American Apparel (Group 4)

American Apparel

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Background

American Apparel is a US-based company, which designs, manufactures and sells clothing and accessories for men, women and children through retail, wholesale and online distribution channels. American Apparel is a manufacturer, distributor and retailer of branded fashion basic apparel that operates around 239 retail stores in 20 countries in the Americas, Asia, Australia and Europe.

The company operates its business through the following four segments: U.S. wholesale, U.S. retail, Canada and international.

American Apparel’s U.S. wholesale segment consists of the company’s wholesale operations of sales of undecorated apparel products to distributors and third party screen printers in the US, and online consumer sales to the US customers. U.S. retail segment consists of American Apparel’s retail store operations in the US, which comprises of around 136 retail stores.

The company’s Canadian segment consists retail, wholesale and online consumer operations in Canada. The retail operation in the Canada segment comprises of around 31 retail stores.

American Apparel’s international segment consists of the wholesale, retail, and online consumer operations outside of the US and Canada. The retail operations of segment comprises of around 75 retail stores operating in 18 countries.

American Apparel is unique for two main reasons: Since its inception in 1989, it has been positioned as an environmentally and socially responsible operation. It’s also a domestic producer — a rarity among major U.S. clothing lines — that sells in both the wholesale and retail sectors.

American Apparel’s Downward Spiral

There were 3 major causes to American Apparel’s downward spiral. Firstly, CEO strife led to the severing of ties with all former stockholders as well as ex-CEO and founder Dov Charney. Secondly, American Apparel also had financial issues they had to settle such as legal fees and debt. And finally, they had continued losses in sales that can be attributed to the controversial branding.

The company filed for bankruptcy in the U.S. on October 5, 2015. In February 5, 2016, American Apparel exited bankruptcy after its financial restructuring plan was accepted. With this, the company is now privately owned by its creditors and bondholders, severing ties with all former stockholders as well as ex-CEO and founder Dov Charney.

Despite the large percentage of American Apparel’s customer base, consumers can easily avail themselves of alternative products. This lack of exclusivity can be attributed to the apparel industry being highly saturated and competitive and due to the nature of American Apparel’s low-differentiation type of product; basic apparel.

Among consumers, American Apparel has become a cult brand with a strong Facebook and Twitter presence and 3-year history of creative online marketing ventures, albeit having quite a negative reputation regarding its controversial campaigns.

Research Question

Given this pretext, our group is focusing on rebranding the retailer’s brand image by analysing American Apparel’s marketing strategies before and after bankruptcy and explore how social media can help to reinvent the brand. Our objectives include strategies to improve any negative sentiments post bankruptcy by analysing marketing strategies before and after bankruptcy.

This study aims to bring a fresh perspective to marketing a brand, particularly after a financial setback, and how a fresh start can be made possible with social media strategies.

Marketing Strategies Before Bankruptcy

Pre-bankruptcy, much of the company’s advertising relied on controversial branding. Long known for edgy, sexually charged advertising and store displays, the company lost its grip on the hottest fashion trends and basic retailing strategy, with stores selling the same goods year-round. The racy print advertisements generated lots of publicity for the company, but much of it was negative. In 2015, the struggling brand, which was founded in 1989, spent no money on marketing.

Marketing Strategies After Bankruptcy

The company purportedly ditched the suggestive branding and, in a June 2015 presentation, outlined a new branding strategy that’s in line with a “positive, inclusive, socially-conscious” mindset.

Firstly, the company will try to return to its Americana roots by introducing a “Made in the USA” crowdsourcing initiative. Secondly, the company is also tapping into celebrity photographers, artists and social influencers to promote the merchandise in a new campaign. The marketing strategy includes media buys in print, digital and out-of-home, as well as a robust social media plan.

American Apparel have partnered with the Global Philanthropy Group on issues of women’s rights and LGBT rights, to “take the brand to the next level”. However, this is in contrast to the advertising that they will still be carrying out, where racy billboard advertisements are still a mainstay.

Our Project Outline

  1. Research current social media initiatives on social media, focusing on the company background and articles available on the social media  strategies that American Apparel uses
  2. Identification of flaws by comparing current social media initiatives to that of an ‘ideal situation’ using the framework of “Strategic Options for Social Media Development”
  3. Suggestions by recommending a set of solutions tailored to the company

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