THE BLOG
09/02/2014 03:42 pm ET Updated Nov 02, 2014

Abercrombie & Fitch: A Sad Lesson In Branding

Abercrombie & Fitch is often on my radar - not because I wish I was young enough to be a target customer, employee or even a model but because it did everything "right" from a branding point of view yet continues to suffer financially.

Abercrombie & Fitch products are made from high quality materials and sold at high prices to support a "near-luxury lifestyle" brand image. Abercrombie & Fitch made an extra push toward this "near-luxury" brand position in 2005 when it opened its store on Fifth Avenue in New York.

To me, Abercrombie & Fitch passed the ultimate marketing test - i.e., when you walked into a store you knew exactly what the brand stood for and whom it was targeting - not all retailers have always been so clear in their positioning. When I see a retailer in trouble it is often because their brand position has become muddied and the market is unsure what the brand stands for anymore.

Not long after this, the Great Recession swamped us. Abercrombie & Fitch held on and refused to discount its product for fear it would hurt the brand's appeal and integrity in the long run.

But the Great Recession wasn't a blimp on our landscape. Instead, it was a long, deep, drawn out tragic affair. Abercrombie & Fitch's sales and financial performance declined and employees were laid off. If I recall correctly, their decline in same store sales during the 2008-9 fiscal year was among the worst in the industry.

I watched and held my breath and hoped that the brand would pull through. After all, branding theory teaches us to stay true to the brand promise and this is what Abercrombie & Fitch did. Discounting prices to generate sales and/or cheapening materials so as to lower costs, and therefore prices, would have diminished the brand.

Aside from the recession lasting a very long time, I think a number of other factors contributed to Abercrombie & Fitch's downturn. One is that their target market sought alternatives and so got "out of the habit" of visiting Abercrombie & Fitch stores. Unfortunately, some of these alternative brands then became part of the target market's new brand repertoire. Second, it became "uncool" to buy expensive clothes. Cheaper alternatives such as H&M sprung up and vintage clothing took off.

In the Los Angeles Times on August 29, 2014, I read that Abercrombie & Fitch is going to phase out products carrying its logo and instead focus on trendier clothes that give the wearer a lot of choice as to how to combine pieces. That's interesting because Abercrombie & Fitch is essentially saying there isn't as much value in its brand anymore. Good on Abercrombie & Fitch for being bold enough to do something different. It's a shame that the brand couldn't sustain the Great Recession but I do agree with the latest strategy because consumers got out of the habit of displaying logos of expensive brands. Abercrombie & Fitch remains a "near luxury lifestyle" brand but it has to do so quietly.