Saving American Apparel with the Retailing Mix



Back in 2015, a once-successful brand by the name of "American Apparel" had filed for chapter 11 bankruptcy. This was a shocker to many as not even 8 years prior, the company was trading high on the stock market and had build a reputable and profitable brand. What could of been done differently to save "American Apparel" using the retailing mix?

 Applying the Pricing Mix

 Due to a domestic manufacturing model, American Apparel's gross margins were significantly higher than other basic apparel brands that carried similar wear of bodysuits, casual lingerie and mid-end footwear. According to the company, its blended margins were 70%, in comparison to an direct competitor like GAP, who averages 30%. In order to create more profitability moving forward, a great strategy would be to cut down on manufacturing costs by moving labour overseas. Even though this is seen as bad business for local economy and for brand image - American Apparel can use this opportunity to build safe and upscale facilities for the workers in Mexico or China, enforce age restrictions and equal pay - and advertise these actions to improve their brand image by focusing on social responsibility. 

 Applying the Communications Mix

 With so many customers shopping and comparing prices online - it can be challenging obtain and keep loyalty. However, despite high product prices and controversial ad campaigns - in 2007, American Apparel was ranked as 8th most trusted brand in the world, ahead of competitors such as H&M and Levi's. To build on the momentum which was already there - a great strategic move would of been to create a well-designed and structured application  for the target market to use (reported 21-27 metropolitan young adults).

 American Apparel had fallen just as quickly as it had risen. Once a trend-setter and leader of keeping all stages of the brand production process within the USA - has now become a spot in American retail history - with only a sister website remaining as a faint memory of what was. A great reminder to all retailers that if one cannot keep up with the ever-changing marketing and technological landscape - survival is unlikely.

 References:

 https://en.wikipedia.org/wiki/American_Apparel

 https://www.marketwatch.com/story/5-reasons-american-apparel-is-bankrupt-2015-10-05

Comments

  1. Unknown30 March 2018 at 19:46

    I love your last sentence that states that it is important to keep up with the changing market. I definitely agree with that because what consumers want is always changing and if a company ignores customer's changing tastes, it would be difficult to survive.

    ReplyDelete

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