Abercrombie and Fitch - Paper
Abercrombie and Fitch, headquartered in New Albany, Ohio, operates …show more content…
Abercrombie and Fitch does not own any manufacturing facilities of their own and rely solely on the environmental sustainability initiatives of their suppliers (Drissen 2012).
Although Abercrombie is able to charge premium prices for its merchandise, its pricing power over the customer is limited. During good economic times, customers are willing to pay for the products, but as the economy declines, the marginal customers are shopping for value. This is evident in the graph in Appendix 1. At the heart of recession in 2009, because Abercrombie continued to charge premium prices, its has a greater reduction in operating revenue than its competitors that resorted to price promotions. To increase revenue Abercrombie has gone against its no price promotions policy to make its products more affordable to its customers. However, this is a price promotions are just a short-term solution to boost sales during the recession (Smith, 2011). Abercrombie also maintains borrowing power over suppliers by sourcing from multiple suppliers. According to the Form 10-K, Abercrombie sourced from 170 suppliers during 2011 from around the world. Not more than 10% of its merchandise came from a single supplier (Form 10-K, 2011).
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* Target market, America’s middle class which is disappearing really fast * Overprisced collegiate wear, does not