American Apparel on Facing Troubles
Earlier this year, the famous company American Apparel made an announcement in turning the brand from what they call ‘chaotic to iconic’. It is made after six long years of getting low sales, controversies on advertisements and a scandalous issue of their former chief executive. However, last October 5, it filed for bankruptcy thus, making others speculate that the company is having a rough road towards recovery.
The brand was known of its great and stylish clothing among its teen fans, it is said to be an epitome of edgy and preppy fashion. The brand is also famous for its affinity for spandex garments and provocative ads and campaigns. With their Jock-inspired clothing, holding socially motivated slogan tees, it made a big hit in the world of fashion. With that, the company had enjoyed years of success for three years with sales on a ‘constant upward trajectory’.
It reached a global success in 2006 after it had able to set up shops in various countries in Asia, Europe and Latin America after it received $280m stock deal.
However, in the year 2009, American Apparel slowly went drowning. The kind of chaos the company faced was beyond expectation. It struggled to stay atop, competing with other fast rising fashion and clothing brands like H&M and Forever 21 noting that such brands are playing on cheaper price points and constantly releasing freshly designed garments.
American made brands have made an initial top position in the market despite the fierce competition in the world of fashion, however, considering the inability of a brand to make product evolution resulted to the downfall of sales and add to it the overtly sexualized ads, definitely it would led to a downward sales trajectory.
As per record, the company’s sales went down in August with 17.2 per cent drop in sales for the second quarter of 2015 coupled with a 25.3 per cent fall in profit from $82.4m to $61.5m.
A senior analyst of Fitch Jim Whyte, told The Drum that the brand’s product offering should also be blamed of its bankruptcy aside from the headline making controversy of the ousted exec Dov Charney. Whyte said, “It’s made-in-America proposition and its strength in simple fashion classics and active-wear are very much is sync with broad changes in consumer preferences. However, American Apparel grew its number of stores aggressively but its range of products lagged behind. In a break-neck global expansion the brand has lost much of its niche caché but has failed to develop a broader repertoire beyond its highly successful but narrow range of T-shirts and Y-fronts.”
Moreover, it had been reported that the brand’s website was only revamped two years ago making it too late in the race in the e-commerce. Plus, most brands are making use of mobile app coupled with strong brand offering making American Apparel more left behind the race.
Managing director of branding agency FreshBritain Bob Sheard said, “For ecommerce to succeed the brand and product needs to be addictive. The brand content needs to feed that addiction, so that the consumer revisits the site to nourish their addiction. American Apparel it seems didn’t identify what about their product and brand might be addictive and consequently didn’t exploit it fast enough.”
“The marketing and advertising may [also] have contributed in so much as they are delivering basic product – the product has no tangible superiority over the competition and in that situation the marketing and advertising must create a clear emotional differentiator.” Sheard added.
On the other hand, Paula Schneider the newly appointed chief executive of American Apparel said that the differentiator could be the newly designed advertising campaign. In an interview last February, Schneider said that the brand will make it a point to stay away from overtly sexualized ads to focus on social issues like gay rights and anti-bullying.
Sheard then added, “Coming back from the brink will require a wholehearted investment in a ‘redemption’ narrative, American Apparel needs to figure out what about them is addictive and then align the meaning of product to the meaning of the brand.”
Finally, Schneider added saying that American Apparel needed restructuring in order to achieve “stronger, more vibrant company”.