Entry of Abercrombie and Fitch in France

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INTRODUCTION

Michael S. Jeffries, Abercrombie’s CEO, told stock analysts in May that the four-story New York store, which opened in November, has drawn “a very large percentage of international customers, a very large percentage European,” adding, “We are thrilled with what we are learning about running high-volume stores. It gives us huge confidence for the international potential of this brand.” (Abercrombie & Fitch, 2007)

Then, Abercrombie & Fitch decided to expand its brand throughout the european market.

Abercrombie & Fitch has recently opened its first store in Europe. Indeed, on March 22, 2007, Abercrombie & Fitch opened a store in Mayfair, London. It is a big success, indeed the store generated a volume of $280,000 in its first 6 hours of operation. (Abercrombie & Fitch, 2007)

On July 13, 2007, Abercrombie & Fitch Head Office based in New Albany, Ohio, United States of America, announced “its plans to expand its retail presence throughout Europe. The Company is in the process of securing locations in Italy, France, Germany, Spain, Denmark and Sweden and plans to identify additional key locations in the United Kingdom.” (Abercrombie & Fitch, 2007)

Because of the success of the first european store based in London, the Board of management decided that the new team based in England will be responsible for the expansion of the company throughout Europe.

A contract between Abercrombie & Fitch and PBS Real Estate has already been signed. Indeed, “Abercrombie & Fitch has retained PBS Real Estate, LLC (PBS Real Estate), and its Principal Laura Pomerantz, as exclusive European and United Kingdom real estate consultant to identify locations that best support the Abercrombie & Fitch brand attributes.” (Abercrombie & Fitch, 2007)

The Board of Management based in United States of America thinks that it is a good time for expansion throughout Europe. Indeed, Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch stated: “We have been evaluating the European markets for some time and it is clear that the demand for the Abercrombie & Fitch brand is very strong”. He added: “We believe that now is the ideal time for us to execute our international growth strategy with expansion throughout Europe.” (Abercrombie & Fitch, 2007)

As mentioned above, Abercrombie & Fitch plans to expand in many markets throughout Europe. As the Marketing Manager of Abercrombie & Fitch Ltd., based in United Kingdom, I got the responsibility to choose which market is the best in order to keep on making the brand successful.

The marketing team has worked on the expansion throughout Europe for six months and we decided to expand the brand in France first.

The report identifies the reasons for selection of french market, presents the market entry strategy, outlines the actual and potential barriers of entry and identifies the issues which could arise from cultural differences.

1.REASONS FOR SELECTION OF FRENCH MARKET FOR ENTRY BY THE COMPANY

The marketing team analysed the french clothing market:

Overview

“The French clothing and textile industry is the second largest market in the EU and remains one of the leading motors of the French economy. High quality, style and creativity contribute to the glamorous worldwide reputation of "made-in-France" clothing.” (Allaire and Couvelaëre, 2005)

According to Allaire and Couvelaëre (2005), “the french clothing market is dependent on seasonal and discount sales. They peak at four periods: December (Christmas), January (sales), June-July (sales) and October (first winter purchases). In 2003, January sales represented 12.8% of the total annual turnover.”

Allaire and Couvelaëre (2005) stated: “promotions and discount sales are dramatically increasing. They represent 42% of total sales in the distance-selling network and 32% of sales in hypermarkets. In 2003, their share accounted for 30% of total childrenswear sales, 26% of womenswear and...
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