Should Have Known Better

By now you have probably caught at least some of the news reports about the Abercrombie situation - the video interview where their CEO basically told everyone who doesn't look like a fashion model that he does not want their business or even their unsightly presence in his stores. It's not clear from the interview how much of this was a publicity stunt - along the "any exposure is good exposure" lines - and how much of it was a considered articulation of the company's policy and mission, but whatever effect the CEO was going for he doesn't appear to have gotten it...

An article off the Brand Index web site indicates that ever since the interview went viral the popularity of the Abercrombie & Fitch brand with consumers in the coveted 18-34 demographic has been plummeting – based largely on the buying preferences of the Millennial generation, who don’t appear to have taken the whole thing well. Whether or not this die-off in the brand’s popularity includes the “beautiful people” who were the original target of the Abercrombie advertising remains to be seen, but even if the loss in sales and corresponding loss of revenue are the result of people who do not fit that image becoming offended and taking their business elsewhere, this seems like an unusually stupid example of management arrogance…

Now, we should probably acknowledge that Abercrombie is hardly the first company, even within the fashion industry, to attempt to create an image of exclusivity around its product line. In general, the idea that a product is intended not just for anyone, but specifically for your demographic group is appealing to a large percentage of consumers, and since clothing can be said to have specific age, body type, activity and financial restrictions on appropriate consumption, it lends itself very well to such a marketing strategy. By the same token, only an idiot would go around telling potential customers that their money is not welcome, and that they should take their business somewhere else. Especially considering that this is not the first such gaff committed in recent years…

Consider, for example, the infamous case of Gerald Ratner, who was once CEO of the family’s chain of jewelry stores – until one day in 1991 when someone asked him how his company managed to sell a specific product for such an absurdly low price. Ratner replied “Because it’s total crap” – apparently failing to understand that, like several other industries we have discussed in this space, jewelry stores make sales based on image, salesmanship, and occasionally craftsmanship, rather than the absolute value of the goods being sold. As a result, his company’s stock lost somewhere on the order of $1 billion USD in value in less than a week, Ratner was forced out of the CEO’s position in a business his family had owned for three generations, the company became such a laughingstock that they had to change the name of their corporation and re-brand all of their stores, and to this day a major act of management idiocy is still called “Doing a Ratner” in the United Kingdom…

Will this kind of mistake come to be known as “Doing an Abercrombie” in the U.S.? Or perhaps, “Doing a Jeffries” in honor of the CEO himself? Will the company survive, or will it finally lose the gut-fight it was in with American Eagle and H&M and disappear from the scene? Will Abercrombie’s ownership group demand action, possibly including Jeffries’ resignation and a complete spin control/brand recovery effort? It’s really too early to say what the final outcome will be, but I think we are justified in saying that the CEO at Abercrombie and Fitch really should have known better…