A Tale of Two Brands as Abercrombie & Fitch Seeks Increased Customer Loyalty

As Abercrombie & Fitch continues to establish an evolved brand identity, it has turned into a tale of two brands−Hollister Co. and Abercrombie & Fitch.

Third-quarter net sales sank 13 percent, to $358.3 million for Abercrombie, and decreased 1 percent, to $463.5 million for Hollister. What’s more, net sales for the third quarter decreased 7 percent, to $531.4 million in the U.S.

Executive Chairman Arthur Martinez said the company’s direct-to-consumer business continued to grow both domestically and internationally and conversion remained positive across both channels.

“The Hollister brand continues to make progress as comp trend improvement throughout the quarter resulted in positive comp sales in the U.S,” Martinez said during the third-quarter earnings call. “There continues to be a positive response to Hollister’s product innovations, emerging categories, and overall customer experience.”
For the A&F brand, Martinez said, flagship and tourist locations continued to be a major headwind.

“We’re moving aggressively to evolve the A&F brand across all channels through comprehensive changes in product, customer experience, and marketing,” Martinez said. “The team is hard at work implementing the evolved brand identity across all of our customer touch points.”

Abercrombie & Fitch CEO Fran Horowitz said the company made significant strategic and operational progress for both brands.

“We continue to focus on creating an emotionally engaging brand experience across every touch point putting the customer at the center of everything we do,” Horowitz said. “Through extensive research and increased customer interactions, we know a lot more about our customers and what they want than we did when we began this journey and we're putting all we have learned to work. Based on the success of our previous Hollister store remodel, we completed eight additional remodels during the quarter with an additional twelve scheduled to open by next week. This brings the total number of remodeled Hollister stores to sixty-four this year.”

What’s more, the Hollister Club Cali loyalty program, which rolled out in the U.S. last quarter, “has been met with a lot of enthusiasm from our customers and already has nearly four million active members,” Horowitz said. “In addition to driving higher sales, the program has been successful in increasing customer engagement, identification, and retention.”

Evan Magliocca, brand marketing manager, Baesman, offered Loyalty360 his take on Abercrombie & Fitch.

“For Abercrombie & Fitch Co., it’s really a tale of two brands,” he explained. “Hollister Co. has very clearly defined its customer and rolled out a loyalty program to target its base. Hollister has the right product assortment and the brand marketing to match its customer lifestyle. It’s done a great job amalgamating each of these aspects into the customer experience.”

Conversely, Abercrombie & Fitch has struggled to find its identity.

“You can’t have a great experience without identity,” Magliocca said. “It has made progress recently, but it shows how strongly identity is integrated with the customer experience. You can’t roll out loyalty without understanding your customer. Without a defined customer base, you can’t have the right product mix and your brand marketing will miss the mark. Just offering great UX—which both A&F and Hollister Co. offer—simply isn’t enough. The branded split in success between A&F and Hollister Co. shows the importance of customer behavior, identity, and alignment.”

Stellar Loyalty CMO Narina Sippy told Loyalty360 that the company has taken the first step of recognizing a problem exists.

“Abercrombie & Fitch has acknowledged it needs to know its customers better, understand what will resonate with them, and build deeper relationships,” Sippy explained. “The success of its sister brand, Hollister, and the Hollister Club Cali loyalty program, has demonstrated the value of investing in customer loyalty. Abercrombie & Fitch has an opportunity to leverage Hollister’s best practices as it re-imagines its customer experience and relaunches a loyalty program that caters to its customer preferences and shifting modes of digital engagement.”

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