Introduction
The case raises ethical concerns, particularly considering that the world is in the twenty-first century, where individuals have the right to express their ideas and thoughts. Abercrombie and Fitch organization (A&F) has evolved over the years to remain lucrative and competitive. The corporation’s market segmentation techniques are one-of-a-kind, and its target demographic is distinct from that of its rivals. The chief executive officer’s mission and strategy may not be shared by all segments of the public, thereby prompting several objections from various individuals and organizations. The purpose of this essay is to determine the challenges that the organization is currently facing, as well as potential remedies and suggestions for these issues.
Abercrombie and Fitch’s issues stem from their exclusionary approach and gender stereotypes. The corporation used an exclusivity technique to segregate the business based on clients who are hip and good-looking. The advertising plan was to attract just those individuals who could wear the corporation’s clothing. At the same time, the institution’s gender stereotypical issue culminated in negative attention for the firm, which has been manufacturing more oversized items for men and not for females (Blanchard, 2014). Michael Jeffries, the CEO of A&F, was confused since the rising problems required quick solutions. Jeffries was to decide whether to broaden the target market and make it inclusive or to solve the negative publicity issue. The management at A&F had to decide and formulate an approach that would maximize profits for the continuous growth and success of the company.
A&F Should Not Stick to Exclusionary Tactics
Exclusive market tactics provide advantages and disadvantages to corporations; however, the disadvantages override the benefits. In terms of governing, firms using the exclusionary approach can gain from the few numbers of suppliers of the organization’s commodities throughout the country, as controlling forty suppliers is more manageable than handling a thousand dealers (Bhatia & Baruah, 2020). In addition, because the organization’s goods have a limited number of merchants, the corporation can effectively control how commodities are valued or sold to clients. A&F effectively managed thirty-six stores as the exclusionary strategy made it easy for the management (Blanchard, 2014). Having fewer retailers and stores is easier to supervise and enables quick decision-making for better management and organization.
In the event of exclusive production, suppliers or stores can hold additional inventory and achieve economies of scale in respective activities due to the exclusive arrangement. Furthermore, because of the large volume of business generated by the retailer, the corporation may provide simple credit conditions to the distributor (Bhatia & Baruah, 2020). Due to an exclusive deal to market the corporation’s commodities, Abercrombie & Fitch and its partners profited. A&F enhanced profitability offered a greater return on capital investment and provided the firms with a foundation to develop due to the economies of scale. The revenue A&F received from sales enabled it to amass a significant market share in the 2000s (Blanchard, 2014), with over four billion dollars in yearly sales. Increased profits and large business scales achieved from influential economies of scale solidify organizations from external threats.
The most significant downside of exclusive marketing strategies is that the firm relies on a small number of suppliers or merchants for product promotion. Dependence on a handful of retailers does not provide the firm with the benefits of diversity. If two to five distributors cannot make excellent sales, it can significantly influence the organization’s revenue from sales (Bhatia & Baruah, 2020). When a corporation has many small distributors or merchants, this would be prevented. A&F witnessed a devastating loss of twenty-five million dollars in 1992 due to the limited operating stores that could not generate revenue from sales (Blanchard, 2014). The disaster saw Jeffries get employed as the new CEO of the corporation with the difficult task of getting the business back to success. Having few suppliers is risky for a company’s growth since, in case of losses, the organization suffers as risk is not effectively spread across the retailers.
Another issue with the exclusionary marketing approach is that the organization’s goods exposure is limited owing to a small group of retailers and suppliers. Furthermore, exclusionary methods are not suitable for low-cost items with low-profit levels that require more purchases to compensate for reduced profitability margins (Bhatia & Baruah, 2020). The exclusionary tactic implemented by A&F focused on a target market of sexy, fabulous younger clients, thus leaving the older market untapped. The company produced large clothes for men and not for females, which caused severe backlash to the organization’s operations. Celebrities criticized A&F over the sizing problem, and it negatively impacted the company (Blanchard, 2014), with female sales down by thirty percent. Companies that employ an inclusive strategy help businesses avoid negative publicity and increase revenue generation from sales.
A&F Should Become More Inclusive and Add More Sizes
Diversity and inclusion have a substantial influence on workforce leadership and participation, as well as being a critical component for financial development and economic revenue growth. Due to the apparent clear relationship between diversity administration and economic success, every organization should stop debating whether or not to develop a diverse and inclusive plan and start doing so right away. According to Kateryna et al., a highly inclusive executive committee was shown to have a quantitatively significant association with higher financial achievement (2022). Corporations in the leading ranking of inclusiveness and gender equality are most likely to outperform their regional industrial standard in financial returns.
Companies that embrace diversity and inclusion initiatives improve profitability and exceed consumer requirements and enhance the likelihood of clients connecting with and purchasing their products. The target market of A&F is the millennial generation (Blanchard, 2014), who will remain loyal to an inclusive organization that offers a variety of products. Jeffries should exercise gender equality and produce different sizes of female clothes as this widens the market improving sales. Including extra-large (XL) and double extra-large (XXL) clothes will allow plus-size individuals to shop at the organization’s stores. A&F will gain positive publicity since selling all sizes of clothes will make plus-size individuals confident and increase self-esteem while wearing cool and sexy clothes produced by the company.
Traditional bargaining dynamics between corporations and candidates are shifting, putting candidates in the spotlight. The battle to hire is genuine, especially as prospects grow more demanding. Not only is the inclusive strategy a conceptual and moral actuality, but it also draws excellent talent (Kateryna et al., 2022). Due to the stringent company standards at A&F, employees were required to look a particular way. The staff at A&F were required to appear natural and good-looking, precisely similar to their intended market. Such strict rules might discourage quality personnel who could add valuable information to the company’s operations. The standards sparked a lawsuit where A&F management fired a Muslim worker for wearing a hijab (Blanchard, 2014). Employees are searching for more than just a well-paying profession with a long-term agreement; they also want to work in a happy and productive workplace where they can be themselves.
The inclusive and diverse marketing strategies aim to resolve the discrimination in society. The prejudice that arises from race, religion, culture, gender, religion, and medical condition harms the growth of society (Shore et al., 2018). A&F had a negative contribution to the problem of gender stereotypes and body image as it greatly influences how the young generation views beauty. The corporation reiterated the notion that the perfect woman is tall, slender, and attractive, whereas the average male is attractive and muscular through its marketing and goods offers. In advertisements, huge males were shown as incredible sports players and boxers; however, no big women were depicted (Blanchard, 2014). A&F’s exclusionary focus advertising strategies exacerbated the unfavorable gender stereotypes. As a result, Jeffries witnessed criticisms that affected the business by lowering the market share. Implementing an inclusive strategy resolves discrimination in society as it offers minority groups a safe place to engage and purchase a wide range of products.
Conclusion
In conclusion, the danger of failing to implement an inclusive and diversity strategy in the business is that a firm will lose money, personnel resources, and consumers. It reduces the chances of its products accessing all customers, halts the loyalty exercise, repels staff and recruits, and decreases production. A&F needs to consider implementing the inclusive approach immediately and increase the sizes of women’s clothes to meet the average and plus-sized females to safeguard the company’s future. Positive publicity will save A&F from fading away entirely from the industry. Building a more inclusive organizational culture will embrace innovation leading to better and more effective decision-making to help A&F offer quality products and tap every market.
References
Bhatia, R., & Baruah, P. (2020). Exclusive talent management and its consequences: A review of literature. Asian Journal of Business Ethics, 9(1), 193-209. Web.
Blanchard, D. (2014). Abercrombie & Fitch: Is it unethical to be exclusive? Ivey Publishing.
Kateryna, K., Nina, K., Yuliia, U., Nadiia, S., & Viktor, K. (2020). Institutional qualities of inclusive environmental management in sustainable economic development. Management Systems in Production Engineering, 1(28), 5-22. Web.
Shore, L. M., Cleveland, J. N., & Sanchez, D. (2018). Inclusive workplaces: A review and model. Human Resource Management Review, 28(2), 176-189.