Executive Summary
This report aims to analyze and discuss the horizon scanning method in the context of Abercrombie & Fitch and its prospects for development in the retail and clothing industry. The horizon scanning method is an approach that helps to detect and examine any emerging trends, potential opportunities, threats, and issues that might impact an organization’s development. This report is concerned with using this approach for Abercrombie & Fitch analysis and summarizing the findings to formulate recommendations for the company’s operation.
To identify the trends, opportunities, and threats, several academic sources and reports were studied and considered; as a result, several significant trends were detected. The first and the most critical trend for Abercrombie & Fitch, in particular, is the necessity to focus on diversity and inclusivity. The second trend is the adaptation of the circular economy model. The last trend is increasing media presence and social media use. Basing the long-term strategy on these trends would help the company maximize its growth prospects.
Introduction
This report examines prospects for the operation of Abercrombie & Fitch, applying horizon scanning as the primary approach and other tools that can help identify potential opportunities. The clothing industry is highly competitive, and with the emergence of e-commerce, new technologies, and trends, the number of competitors has been growing steadily. The innovations in this industry are adopted and implemented fast by the competitors, and the influence of emerging trends on this industry is apparent.
Thus, Abercrombie & Fitch needs to look closely at these trends and introduce necessary changes in the marketing plan to compete and increase their market share. With this aim, the paper will compare the newest emerging trends and the company’s current strategy and focus. In recent years, there has been a noticeable shift in the clothing industry towards implementing a circular economy and considering the sustainability trend. Abercrombie & Fitch’s strategy, thus, will be examined in consideration of these shifts, and the recommendations will be made based on these critical tendencies.
Business Background
Abercrombie & Fitch is an American clothing brand that focuses on producing casual wear and positions itself as a premium brand. The company’s primary target market is young people, particularly teenagers and young adults. The brand focuses on buyers who aim to purchase quality and ethically produced clothing. Abercrombie & Fitch’s market share within the retail apparel industry after the fourth quarter of 2022 constituted 4.19% as a medium of 12 months (ANF’s vs market share relative to its competitors, 2023).
Compared with other competitors, such as Ross Stores Inc. with 21.21% and The Tjx Companies Inc. with 37.58% (ANFs vs. market share relative to its competitors, 2023), this number is not exceptionally high. This means that the company still has enough margin for growth. The significant gap between Abercrombie & Fitch and its competitors makes it necessary to look into emerging trends and consider what approaches the leading companies adopt. However, it also needs to be considered that Abercrombie & Fitch positions itself as a premium brand, which automatically decreases their target market and market share.
The organization’s strengths, weaknesses, opportunities, and threats need to be considered to create the most effective strategies. The company’s biggest strengths are the loyalty of a particular market segment and its e-presence and international presence. The brand obtained worldwide recognition in previous years, and its products are still somewhat popular among the younger populations of more than 20 countries worldwide.
Nevertheless, the company has been repeatedly accused of a lack of diversity and inclusivity in its lining. With the most prominent retail apparel brands prioritizing inclusivity in their marketing campaigns, the company faces the threat of losing the target market’s loyalty. Compared with the previous decades, when the brand was at the peak of its popularity (Horton, 2022, para. 2), it lost a considerable part of its client segment. The discrimination and lack of diversity are why the brand has lost its popularity, which is alarming as it is not easy to return it.
The brand’s marketing strategy focused on promoting itself as a brand that sets specific standards of style and beauty. As the previous decades did not see the rise of inclusivity yet, the brand image was somewhat elitist and exclusive of many types of customers (Horton, 2022, para. 4). This, however, brought the brand to its downfall. The current attempts to change its popular perception are not giving results at the present moment. The previous strategy is incompatible with the current trends and, thus, needs to be changed.
Horizon Scanning
Horizon scanning is a method applied to detect threats or opportunities that can appear in the future and impact the development of a particular organization. Horizon scanning is carried out at the beginning of any activity to predict ‘things to come,’ that is, to see what can occur and its implications (Cuhls, 2019, p.1). It is a universal tool that can be applied in any field, including the operation of businesses. The horizon tool is often applied to modify the marketing strategy within business operations.
Often, building an effective marketing plan based on what is already present is not enough, and it is necessary to look beyond it. This overlook includes focusing on the potential threats and the present issues that can become more significant in the future (Cuhls, 2019, p.1). Horizon scanning can be a prolonged process of gathering information on the trends, new technologies, and changes that are yet to happen (Cuhls, 2019, p.2). This process can be all-encompassing or just focused on one particular issue.
Horizon scanning is not a clearly defined process; there are no limitations on how it should be conducted and what steps it should include. According to Cuhl (2019, p.4), “Horizon Scanning can be completely explorative and open or be a limited search for information in a specific field based on the objectives of the respective projects or tasks. It seeks to determine what is constant, what may change, and what is constantly changing in the time horizon under analysis.” The process is not limited in time either, as it can be short-term, medium-term, or long-term (Cuhl, 2019, p. 4). Thus, it can be applied when building a short-term and long-term marketing strategy. The most crucial goal of horizon scanning is to stay ahead of the curve and maintain a competitive edge in the industry (Baines, Antonetti & Rosengren, 2020, p. 259). If one organization does not apply this tool, others will; thus, some businesses will have an advantage over others. This is why it is essential to pay proper attention to this process.
Future Trends and Their Impact
The clothing and textile industry and the retail apparel industry have gone through essential transformations in the last decades. Last year, new social trends have impacted all major industries, and the clothing industry is especially susceptible to these social changes. Many brands target younger people as their primary customers; the newest tendencies influence young customers. Thus, companies like Abercrombie & Fitch, whose target market is primarily young adults, must be especially aware of possible shifts in the future.
Recently, there has been a shift towards recognizing the importance of establishing a circular economy. The necessity to move towards this type of economic system has been recognized both by consumers and the authorities; for example, the European Union has officially stated that European countries will begin the transition (Koszewska, 2018, p. 337). The circular economy model is based on the so-called three Rs: reduce, reuse, and recycle (Koszewska, 2018, p. 337).
Due to the increasing awareness of the damage caused by over-consumption and over-production, more consumers are changing their buying preferences. This is especially true for young consumers, who are more environmentally conscious than the older generations. Young people have been seen at the forefront of environmental activism, with Greta Tunberg being an example of that (Wallis & Loy, 2021, para. 2). They are the ones who are seen demanding businesses change their practices. The older generations are not as environmentally conscious; however, the younger generations will replace them as the largest consuming segment in the foreseeable future. The upcoming generations are expected to be even more aware of ethical production.
Abercrombie & Fitch is already making steps towards a circular economy. The current marketing plan includes adopting ethical production and bringing customers’ awareness. However, customers are becoming more aware of unethical and environmentally damaging production methods, so it might be necessary to transform the production system further and make it the main focus of the brand’s marketing plan. This is especially important about the company’s downfall related to its accusations of discrimination.
Another trend of recent years that is expected to rise in importance is the focus on diversity and inclusivity in the clothing and retail apparel industry. This is related to the general trend of increasing inclusivity in society. In recent years, much attention has been directed to acknowledging the diversity in society related to race, gender, and other aspects. The fashion and clothing industry has been a target of implementing these changes because this industry has represented one type of customer for a long time.
A typical former customer representation looked like a white, non-disabled, and typically skinny person portrayed by models. As Black (2022, p. 2) notices, “Although equity and inclusivity are moral imperatives within society, it is widely recognized by certain groups of fashion consumers that the experience of fashion can be limiting about available options -for example, in sizing.” Trends such as body positivity, adding more plus-size options, and diversifying gender and race representation have impacted the apparel industry significantly. The brands that do not follow these trends are likely to lose profit.
Brands need to comply with all types of inclusivity and include them in their marketing campaigns. This includes racial inclusivity, which Abercrombie & Fitch was notorious for ignoring. The trend for inclusivity is not expected to decrease any time soon; on the contrary, the standards for inclusivity in marketing are expected to become stricter. This is why Abercrombie & Fitch must change its positioning on these issues entirely and transform its brand image, refocusing all of its attention on creating a new version of it. The stakeholders must understand that unless the entire brand image is changed, the company will not survive the competition with other brands that are not accused of the same wrongdoings. Rebuilding the marketing plan by creating a new brand image that has a primary focus on inclusivity could prepare the company for being able to compete with other brands.
The last trend, which is the use of social media and influencers, is also essential in creating a new marketing plan. It is essential to incorporate inclusivity and increase social media presence by engaging public figures and influencers (Black, 2022, p.3). Engaging the target market on Instagram is paramount and will continue to grow. Instagram is likely to become the leading marketing platform, and combining the brand transformation with a focus on inclusivity and activating social media marketing is necessary.
Research Implication and Future Actions
Recent societal changes that have raised awareness of environmental and inclusivity issues have made it necessary to transform the current marketing plan. Firstly, the company needs to become prepared to adapt to the circular economy and make its sustainability efforts the basis of its brand image. Some changes must be implemented regarding the inclusivity trend detected through horizon scanning. The current marketing strategy is based on prioritizing LGBT inclusivity. The brand positions itself as an LGBT ally, and the current marketing campaign, Proud Year-Round, focuses on LGBT representation. However, it would be more helpful to make a campaign that prioritizes racial inclusivity and refocus the brand’s social media.
In terms of social media presence, it is essential to increase the engagement of public figures on social media, emphasizing a new version of the brand image. Expanding collaboration with influencers is necessary, as collaboration is more profound and intensive. Making one-time collaborations with social media figures can be helpful. Still, creating long-term relations with influencers is more beneficial, that is, making influencers ambassadors of the brand.
Another vital aspect is choosing the correct figures to create these types of collaborations: if the goal is to create a particular image of the brand, the influencers need to comply with this image. For example, for a sustainability campaign, it might be necessary to work with influencers who advocate for sustainability. Incorporating sustainability into the corporate strategy through this tool can create a brand’s deeper associations with this aspect (Peters and Simaens, 2020, p. 1). It is also preferable to choose public figures with a loyal audience that trusts the influencer’s choice. This type of audience is more likely to buy the products recommended by the people they follow.
Another tool that needs to be prioritized is TikTok videos or Instagram reels. Most of the influencing at this moment is carried out through these instruments. Younger generations consume a large amount of content from this type of media, and their choices are influenced by what they consume most of the time. Thus, engaging the target market through influencers that produce this kind of content can help increase customers’ loyalty and change the brand’s perception.
Conclusion
After applying the horizon scanning method, several fields for improvement in Abercrombie & Fitch were detected. This approach helped to identify sustainability and circular economy, inclusivity, and social media use as the main trends to be aware of in the retail apparel industry. After the analysis, it became clear what changes must be introduced to the brand’s marketing strategy. Focusing on inclusivity and adapting to the circular economy model were the pillars of the industry’s development. The horizon scanning method is now a more clearly understood area for exploring the industry’s future in general and Abercrombie & Fitch in particular.
Reference List
ANF’s vs market share relative to its competitors, as of Q4 2022(2023). Web.
Baines, P., Antonetti, P. and Rosengren, S. (2020) Marketing.London: Oxford University Press.
Black, S. (2022) ‘Inclusivity and influence’, The Journal of Design, Creative Process & the Fashion Industry, 14(1), pp. 1-4. Web.
Cuhls, K. A. (2019) ‘Horizon scanning in foresight – why horizon scanning is only a part of the game’, Futures & Foresight Science, 2(1), pp. 1-21. Web.
Horton, A. (2022) ‘Discrimination was their brand’: how Abercrombie & Fitch fell out of fashion’, The Guardian. Web.
Koszewska, M. (2018) ‘Circular economy — Challenges for the textile and clothing industry.’ Autex Research Journal, 18(4), pp. 337–347. Web.
Peters, J. and Simaens, A. (2020) ‘Integrating sustainability into corporate strategy: A case study of the textile and clothing industry’, Sustainability, 12, pp. 1-35. Web.
Wallis, H. and Loy, L. S. (2021) ‘What drives pro-environmental activism of young people? A survey study on the Fridays for Future movement’, Journal of Environmental Psychology, 74. Web.