Competitive Environment

Topics: Revenue, Expense, Net income Pages: 11 (2675 words) Published: January 10, 2011
CASE #12
The Competitive Environment in the 18-22-Year-Old-Apparel-Market

Difference in A&F΄s and AE΄s retail strategies

To start with, both A&F and AE share the same target market and offer similar merchandise. However, there are some differences in their retailer strategies that make this fashion stores stay competitive. Both retailers target mostly teenagers, and offer casual wear for young men, women and kids accompanied with accessories, outerwear, footwear and sweaters... As a difference, AE offers dorm wear and intimate apparel. In addition, A&F goods are more expensive and tend to target higher class teenagers while AE prices are ¨a little cheaper.¨ For this reason, A&F also runs Hollister Co. Stores which can compete on the basis of lower prices. Moreover, AE has a competitive advantage in the location part of the retail mix, meaning that the number of stores of AE is grater compared to A&F.

Brand Images

As previously mentioned, A&F merchandises are more expensive compare to AE offerings. Therefore, the image brand of A&F emphasizes higher class teens and younger adults. Nevertheless, A&F has a more effective emotional appraisal as one can realize from Jenifer Shaffer thinking ¨It’s like I really had to have Abercrombie.¨ In addition, as AE is cheaper compare to its competitor the image of such brand is less attractive and is associated with phrase ¨a little cheaper.¨ However, both brands are seen as trendy and sexy.

Other Competitors

To continue, other stores that target same customers and have similar offerings as A&F and AE are Gap and J Crew. Gap has differentiated itself on the level of prices by segmenting its offerings on the bases of discount, middle and high prices. Therefore, Gap targets a greater group of customers by operating Old Navy (low price), Gap (mid price) and Banana Republic (high-end price) and presents a greater number of goods for people of different incomes. Furthermore, J Crew has also collections of men's and women's clothing, accessories, and shoes; however, in a more ¨classic style¨. Many of the products feature luxury materials such as Italian cashmere and leather, Czech glass buttons, and British wool. In addition, the company produces a wedding and special occasion’s line, a high-end line known as the "J.Crew Collection", a children's line called "Crewcuts", and a line called "Crewmutts" that features items for dogs.



According to the presented positioning map, one can see that AE, Old Navy, A&F and Gap are most what customers expect from these companies-casual but fashionable stores with moderate service, while Banana Republic and J Crew are positioned differently and could satisfy costumers of other needs.

Stronger Competitive Position

In our opinion, A&F has the strongest competitive position due to its high value of brand image. However, according to the price preferences, AE has the highest competitive position due to the low price but still fashionable offerings.

Case #13

Tiffany΄s and Blue Nile: Comparing Financial Performance

Tiffany΄s Strategic Profit Model-Jan 07


Blue Nile Strategic Profit Model-Dec 06

[pic]The difference between being the manufacturer of the good you sell rather than just a seller of such goods is best shown by the cost of goods sold represented on the income statement. In addition, one can realize that the cost of goods sold is much higher for Blue Nile since they have to first purchase the diamonds and then resell them through the engagement rings. For this same reason, the income statement shows higher profits for Tiffany΄s rather Blue Nile΄s. The difference also becomes obvious when observing the fixed assets of such companies where as Tiffany’s fixed assets are much higher compared to Blue Nile’s. In addition, if looking at the inventory numbers, one can realize that Blue Nile’s keeps its inventory low due to the high expenses of purchasing it and having it on...
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