Abercrombie & Fitch Gains Single Cross-Channel View of Customers

Newly launched loyalty programs and advances in its CRM solutions will provide Abercrombie & Fitch with "a single view of the customer across channels, to target both product and promotional messages to customers on a segmented or ultimately, individualized basis," said CEO Michael Jeffries during a recent conference call discussing the retailer's Q2 financial results.

"Our CRM programs are something that we have been working hard on for nearly two years," said Jeffries as he announced the launch earlier this month of new loyalty club programs for both Abercrombie & Fitch and the retailer's Hollister brand. "We believe these programs will allow us to gain insight into the behaviors of new and returning customers," he added, noting that the retailer had 150,000 pre-registrations prior to the clubs' launches "and we expect this to grow significantly in the coming weeks and months and become a meaningful part of our model."

Abercrombie's financial results for the second quarter were, by Jeffries' own admission, disappointing, although the company's direct-to-consumer segment posted its 10th successive quarter with year-over-year sales growth of 25% or better. While companywide net sales for the quarter increased 4% to $951 million, comp store sales declined by 10% compared to the same period the previous year. Comp store sales were down 5% in the U.S. and 26% for Abercrombie's international stores.

As a result, the retailer is committed to growing its inventory at a slower pace than the rate of sales growth, a move supported by investments in new merchandising, planning and allocation systems that are now live for the spring 2013 season.

"These new systems will greatly enhance the efficiencies in building plans and give us much better visibility on margin and inventory plans by selling channel," said Jeffries. "In addition, these systems will shift our focus to selling margin rather than IMU," which stands for Initial Mark-Up, the difference between the cost of a good sold and its retail price. Jeffries termed this change "a significant improvement given the evolution and complexity of our business today."

A third area of focus is insight and intelligence, particularly with regard to its international operations. "We are building the team to help us better understand macro, competitor and customer dynamics in our key markets," said Jeffries, adding that the business intelligence would include both primary and secondary research, "as well as leveraging our associates to gather and synthesize intelligence they come across."

For related content: Abercrombie & Fitch Closing 180 More Stores by 2015

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