MGMT478 FINAL GROUP PROJECT | FALL 2021

Sofia DeSimone, Bridget Foos, Rachel Killen, Maggie Sattler

 Contents
Meet the Team………………………………………………………………….3
The Apparel Retail Industry…………………………………………………...4
Industry Statistics……………………………………………………………....5
General Environment Analysis ………………………………………………..6
Industry Analysis…………………………………………………………….....7
About A&F……………………………………………………………………...8
Vision and Objectives……………………………………………………….....9
Financial Information…………………………………………………………11
Business Level Strategies………………………………………………….......12
Corporate Level Strategies…………………………………………………….13
Core Competencies…………………………………………………………... 14
Our Strategic Recommendation……………………………………………....15
Exploiting Opportunities and Minimizing Threats…………………………16
Promoting Internal Development…………………………………………….17
Focused Differentiation Strategy……………………………………………..18
Competitive Advantage VRIN………………………………………………..19
Enhancing Core Competencies……………………………………...20
Summary……………………………………………………………....21
 Meet the Team

Rachel Killen Sofia DeSimone Maggie Sattler Bridget Foos

Management & Finance & Management International Business & Accounting & Finance
Hospitality Management Finance
 The Apparel Retail Industry
● Companies who operate by selling products people wear - clothing, shoes, accessories
● Segments can be broken down by type, variety, and price of merchandise
● Three largest retailers are:
VF Corp PVH Corp Hanes
 Industry Statistics
Current Global Market Value, 2020 Revenue of the apparel market worldwide
➔ $1.5 trillion
Projected Global Market Value, 2025
➔ $2.25 trillion

Market Performance Comparison

compound annual growth rates (past and predicted)

2016 - 2020 2025

USA: -4.8% 4.7%
European: -3.8% 5.3%
Asian-Pacific: 0% 7.8%
General Environment Analysis

Opportunities Threats
● E-commerce ● Economic downturn
● Social media ● Supply chain disruptions
● Sustainable apparel ● Conflicting sociocultural views
● Comfortable clothes
 Industry Analysis

Potential Entrants: weak

Substitutes: weak

Bargaining Power of Suppliers: weak/moderate

Bargaining Power of Buyers: moderate

Existing Competitive Rivalry: strong

Overall Attractiveness and Profitability: not attractive, moderately profitable

 About A&F
wikipedia.com
seeklogo.com

Industry: Apparel Retail

customeazy.com logok.com

Location: HQ in New Albany, OH; over 730 stores

Main Competitors: The Gap, American Eagle, Urban Outfitters, H&M, Aeropostale, Zara, and Forever 21

Target Market(s): Ranges from children to young adults

globalnewswire.com
 Vision and Objectives Corporate Level

Main Values
1. Commitment to quality
2. Authentic goodness
3. Always forward
 Vision and Objectives
Mission Statement: Abercrombie & Fitch believes that
every day should feel as exceptional as the start of the
long weekend. Since 1892, the brand has been a
specialty retailer of quality apparel, outerwear and
fragrance - designed to inspire our global customers to
feel confident, be comfortable and face their Fierce.
Age demographic: college students and young
professionals
Business Level
Mission Statement: The quintessential apparel brand
of the global teen consumer, Hollister Co. celebrates the
liberation spirit of the endless summer inside everyone.
Inspired by California’s laidback attitude, Hollister’s
clothes are designed to be lived in and made your own,
for wherever life takes you.
Age demographic: preteen/teenager
 Financial Information
Abercrombie’s sales have grown by 1-2% a year over the
last 5 years, excluding 2020.

2020 Sales: $3.1 billion

Q2 2021 Sales: $864.85 million

2021 Net Sales on 7/31: $1.6 billion

2021 Net Income as of 7/31: $150 million

 Business Level Strategies
Abercrombie operates with a Product Differentiation
Strategy. Below are some ways they achieve this:

forbes.com

➔ Focus on having smaller quantities of

higher quality clothes
➔ Partnerships with social advocacy groups estnn.com

to create clothes that reflect social climate

➔ Partnerships with popular celebrities and
social media stars
Facebook.com

stylecaster.com
 Corporate Level Strategy
Abercrombie underwent a massive rebranding project
beginning in 2015.

Diversification Strategy cosmopolitan.com businessinsider.com

- Separated Hollister & Abercrombie into

separate target markets cosmopolitan.com

- Moved away from dimly lit and heavily

fragranced stores
- Transitioned from ‘preppy’ clothes towards
the trends of today
teenvogue.com

abercrombie.com
 Core Competencies
Based off of their updated rebranding, three core
competencies identified create value:

1. Consistent quality
2. Brand recognition
3. Market trend recognition
 Our Strategic Recommendation
Design and launch a new business casual line for existing Trendy
customers
Details: Design 25-30 pieces initially, with plans
for 15-20 of these pieces to be in the final
launch in a capsule collection

Locations: Online and in specific urban retail

locations Comfortable
Why: As our target market grows up and enters
the professional world, we want to continue to Affordable
grow with them & allow them to purchase
affordable, fashion-forward business clothing
Versatile
 Opportunities and Threats

Exploiting Opportunities Minimizing Threats

● Preference for comfort ● Supply chain disruptions
○ Stretchy, soft material ● Demand for reasonably priced, but
● E-Commerce ethically sourced clothes
○ Purchasing back-up sizes
● Social media partnerships
○ Selection of young influencers

ixtenso.com
Promoting Internal
Growth mechanisms
Development

Product development- new product line to an existing

market of consumers

Abercrombie possesses the key capabilities for successful

incremental innovation

● R&D: Expert in-house design teams

● Engineering: Economies of scale, selective suppliers

● Marketing: Social media presence, experience with influencers

Focused Differentiation Strategy
Niche Group
Young professionals with a fashion forward vision

Differentiated
➔ High Comfort Contemporary but Stylish
Competitive Advantage VRIN

Valuable

Rare

Inimitable

Non-substitutable
 Enhancing Core Competencies
Our strategy will enhance our previously identified
core competencies in the following ways:

1. Consistent Quality
a. Clothing for the professional workplace
that offers the same comfort and quality as
our other products
2. Brand Recognition
a. The Abercrombie name will continue to
attract our current customers and will make
marketing to new customers more effective
3. Market Trend Recognition
a. This is a new challenge to recognize market
trends in a new area
 Summary
The Industry
● Performance dipped during the pandemic but future opportunities with e-commerce and
changing socio-cultural views will promote industry growth

The Company
● A&F utilizes product differentiation
● Recent rebranding initiative promoted a corporate diversification strategy
● Core Competencies: consistent quality, brand recognition, market trend recognition

The Recommendation
● Add a business casual line to current product offerings to capitalize on core competencies
and employ further diversification from competition