Abercrombie & Fitch will boost marketing spend for the second consecutive year to complement the growth of its new regional marketing hubs.
The company’s chief executive, Fran Horowitz, said the company is currently in “transition” between running its marketing entirely out of the US and splitting the spend between HQ and local markets.
Abercrombie & Fitch, which owns Hollister as well as its eponymous label, has opened offices in London and Shanghai to run its EMEA and APAC regions respectively. Those hubs have begun producing their own individual local campaigns, working alongside the global marketing operation rather than for it.
Now, Abercrombie & Fitch is building out those teams and investing more cash into its “localization efforts”, according to chief financial officer Scott Lipesky.
The company is currently advertising for two brand marketing managers in London and Shanghai as part of the pivot.
The latter marketer will be responsible for launching campaigns on Chinese online retail site Tmall – the “biggest piece” of Abercrombie & Fitch’s digital business in APAC.
“We’re really excited about some merchandising and marketing talent that we put into the Shanghai office, and really building an assortment for Tmall and building a better strategy for Tmall versus what we had in the past,” said chief executive Fran Horowitz on a call with investors this week (4 March).
“There's clearly a lot of noise out there in key markets in Europe and with the coronavirus in Asia and moving less,” added Lipesky “But we are optimistic long term, and that's going to be a key driver for us long term.”
A marketing 'step-up'
Abercrombie & Fitch is planning to raise marketing budgets globally after last year’s spend increase paid off in “positive cross-channel traffic and support ongoing digital growth”, said Lipesky.
Spend on ‘marketing, general and administrative expenses’ was reported as down on 2018’s $485m at $465m, however Lipesky confirmed broken out marketing spend increased year-on-year.
“We made a really nice step-up back in 2018 with marketing,” Lipesky said. “We continued in 2019 and will continue in 2020.”
The company has made a concerted effort to speak to its core Gen Z customer by spreading media buys across new platforms such as Tik Tok and Twitch, as well as YouTube, Instagram and Spotify.
The brand also reworked its creative to speak more “authentically” the to its teenage audience by way of the ‘World Teen Mental Wellness Day’ and the ‘Hollister Confidence Project’.
Results for the year were positive overall, with net sales rising 1% to $3.62bn. Comparable sales also rose by 1% but growth slowed from 2018’s 3% year-on-year increase.
The end of 2019 marked the second full year of Abercrombie & Fitch’s ‘growing while transforming phase’, which – alongside striving for operational efficiencies – aims to move the brand from its days of trendy stores and topless models to an era of positivity and inclusivity.
Its "Fierce" campaign, for instance, features the likes of athletes Megan Rapinoe and Kyle Kuzma sharing “their personal experience from self-empowerment, body positivity and overcoming obstacles”.