Wednesday, June 22, 2011

Everything To Everyone And Nothing To No One

An article today about brands that will disappear in 2012 really grabbed my attention because American Apparel was on the list.  Now, I wasn't surprised about them being on the list because quite honestly, when they went public I figured it was just a matter of time before they eventually ended up as a "pump and dump" statistic in the annals of the corporate world.

Of course the article wants to define American Apparel as,
The once-hip retailer reached the brink of bankruptcy earlier this year, and there is no indication that it has gained anything more than a little time with its latest financing. It currently trades as a penny stock. The company had three stores and $82 million in revenue in 2003. Those numbers reached 260 stores and $545 million in 2008.
The reality is that American Apparel was also a player in the promotional product market and the private label market.  Basically, if you read both of the linked articles you will realize that on the west coast American Apparel is known as a big player in the promotional product market and on the east coast it is perceived as a 'hip retailer.'

Everything to everyone and nothing to no one.

While the promotional products market is huge, and the private label market is even bigger you also have competitors like Alstyle, Gildan, and Delta, to name a few who are focused on those markets; Alstyle is half the size of American Apparel and the other two are a little larger but only marginally.  All of them are aggressively defining their markets and exploring new ones; for example, Gildan's bought a sock company a few years ago so that it would have access to Walmart, all in an attempt to compete with Fruit of the Loom. 

Common sense would make you ask one simple question, "Why would someone pay retail for an American Apparel product at one of its stores when they can also find themselves receiving an American Apparel made product for free as some promotion?"

Personally, I could never understand how a company with a customer base that was 85% female could be so popular with women when Dov Charney, the CEO, has had more sexual harassment lawsuits filed by employees against him than you could imagine!  This won't be an issue much longer.

The future belongs to those companies that define themselves and then embrace their market; at some point companies have to say, "That's not who we are and that's not what we do."  Success will not come to those who hedge their bets by dabbling in a variety of markets. 

Everything to everyone and nothing to no one.

I always admired American Apparel because they were cutting edge and swimming against the current with the concept of  "Made in Downtown LAVertically Integrated Manufacturing" and their vocal support of causes such as immigration reform, support for gay rights, and environmental issues.  They were "Web 2.0" long before it became common.

But if you are going to be more than just a tee shirt, then don't sell to markets where all they care about is a tee shirt, because that ends up being a battle over price. 

I really do hope that somehow American Apparel is able to find its way and recognize that it was once a brand that's value was greater than the sum of its parts.

1 comment:

Carl said...