A&F Responds to Economic Difficulty
The New York Times ran an article today about November’s retail numbers.
Weighed down by plummeting auto sales, retail sales declined for a fifth consecutive month in November as Americans continued to trim their spending amid layoff announcements, jittery stock markets and other signs of persistent economic gloom.
I don’t know much about economics, but I thought that the market model shows that as demand for a good decreases, so will the cost of that good. Am I rite?
According to a story published in today’s Collegian, Abercrombie & Fitch doesn’t agree.
Get the full story after the jump.
The manager of State College’s A&F store explained the company’s response to the tough economic climate.
Despite this statistic, Timm said he knows sales have gone down as a whole to about 20 percent for the company and about 50 percent for the State College store alone.
“The company is doing things to combat a downturn in sales, like raising prices and cutting back employee hours,” he said.
Excuse me? Did he say raising prices? How does A&F justify that move?
“Raising prices will still appeal to people who buy for the brand,” he said, “but for the people who don’t have as much money there is well-distributed clearance throughout the store.”
Translation: We’re trying to preserve our key “dumb and blindly devoted” demographic with high prices, and to the “dumb, blind devoted, and realistic” demographic with our clearance items.
“We hear your concerns,” said Chairman and Chief Executive Michael Jeffries in an earnings call with analysts last month, but “promotions are a short-term solution with dreadful long-term effects.” Marking down clothes now could lead to the brand being seen as something cheap, he explained.
Who knows, maybe Jeffries is on to something here, but between you and me, I wouldn’t mind if Abercrombie & Feature was part of the creative destruction process that is going to occur as a result of this economic difficulty.
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