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.
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.
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.