Management at Abercrombie & Fitch Co. is betting on a “customer-centric” approach to help right the ship and get the struggling retailer sailing smoothly again.
As the company continues to search for a chief executive officer, the management team is focused on several initiatives aimed at strengthening sales and profits, which includes notching up its e-commerce efforts, improving the in-store experience and reinvigorating its product mix. In-store prototypes are also in the works for both of the retailer’s brands, Abercrombie & Fitch and Hollister.
These efforts follow other changes at the company, most notably the hiring of Aaron Levine, formerly of Club Monaco, who is now leading the men’s design team at Abercrombie & Fitch. The company has a long, upward climb ahead. In its first-quarter report, the company’s net loss tripled on a 13.7 sales decline. But its current interim leader and top merchandisers are energized — and transparent as the company works to woo investors as well as shoppers.
At the Jefferies Global Consumer Conference in Boston earlier today, Jonathan Ramsden, interim principal executive officer, chief operating officer and executive vice president, and Fran Horowitz-Bonadies, brand president of Hollister Co. California LLC, shared the microphone to explain some of the key aspects of their strategy to the investment community.
For the Hollister retail brand, the biggest changes will be visible to the consumer. “We believe a strong brand experience starts with a customer,” said Horowitz-Bonadies, who joined the company last fall and was a top merchant at Express Inc. “To that end, we have made significant changes in our store experience to create a faster, easier and more inviting shopping experience. This includes removing a number of fixtures and props that will no longer be part of the Hollister experience as well as making adjustments to music, lighting and scent.”
Horowitz-Bonadies went on to say that the changes were done “to increase the focus on the product and remove barriers to purchase. We continue to roll out the updated Hollister storefront around the world. We remain pleased with the store productivity of the converted stores, which still are experiencing a high, single-digit lift in sales and gross profit.”
The Hollister brand president said the company is in the process of testing in-store prototypes, and “recently retrofitted five Hollister stores with a fully redesigned and re-fixtured interior. From the customer’s perspective, the improved interior will increase visibility through a more open layout, [and] brighter color schemes.”
The retailer said these changes are part of a strategic equation that includes closing underperforming stores. Ramsden said 25 percent of its store base in the U.S. has been shuttered over the past five years.
“We will continue to close underperforming stores and expect to close approximately 60 stores in the U.S. during 2015 through natural lease explorations,” he added. “And with the nearly 70 percent of our U.S. leases expiring by the end of 2017, we continue to have significant flexibility as we work to strike the right balance in a changing environment.”
Ramsden said the retailer’s European units continue to perform well, and there is also a great deal of “lease flexibility” in Europe “where we have the ability to exit over 50 percent of our leases in the next three years,” he said, quickly adding that the company does not “currently foresee closing many stores in the region.” Ramsden also said the retailer is seeing success with its “continuous profit improvement program” as well as better management of capital expenditures and investments — especially as prototypes are launched for both brands.
Regarding the latter nameplate, Horowitz-Bonadies said the company sees the brand firmly anchored with “the Southern California lifestyle” attributes that include the “feeling of having fun while maintaining a free-spirited and confident attitude.”
“We strongly believe that these emotions are relatable to our customers all over the world,” Horowitz-Bonadies explained. “In evolving our brand marketing, we will move our imagery beyond just the beach to create a more authentic Southern California experience.”
Horowitz-Bonadies said the company will engage “our customer on their terms using channels they deem most relevant such as on Instagram; we’re housed to rank best in retail for fan growth, ad recall and engagement.” She added that the company is also testing “localized marketing content” in China and the United Kingdom. “Obviously, fan engagement is only one aspect in the evolution and must be aligned with a strong brand experience and relevant product,” Horowitz-Bonadies said.
Another key part of the company’s efforts includes “aligning our customer-centric actions within our digital experience to create a seamless brand experience across all platforms and channels,” Horowitz-Bonadies said adding that many consumers begin their “shopping journey” online first. Subsequently, she said “our emphasis is on enhancing the site to improve and expand navigation, enhance product content and fit, [integrate] customer reviews and product recommendations along with mobile optimization.”
In addition, the retailer is working to simplify pricing and markdown strategies. Horowitz-Bonadies said that, outside of the U.S., “we have done a significant amount of work to ensure that we are appropriately priced and positioned versus key regional competitors. As we have [previously] discussed, we have rolled out updated pricing throughout the U.K., which has continued to deliver sequential comp improvement. Updated pricing will roll out to the rest of the world in the very near future.”
Lastly, the retailer is evolving its merchandise assortment, “ensuring the design and product content reflects current trends, as well as striking a write-down between fashion relevance, quality and value by delivering good, better, best assortment architecture with our must-haves in key categories,” Horowitz-Bonadies said.