Identifying the Business Problem

As a clothing retailer with a long history of outfitting wealthy and famous Americans, Abercrombie & Fitch (A&F) strived to "create a" "Classic American Style" in its clothing line. Executives at A&F also pushed the classic look of A&F into modeling, advertising, and the employees at individual stores where the company culture strongly influenced hiring new employees that fit the A&F "look." The clothing retailer ran into legal trouble in 2003 when a class action lawsuit was brought against the company for racial discrimination in hiring and employment practices. In attempting to create the "Classic American Style," A&F found itself facing expensive settlement costs and coming under intense public scrutiny. A&F executives maintain that the company did nothing wrong in its hiring and employment practices. This problem raises the issue of a company hiring employees based on looks and how that can quickly deteriorate into hiring decisions based upon race.

Identifying the Critical Issues

1.Abercrombie has a brand image that it is trying to promote and protect; however, the societal environment surrounding the company is changing rapidly and the company's brand is not changing along with society.

2.Abercrombie promotes hiring employees with the Abercrombie "look" which raises the question of whether or not a company can or should make hiring decisions based upon looks.

3.The company claims that an anti-discrimination policy has been in place at the company for a long period of time and does not claim responsibility in the settlement; however, the company does not have a strong track record in regard to racial sensitivity or diversity.

4.Abercrombie settled the class-action suit and has complied on base levels with all requirements of the settlement, but questions remain about how much the company has really changed in response to the suit.

Stakeholder Perspectives Include:

Minority Employees/Plaintiffs in the discrimination lawsuit. Employees of color and minorities have been relegated to menial positions within the company, working in back rooms, after hours, and out of sight of the public. Applicants for store positions were denied employment or treated unfairly based upon race because they did not fit within the Abercrombie "look." There is also a lack of diversity in Abercrombie & Fitch advertisements and promotions.

Abercrombie & Fitch. The company maintains that it has done nothing wrong and that it has the right to promote its brand image as it sees fit. The retailer remains obsessed with beauty and the brand image, maintaining a marketing strategy that is extremely focused on a narrow target audience.

Possible Solutions to the Problem

The appropriateness of hiring employees based upon their look.

Issues to consider:

A&F has a long history of providing clothing to wealthy and famous individuals who helped brand the clothier as "Classic American." How can the company work to retool this brand image to include the diversity of modern America?

Timeline of Events

1892David T. Abercrombie founds Abercrombie & Co, a store for high-end outdoors products, in Manhattan.

1900Abercrombie enters into partnership with Ezra Fitch; the company relocates and reincorporates as Abercrombie & Fitch a few years following.

1907-1960sAfter resignation of Abercrombie, company expands to become the largest sporting goods store in the world; offerings expand to include sport clothing in 1913; gains reputation of outfitting many of America's rich & famous, including Teddy Roosevelt, Ernest Hemingway, Amelia Earhart, John F. Kennedy, Clark Gable and others; expands across country through late 1960s.

1977Company files for bankruptcy and is bought a different sporting goods retailer.

1988The company is purchased by the Limited, Inc and repositioned as a men's clothing line, to which women's clothing was added.

1992Michael Jeffries, current CEO, hired and reinvigoration and branding of A&F begins in earnest.

1994A&F becomes financially successful again.

1996A&F enters NYSE.

1997A&F launches A&F Quarterly.

1998Abercrombie completes public acquisition and completely spins off from the Limited.

2002A&F releases line of racially insensitive T-shirts and comes under fire from public.

2003-2004First class-action lawsuit brought against A&F for racial discrimination; a second suit follows five months later; a third class-action suit for gender discrimination follower shortly after and all three are subsequently combined for mediation purposes.

2005Abercrombie & Fitch settle suit, but deny any wrong-doing.

Discussion Questions

1.How did the positioning of Abercrombie & Fitch's "Classic American" brand lead to class-action lawsuits regarding racial discrimination?

2.Did Abercrombie respond appropriately to the terms of the settlement and has the company shown improvement in regards to diversity?

3.What further changes can Abercrombie take to become more diverse?

4.Is it important for top management to be as diverse as the workforce?

5.How can Abercrombie & Fitch repair its image with the public?

Did Abercrombie & Fitch "do a"nything wrong? Is hiring on the basis of looks wrong