Posts Tagged 'American Eagle'

American Eagle takes a page from fast fashion

Most RetailWire panelists agreed with me (on a recent discussion thread) that American Eagle is wise to grow its inventory at a slower pace than its sales. It’s really an overdue effort to learn from the best practices of fast fashion retailers, and here’s my comment:

If any of the “Three A’s” of specialty retail had figured out how to improve their supply chain and product development, they probably would not have lost as much market share to the “fast fashion” masters of the art like Forever 21, Zara and H&M. It’s not just about the right merchandise content, but also about speed to market — and speed to exit a downtrending idea. Cutting down on lead times, and sourcing closer to one’s stores, is critical to making it happen.

So American Eagle is right: There is no reason why inventory levels need to grow at a faster pace than sales growth. In fact, just the opposite…if “just in time” sourcing and smart inventory allocation are working as they should.


Trouble in the junior market: Blame it on Apple?

You may have read a recent New York Times article describing how young shoppers’ discretionary dollars are migrating from apparel to the latest tech devices. And you may have also read that Abercrombie & Fitch is abandoning its reliance on logo merchandise. (Aeropostale and American Eagle can be expected to follow suit.) I discuss the confluence of these two trends on a recent RetailWire post:

Smartphones are ubiquitous (especially the Apple and Samsung variety) and offer very little in terms of “individual style” beyond the cellphone cover and homepage photos. But they do, absolutely, drain younger consumers’ discretionary budgets.

Blaming tech spending for the woes of the “Three A’s” (Abercrombie, Aeropostale, American Eagle) is too simple, however. The real culprit is the merchandise content at these stores, and the long lead-time product development model that they are finally abandoning. “Fast Fashion” competitors (in particular Forever 21) have given consumers much more value and variety than the mainstay junior retailers. (And let’s not forget the growth of off-pricers over the last few years.) These “treasure hunt” retailers may feel overassorted, but the consumer looking for individual style obviously prefers this kind of shopping.

Pulling the plug on 77kids

Interesting recent discussion (on RetailWire) about why American Eagle failed in its attempt to create a kids’ spinoff. I start with the name as the first misstep:

American Eagle has built up considerable brand equity, and despite some of its recent struggles its comp sales appear to be back on track. (And it is doing a better job than some of its competitors like Aeropostale learning how to execute “fast fashion.”) But AEO did not take advantage of that brand equity when it launched 77kids.

I realize that Justice has been more successful under its own brand than previously (as Limited Too), but in this case American Eagle might have tried to be more patient with the concept. Testing the concept with bricks and mortar might (in hindsight) have been a more effective idea than starting out online.

Rue 21: A smart growth strategy “from the outside in”

From a recent RetailWire discussion: Rue 21 is a fast-growing junior apparel chain focused on growing in smaller towns first. For many panelists, it feels like a bright idea…and I agree:

This appears to be a smart strategy; after all, Walmart built its business from the perimeter (small towns, exurbs) to the center. I’m not suggesting that Rue 21 is the next Walmart, but clearly there is a niche for specialty apparel stores aimed at misses and juniors, in markets too small to support a Gap, AE or Forever 21 location. This kind of real estate plan also allows specialty stores to operate at higher margins (less competition “next door”) and at lower cost…provided, of course, that Rue 21 provides the right merchandise content for its customers.

American Eagle pulls the plug on Martin & Osa

RetailWire panelists weighed in recently on American Eagle’s announcement that it is shelving its Martin & Osa concept store. Here’s a post-mortem:

I have shopped several Martin & Osa stores since the concept began a few years ago, especially the Old Orchard store (outside Chicago) a couple of times a year. The original concept made sense — targeting male and female customers in their late 20’s to mid-40’s who had “outgrown” American Eagle — but the execution was inconsistent from one visit to the next. The assortment veered from its original vision and skewed too “young,” approaching J. Crew and Banana Republic territory with an overly casual point of view. (And the quality was inconsistent from visit to visit.) It’s worth keeping an eye on the rollout of Madewell (from J. Crew) as a better-executed strategy from this vantage point.