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updated: 9/1/2014 9:10 AM

Abercrombie loses cool, tries to reinvent

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  • Some of the hippest retailers of the not-too-distant past are struggling to adapt to a new era in which technology makes it possible for their competitors to respond more nimbly to teens' fickle tastes.

      Some of the hippest retailers of the not-too-distant past are struggling to adapt to a new era in which technology makes it possible for their competitors to respond more nimbly to teens' fickle tastes.
    Bloomberg News

 

By Sarah Halzack

The Washington Post

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WASHINGTON -- To visit the Abercrombie & Fitch store at the Pentagon City mall in Arlington, Va., this back-to-school shopping season is to see a retailer fighting to win back its customers. The store's windows, which for years were kept shuttered to create an air of mystery and exclusivity, are now open and feature a mannequin wearing a gauzy white camisole and skinny jeans. Inside the store, electronic beats still pulse through the speakers, but at a much lower volume than before. And to find a T-shirt with the company's famous logo, once a staple item, you'll have to walk to the back of the store.

Abercrombie & Fitch, formerly the epitome of teen cool, is fighting along with rivals American Eagle and Aeropostale to lure back the legions of teenagers who abandoned them in recent years for trendier stores.

While shopping with her mom last week, Isis Corbett of Rockville, Md., offered a grimace and an eye-roll when asked if she likes Abercrombie & Fitch.

"A lot of teenage girls wear it, so everyone else has it," Corbett, 14, said. But "you can find more unique things here," she added, gesturing to the racks of jewelry surrounding her at Forever 21, a competing retailer that offers cheaper, trendier items.

Some of the hippest retailers of the not-too-distant past are struggling to adapt to a new era in which technology makes it possible for their competitors to respond more nimbly to teens' fickle tastes. The challenge of making an up-to-the-moment, easy-on-the-wallet garment with a supply network that stretches across the globe is testing the retail industry's traditionally slower ways of churning out merchandise. Advantages are going to stores that use novel approaches to ensure that a design can be made in response to Internet buzz and then taken from a factory floor to a suburban mall in a matter of weeks.

"These young consumers are shopping by seeing what's on Instagram, Facebook, Twitter -- they're sharing on a constant basis. It's always around them," said Marcie Merriman, a consumer-engagement consultant at Ernst & Young. "So if what's in the stores is not changing as fast as what's happening around them, you're going to lose them."

Abercrombie has shortened its development cycle for new merchandise and adopted "fabric platforming" -- buying a large quantity of a single material so it can be used to create a variety of clothing pieces, maybe a crop top, or maybe a palazzo pant, depending on how trends bubble up. It is also expanding its production capabilities in the United States and South America as part of an effort to get clothes to market faster.

"They are addressing [the problems]," said Liz Dunn, a consumer analyst with Macquarie Securities. "It just remains to be seen how quickly they can get their customer back."

Some retailers have figured out the formula. Fast-fashion outposts H&M and Forever 21 have emerged as popular shopping destinations in part because they can undercut their teen-focused competitors on price, analysts said. Just as important, though, is their ability to quickly add new styles to store shelves.

Retailers that have struggled, analysts say, have also been slow to acknowledge a major change in fashion: Teens no longer want to be bedecked in the logo-emblazoned T-shirts and sweatshirts that rocketed these companies to success in the early 2000s. Today's young shoppers are seeking a highly personalized look that makes them stand out from their peers, not blend in.

The back-to-school shopping season will be an important test of whether retailers' early efforts are making a difference. Abercrombie & Fitch, Aeropostale and American Eagle have reported slumping sales and declining profits in recent years. Abercrombie expects to close as many as 70 stores this year; American Eagle has announced plans to close about 50 outposts. American Eagle's stock price has slid nearly 9 percent this year, while Aeropostale's has tumbled almost 60 percent.

During a shopping outing with his mom and sisters last week at the Fashion Centre at Pentagon City in Arlington, Ben Humphrey, 15, said Abercrombie & Fitch doesn't have the styles he's looking for -- patterned button-up shirts, retro band T-shirts and "super-skinny" jeans. He is more likely to find them at his go-to stores, H&M and Urban Outfitters.

"I like more trendy, almost hipster stuff, and they always have what's next," Humphrey said.

Abercrombie is scrambling to claw customers like Humphrey back into its stores. The distinctive scent and dark, clublike lighting? The company is ditching them. Its longtime commitment to not sell apparel in the color black? Gone.

"I continue to believe that we are taking the brands to a place that is more relevant," Michael Jeffries, Abercrombie's chief executive, said on a conference call with investors in May. "I think you can see that in our marketing efforts. And I think you'll see more of it."

"They did such a great job at hurting their image, and they've realized it, and they really want to shift that around," said Simeon Siegel, a retail analyst at Nomura Securities International.

Meanwhile, American Eagle has brought in a new chief merchandising and design officer, and it has turned to Twitter and Instagram to try to reintroduce the brand to shoppers with a campaign that focuses on showing real teens, not models, wearing its clothes. The company has also cut back on logoed apparel.

"We didn't find the merchandise compelling a year ago, and we do find it compelling now," said Jennifer Black, president of retail research firm Jennifer Black & Associates.

Aeropostale, which has the lowest overall prices of the three retailers, might face the greatest challenge in boosting its brand, analysts say. Barbara Wyckoff, managing director of specialty retail at the brokerage firm CLSA, said that in a retail environment in which stores regularly offer discounts of 30 to 40 percent, many shoppers are opting for higher-end brands at reduced prices.

Wyckoff added that for a company with prices as low as Aeropostale's, "you have to sell a lot of units to make your day. And, frankly, you're competing with Wal-Mart and Target."

Aeropostale in August ousted chief executive Tom Johnson and replaced him with Julian Geiger, a company veteran who also served as chief executive from 1998 to 2010. And the retailer has partnered on a clothing collection with Bethany Mota, a teenager who runs a popular YouTube channel focused on fashion, hairstyling and makeup.

With such efforts, the legacy teen retailers are hoping to turn around their ailing businesses.

"I think they're in a better position going into this back-to-school season than they have been in some time," Black said.

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