Company’s External Environment (External)
Key economic and industry variables: Industry analysis (provide data to support):
a. Industry size:
b. Segmentation – geographic and product:
Abercrombie and Fitch Co. started their business at West Cost of United State, because of the West Cost Mountains, camping gears and sporting goods were main products. However, under new management, A&F Co. opened a store on Beverly Hills, California. A&F Co. to aim rich, fitted, attractive, provocative, and sexually explicit customers. Because of hot weather in California, it was easier for A&F Co. to appeal the sexiness and provocative products toward customers.
c. Industry concentration-
This industry is very fragmented because there are few big players on this industry. Since A&F Co. has subsidiaries, different subsidiaries and brand A&F faces different competitors. Even though A&F Co. has unique competitive advantages and marketing skills, competitors have their own competitive advantages and marketing skills, which can turn the table. Also, most of competitors have already expanded to international market.
d. Industry Lifecycle –
A&F Co. has different Lifecycles according to geographic regions. For domestic stores, in case of A&F CO, U.S.A, A&F Co. is in “Decline” stage. A&F Co. is planning to close 20%, 180 U.S based stores by 2015. The reason A&F Co. planning to close U.S based stores is many of A&F’s stores in US are under-performing. Closure of domestic stores will let company get out of low-end locations that causes markdowns and low volumes were prevalent. Also it was A&F Co.’s goal to maintain their image rather then keeping profitability. However, A&F Co. is expanding internationally with positioning itself at beginning of “Mature” stages in industry lifecycle. By May 2012, A&F Co. is planning to open more than 84 international stores in different region such as Europe and Asian countries. The expanding to European countries such as Germany, Italy and Spain and Asian countries such as Japan and flagship stores at Hong Kong and Singapore were big success. International sales were twenty percent of total sales. However, A&F Co. is in beginning of “Mature” stage because they have not yet opened any stores in Middle Eastern countries.
KSF in the industry – what are key success variables and note differences across segments and geography if applicable.
• Use an advertising technique of promoting their employees in to brand representatives. Employees were promoting A&F Co. brands while they are working in the stores. In-store ads of muscular men and seductive women attracted good-looking customers, which built their image of clothes for good-looking people.
• Creating live store experiences. Real-time television display o Santa Monica beach, beach shack store layouts, dim lighting in store designs, décor like living rooms and automatic spritzing scent in timed intervals created environment where customers experienced distinct store image which made target customer to keep coming back.
• A&F Co. adopted Direct-to- Customers operation. By launching e-commerce and cross channel operation, net merchandise sale in Fiscal of each year had been increasing and customer satisfactions were increase as well. Also website and e-commerce helped A&F Co. to built their databases.
• A&F Co. decided to expand internationally. The international stores generated better sales than domestic stores. This process helped A&F Co. to analyze which continent has the highest sale and double check their potential of A&F Co.’s brands.
Drivers of Change or PEST
Opening new stores in European and Asian countries
Increasing demand from European countries
Built for certain body shaped people
Aimed for all different ages with subsidiaries
• Technology change:
Adopting E-commerce and Cross-Channel operating system
Diverse shopping methods and unique shopping...
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