let me know if I can help you with anything." When she left the store 20 minutes later, a pair of $70 jeans in hand, the employee waved and told her to come back soon.

That kind of attention might be business as usual at many service-obsessed retail chains, but at Abercrombie & Fitch-where aloof staffers often acted more like clothes models than sales help-the pleasantries were a big change. "They normally completely ignore you," says Ms. Delaney, a 21-year-old community-college student.

Cooler Than Thou

For years, Abercrombie & Fitch has relied on sultry marketing and a cooler-than-thou attitude to sell its pricey line of men's and women's casual apparel. Customer assistance was minimal. The brand's embrace of physical beauty-from the shirtless hunks who occasionally greeted customers outside stores to the now-defunct company magazine that featured nearly nude models in sexually suggestive poses-raised parents' eyebrows and often intimidated the teens who shopped there. "This was a company trying to be a distinctive high-end brand with low-end customer service," says Rob Wilson, a retail industry researcher.

But these days, A&F is rethinking its strategy-and already seeing a handsome payoff. After a slump over the past few years that cooled the once-hot brand, Abercrombie has come roaring back. Total July sales were up 33% from a year earlier, and for the first half of the fiscal year, sales at stores open at least a year were up 24%.

In the past, Abercrombie seemed to operate on the assumption that its fashions were cool enough to sell themselves. The philosophy worked when Abercrombie's clothes were riding fashion waves like cargo pants in the 1990s. But over the past few years, Abercrombie's cachet with teens has been eroded by lower-priced casual-apparel companies, such as American Eagle Outfitters, where denim prices are about half those at Abercrombie.

According to Teenage Research Unlimited, in the fall of 2003, teens in an annual survey ranked Abercrombie and American Eagle as the third-coolest brands of any kind (behind Nike and Sony). In 2004, Abercrombie dropped to fourth. "Teens got a little weary of it, spending money at a place that seemed like they could take or leave their business," says Rob Callender, trend director at Teenage Research. American Eagle's ads, featuring a diverse array of teens, created a more-inclusive atmosphere than Abercrombie's, Mr. Callender adds.

Abercrombie denies that the charm initiative in stores is the result of race and gender discrimination lawsuits filed in U.S. District Court in San Francisco, which the company settled last year for about $50 million. The three class-action suits alleged that Abercrombie discriminated against black, Hispanic, Asian and female employees and applicants. Abercrombie denied any discriminatory practices, but as part of the settlement, it agreed to hire a vice president of diversity and include a more diverse array of people in hiring and marketing materials.

Another catalyst for improvements was the hiring last year of a former Gucci executive, Bob Singer, as president and chief operating officer.

Mr. Singer turned his focus not on the merchandise mix but on the store experience, starting with customer service. When he arrived at Abercrombie, some customer-service fundamentals were lacking: There simply weren't enough people working in the stores, for example, he says.

"Greeting and interacting with customers is fundamental," Mr. Singer says. "The whole approach for us is not to be salespeople, but to create an environment that is friendly."

Mr. Singer makes no apologies for the stores' good-looking workers and the brand's sexy ethos. "Having good-looking people there who are having a good time, who are exerting a certain kind of attitude" helps create that experience, he says.

Now there are greeters at the front of each store, and an employee posted in every section of the sales floor. The number of employees and stores' business hours have increased, and Mr. Singer has brought in a "vice president of training for stores," to work with the staff.

Increased training has reduced "shrink," or the amount of lost or stolen merchandise. "Most of the people that work in the store are young people, and we have to discipline them about how the store must be organized," Mr. Singer says, noting that most of Abercrombie's store managers and employees are college students.

Taking More Risks

Abercrombie also is reinvesting in its stores' appearance. The chain is opening a flagship store in New York and expanding in busy shopping areas like the Grove in Los Angeles, a popular outdoor development. The company also is building a research and development lab at its headquarters in Ohio, where it will tinker with denim washes and color palettes.

Today, Abercrombie is taking more risks, increasing its inventory levels by almost half in a bet that its styles will once again be in sync with the public's taste. Meanwhile, years of holding the line on discounting are paying off: Customers seem more willing than ever to pay full-price for embellished denim jeans or embroidered T-shirts.

The chain seems to have trained shoppers not to wait for markdowns, says retailing expert John Morris. Abercrombie "held the line without having to promote, so that when he had the right product, the customer was primed to pay full price," he says.

Some customers, though, still find the stores intimidating. "I feel like you have to be pretty to shop there," says 17-year-old Rachel Gaddy, who is starting college this fall. She says that when she first heard about the lawsuits last year, she considered not shopping at the stores. But that didn't last very long. "I couldn't help it because I really like the clothes," she says, adding, "The boys are also really cute."

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