ABERCROMBIE & FITCH: IS IT UNETHICAL TO BE EXCLUSIVE?

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BACKGROUND Abercrombie Co. was founded in 1898 by David T. Abercrombie in Manhattan, originally targeting hunters and fishermen for outdoor gear.3 When Abercrombie crossed paths with Ezra Fitch, a ... partnership was formed that resulted in the birth of Abercrombie & Fitch (A&F). While struggling throughout the 1970s, it wasn’t until 1988 when A&F was bought by The Limited Inc. (now known as L Brands) that the company became solely apparel-base. 4 Currently, A&F has three subsidiary stores worldwide: Abercrombie targets middle school students (ages 12 to 14), Hollister Co. targets high school students (roughly 15 to 18 years old) and A&F targets college students (about 19 to 22 years old). In 1992, A&F lost $25 million despite operating 36 stores. Leslee O’Neil, the executive vice-president of planning, stated, “ . . . it was a mess, a total disaster.”5 Michael Jeffries, hired as the new chief executive officer (CEO), had a clear vision to reinvent the brand and a strategic plan to establish a segmented target market. Jeffries believed A&F could become a “young, hip and spirited” company that would benefit from having a clearly defined target market.6 His vision included targeting cool, sexy and younger consumers and using sex appeal to revitalize the brand. After 14 years under his leadership, A&F had become the envy of the fashion world. Jeffries had built an iconic empire with more than 1,000 stores globally and US$4.5 billion dollars in annual sales.7 The company saw earnings increase for 52 straight quarters, which is described as “the most amazing record that exists in U.S. retailing.”8 By the mid 2000s, the company had amassed a majority market share in the teen apparel market, and DNR magazine proclaimed, “the Abercrombie Effect — not since Ralph Lauren’s ascent in the 1980s has a single brand perfected a lifestyle based on look so often alluded to and imitated.”9 However, despite this success, Jeffries was criticized for his market segmentation strategy, which developed a negative reputation for the A&F brand among some consumers. [Show More]

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