It comes as no surprise to those in the industry that Abercrombie & Fitch (A&F) will not continue with its Hollister brand in Australia. As predicted by Inside Retail PREMIUM last year, the closure of Hollister’s two stores at Westfield Bondi Junction in Sydney and Westfield Doncaster in Melbourne was only a matter of time, given rumours of low foot traffic and struggling sales at the two stores, especially in Sydney, have been circulating for at least 12 months. Critics have been quic
ck to cite the reasons behind its failure, however, these factors fell on deaf ears at A&F, with the US giant always unlikely to stray from its cookie cutter approach to global rollouts.
The brand has traded in Australia for almost two years, and its dual leases with Westfield have reached a point where it is possible to terminate.
The two stores will close mid-year, at the cost of $2 million in lease termination fees.
Shying away from media, the launches were significantly underplayed and underpublicised, especially when compared to other international fashion launches such as Zara, Topshop, H&M, and Uniqlo in Australia.
That was its first mistake, but while A&F was quick to blame seasonality issues for the hasty exit, Inside Retail PREMIUM believes its biggest mistake was failing to understand and adapt to the Australian customer.
Internationally, A&F’s headline brands, Abercrombie & Fitch and Hollister, use in your face marketing strategies, which include semi-clad male and female models instore, which can be alienating to shoppers − especially those outside of its 14 to 18 years old target market.
The SoCal, or Southern California home of the brand also failed to resonate with Bondi shoppers who live on what is arguably one of the world’s most famous beaches.
Beyond these two aspects, even within the teen target market, the company’s two most distinguishing characteristics fell flat – the stores are both dark and smelly.
By smelly, we refer to A&F’s signature scent, which is sprayed liberally throughout stores the world over. A&F pioneered the concept of signature store scents, a trend which has only being embraced locally in the last five years, but A&F has been employing for decades.
Its other alienating and somewhat impractical store feature is the incredibly low level of lighting instore. Many are happy to navigate the tight racetrack floor layout, but choosing colours and matching items becomes difficult is such dark spaces.
The brand argues that its teen target market is drawn to this, and is unphased that it cuts it off to older shopper segments, which prefer open, well lit store environments.
Another aspect going against Hollister in Australia is its use of darkened and covered store windows, providing no means to showcase the brand’s product to unfamiliar passersby. Though its facade is an impressive double storey, balconied structure featuring colonnades and authentic looking roof tiles with peeks of a massive chandelier, it does little to indicate what shoppers may find inside.
A&F CFO, Joanne Crevoiserat, called the performance of the Australian stores “disappointing”, “even after allowing for the seasonality challenge of operating in the southern hemisphere”.
COO, Jonathan Ramsden, said the two Australian stores were a test.
“Particularly with a market like Australia, which we always knew was a test, we wanted to make sure that if the test didn’t perform we had the ability to exit fairly quickly, which is what we have done,” said Ramsden.
“I think that is consistent with a long pattern of us being disciplined about knowing when it is time to exit a particular brand or store or operation.
“It was a test, we always knew it would be challenging because of the southern hemisphere component.
“I think even above and beyond that it was more challenging than we expected. So we decided to exit that market in the last couple of months.”
Australia is not the first failure for A&F. Early last year the company closed its 28 store Gilly Hicks underwear chain which operated in the US and UK, although Gilly Hicks products are still sold through Hollister stores.
A&F has come under fire in the US in the past few years like many of its competitors that share what many consider an All American ‘jock’ origin.
Traditional US apparel brands such as A&F, Gap, American Eagle, and Aeropostale have all come under increased pressure to innovate and perform following the entry
of the new guard of fast fashion, value conscious retailers targeting teens – namely Forever 21 and H&M.
To say the brand no longer sells is a myth, however, its former marketing, pricepoints, and highly visible logos are no longer resonating.
The company is without a CEO, following the departure of controversial leader, Mike Jefferies, in December amid tumbling sales, and A&F’s fourth quarter results are fairly dismal, with same store sales down 10 per cent − six per cent in the US and 17 per cent internationally. Net sales dipped by 14 per cent to US$1.12 billion for the quarter ended January 31.
Perhaps a new CEO can turn around the brand around on its home soil. But for Australia, it’s a case of too little too late.
This story first appeared in Inside Retail PREMIUM issue 2037. To subscribe, click here.