Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Abercrombie & Fitch Co. (ANF), Aeropostale, Inc. (ARO): Can Retailers Stay Relevant?

Retail strategy is effective

These specialty retailers are generally located in mall locations, making them the primary shopping destination for teenagers. Getting a lease at a shopping mall is fairly expensive, and it comes at a first come, first serve basis. Abercrombie & Fitch Co. (NYSE:ANF), American Eagle Outfitters (NYSE:AEO), and Aeropostale, Inc. (NYSE:ARO) have leases in some of the most prominent shopping locations in the world.

Source: Macerich

These teen retailers have to compete for teenagers that come from households with an average income of $73,000 (population sample is 934,000). This means that an every-day-low pricing strategy cannot work. However, these high-end fashion retailers have to appeal to this younger customer demographic by being both expensive, stylish while offering a unique shopping experience. This is exceedingly difficult to accomplish, and it is unlikely that new clothing retailers will be able to push these company’s out of existence. In all likelihood, these companies have staying power, regardless of how consumers feel about the brands. Dollar-per-dollar, these three companies provide the most luxurious shopping experience for the younger teenage demographic.

Conclusion

The teenage retail experience is unquestionably here to stay. The guidance that these companies provided was particularly strong between Abercrombie & Fitch Co. (NYSE:ANF) and American Eagle Outfitters. I wouldn’t lose hope, based on survey results alone. After all, it is the teenagers from the most affluent families who will be making buying decisions. The only luxury shopping experience for younger teenagers can be found at these high-end shopping malls. Once you walk into these malls, you soon realize that Abercrombie & Fitch, Aeropostale, Inc. (NYSE:ARO), and American Eagle Outfitters are the biggest games in town.

The article Can Retailers Stay Relevant? originally appeared on Fool.com and is written by Alexander Cho.

Alexander Cho has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.