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SWOT Analysis of Hollister Co.

By: Jessica Gray, Mehrosh Hasher,

Lydia Russo, Rachael Ware, and Desiree Urban

October 4, 2009

AA 381 Fashion Buying

Introduction:

Hollister Co. was launched by Abercrombie & Fitch Company CEO Michael Jeffries in July 2000, and is a lifestyle brand that markets apparel and fragrances reminiscent of the southern California way of life (Palmer, 2009). Hollister Co., whose clothing is known for their signature seagull logo embroideries, has become widely recognizable due to its success in creating a strong brand image (Palmer, 2009). Hollister Co.’s retail stores, featuring only its own private label merchandise, are usually located in malls and generate significant traffic due to its unique atmosphere complete with ultra-dimmed lights and blaring popular music (Palmer, 2009). The brand’s target market consists of both males and females between 14-24 years of age (Palmer, 2009). Hollister Co. is known for the model-like staff it employs, and the sensual advertisements and store décor that accompany them (Palmer, 2009). Their clothing reflects this ideal, running in notoriously small sizes and only consisting of a very limited collection of casual beach-ready graphic t-shirts, jeans, thermals, swimwear, leggings, shorts, and sweatshirts (Palmer, 2009). Though Hollister Co. has recently been suffering large net losses, it has ranked first place for the Teen’s Top Clothing Brand for four consecutive seasons since 2007, and has generated over 1.6 billion dollars in sales in that same time period (Palmer, 2009).

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Hollister Co.’s Target Market (Quantcast, 2009)

S: Strengths

This section will focus on Hollister Co.’s strengths as a brand, business, and retail store. We will identify and evaluate the company’s strong points in various aspects of their marketing, sourcing, and business planning strategies.

1. Strong Brand Image: Relating to Your Customers and Building Loyalty

Hollister Co. has been very successful in incorporating its southern California surfer theme in all aspects of the business. To add a mysterious, vintage vibe to the brand, CEO Michael Jeffries even developed an elaborate fictional storyline centered on the origination of Hollister Co. (Palmer, 2009). Although the brand launched in 2000, most of the clothing sold in Hollister Co. feature graphics alluding that the company was established in 1922 (ANF Corp., 2009). Jeffries claims that the retailer was named after John Hollister, an eventual sea merchant from California born into a very wealthy family (ANF Corp., 2009). After graduating from Yale University in 1915, he married the daughter of a Dutch businessman in 1919 and sailed to Los Angeles (ANF Corp., 2009). That same year, his son John M. Hollister Jr. was born and John Sr. founded Hollister Co. in Laguna Beach, California (ANF Corp., 2009). The company served as a small trading company, which sold imported goods from the South Pacific until John Jr., an avid surfer, took over the business and expanded the company to include surf apparel and equipment (ANF Corp., 2009). Abercrombie & Fitch Company calls this fictional tale, "a story of passion, youth and love of the sea [combining] the harmony of romance, beauty, [and] adventure” (ANF Corp., 2009). This genius move has instilled a sense of history, memorabilia, and prestige to the clothing, further enhancing its appeal to young customers.

The ever present California theme translates into the entire stock of merchandise carried in Hollister Co.’s retail stores. Most of the garments sold in Hollister Co. feature their trademark seagull logo, either embroidered or print screened on to tank tops, jeans, and graphic t-shirts (Palmer, 2009). The style of their merchandise is completely dominated by a beach theme, including such seaside staples as board shorts, swimsuits, flip flops, etc. Even their casual garments reflect the wear and tear of the ocean, as Hollister Co. offers relaxed-fitting worn-out jeans, whitewashed and with holes in the knees (Palmer, 2009). Their extremely casual lightweight cotton tees and other breezy tops are also reminiscent of the clothing one would wear walking alongside the ocean. The fragrances sold in Hollister Co. have also typically been evocative of the beach, the ocean, and nature (Palmer, 2009).

To further instill this ideal California lifestyle into their brand, Hollister Co. decorates their retail stores accordingly. The retailer’s façade emulates that of a beach bungalow or cabana, complete with shutters, palm trees, and beach-bodied mannequins displaying their latest looks (Thomas, 2009). Inside their stores, the walls are decorated with large sensual photographs of young couples and individuals engaging in an array of activities centered on the ocean (Thomas, 2009). Huge surfing images adorn the walls along with actual surfboards (Thomas, 2009). These in-store ads feature attractive males and females with exceptionally well-built beach bodies (Thomas, 2009). Even the sales associates within the store, more formally known as brand representatives, are hand-selected to be similar physically to the surfer models in the advertisements (Thomas, 2009). Their employees serve as live models wearing Hollister Co. clothing. Customers have traditionally reacted positively and sales have increased as a result of seeing Hollister Co. clothing represented in its best light, on a seemingly ideal individual. Hollister Co.’s target market yearns for this ideal southern Californian relaxed, unfussy, comfortable, lifestyle and the company has taken full advantage of this niche in the market. They not only want to shop, but are craving that environmental stimulation and experience that the beach offers as well.

2. Unique Atmosphere: Sensual Stimulation Excites Buyers

Hollister Co., along with its parent company Abercrombie & Fitch Company, currently owns and operates over 450 retail locations across the nation (Hunter, 2008). Each store has been designed to resemble Surf City, California (Hunter, 2008). In order to attract their youthful customers, Hollister Co. uses a variety of techniques, capitalizing on all of their target market’s senses. The retail store is first and foremost very visually stimulating, implementing a very dimly-lit sales floor (Hunter, 2008). Image and appearance are key to Hollister Co.’s success, which is why at one point Hollister Co. spent ten million dollars purchasing flat screen televisions in order to broadcast live feeds of surf conditions in Huntington Beach, California within the store (Hunter, 2008).

Hollister Co. aims to create an engaging atmosphere within their stores that is reminiscent of a night club or a secret beach bungalow (Hunter, 2008). It is a part of the company’s policy to incorporate booming rock and alternative music into their customer’s shopping experience (Hunter, 2008). Each store has a stereo which plays very loud pre-determined songs, which have been selected by the corporate team (Hunter, 2008). The playlist consists of popular music that Hollister Co. believes their desired target market will enjoy (Hunter, 2008). Using a third form of sensory perception, one can even smell the beach and sunny California within Hollister Co. every time they shop. Sales staff is encouraged to spray various Hollister Co. fragrances throughout the retailer, as well as on the clothing (Hunter, 2008). Retailers like Hollister Co. that are trying to garner the attention and business of young, fickle, teens need to employ these unique and compelling techniques in order to stand apart from a myriad of competitors. Hollister Co. has successfully created a shopping experience in which their target feels comfortable, excited, and ready to purchase.

3. Store Locations and Layout: High Visibility Spells Traffic

Hollister Co.’s retail stores are extremely productive thanks in part to their locations in high traffic areas such as shopping malls which receive high visibility (Hunter, 2008). The store’s productivity, measured in sales per square-foot, $531 per square foot last year (Hunter, 2008). While it was lower than in previous years, Hollister Co.’s retail stores are still considered very profitable overall (Hunter, 2008). Any stores bring in over $500 per square foot are considered to be extremely successful (Hunter, 2008). Furthermore, Hollister Co. has surpassed the sales of one of its lead competitors for many years, PacSun, who also operates locations in malls (Hunter, 2008). Abercrombie & Fitch Company expects Hollister Co. to continue to be its primary driver of growth within the company for years to come (Hunter, 2008).

Hollister Co.’s retail locations use a variety of displays in order to effectively merchandise their products to customers. Wall shelves, tables, mannequins, rounds, and hanging racks are utilized in order to present merchandise in an aesthetically pleasing way to Hollister Co.’s target population (Hunter, 2008). The stores remain uncluttered and the layout is wide open to allow for easy navigation throughout. Large armoires and shelving units are confined to the walls in order to not impede customers’ views of the cashier and dressing room signage (Hunter, 2008). Traditional visual merchandising methods are used in the store’s front windows, as well as in the placement of merchandise in the same categories being located near one another (Hunter, 2008).

W: Weaknesses

This section will focus on the weaknesses within the business and retail operations of Hollister Co. Our group will identify possible downfalls within Hollister Co.’s retailing, marketing, and business strategies.

1. Lackluster Product Offerings: Alienating Your Customers

First and foremost, Hollister Co. has never been branded as being a trendy or particularly fashion-forward company (Hunter, 2008). Their product offerings consist mainly of t-shirts, polos, henleys, sweatshirts, outerwear, bathing suits, jeans, flip-flops, and fragrances with their logo on them or printed with another beach related theme (, 2009). As one can see, their clothing is very basic and very casual in style, which is not to everyone’s liking. Hollister Co. is certainly not a one-stop shopping experience, and while they do promote fads and popular trends, their product line relatively remains the same from season to season (Hunter, 2008). Furthermore, as previously mentioned, all of the garments sold within the retailer look and feel beach-like. Their customers are very limited in terms of varying styles and types of clothing sold in these stores.

In keeping up with their “ideal” surfer, beach-bodied, theme, Hollister Co.’s sizes have also tended to run small as compared to other stores (Complaints Board, 2009). Hollister Co.’s teen target market, as well as their customers in their mid-twenties, has a hard time fitting into their clothing (Complaints Board, 2009). The company’s standard small carries the measurements 33-25-35, medium which carries the measurements 35-27-37, or large which carries the measurements 37-29-39 for women (Hollister Co., 2009). Complaints from customers buying clothing for their teenage daughters have poured in. They argue that the discrepancy in sizing makes their young girls feel obese when they do not fit in them and that Hollister Co. focuses too much on the thinner figure both in advertising and fit (Complaints Board, 2009). Furthermore, Hollister Co. targets slimmer-figured people in the way their merchandise is displayed. Regarding their jeans, they keep the smaller sizes on the bottom closer to reach and the larger sizes up high (Complaints Board, 2009). Former employees of the Hollister Co. have stated that girls who required larger sizes were often embarrassed when asking for assistance in reaching them (Complaints Board, 2009). With the average dress size of Americans increasing from 8 to 14 in recent years, Hollister Co. may need to revamp their sizing soon (Cotton Inc., 1997).

2. Retail Operations: Unfair Treatment of Employees

Employees of Hollister Co. have been known to report maltreatment in situations in which they have been treated unfairly in the workplace. Because Hollister Co. typically employs sales associates that have the southern California look, along with that same physical attractiveness, employees who don’t fulfill this persona are sometimes pushed aside (Gonzalez, 2009). While Hollister Co. is legally required to hire sales staff regardless of race, gender, handicap, or physical appearance, they are not allowed to turn job applicants down based solely upon their ideal (Gonzalez, 2009). However, once hired, Hollister Co. has been known to cast those who do not fulfill the company’s “look” to work in the back room of the retail store stocking or during closing time (Gonzalez, 2009). The store traffic around closing time is significantly less than in the daytime (Gonzalez, 2009). Those considered emulating that southern California look enough typically work as greeters and sales assistant that fold clothes and assist on the sales floor (Gonzalez, 2009).

Besides limiting their staff in terms of role within the store, Hollister Co. also limits them in positions, promotions, and advancement within the company. Hollister Co. lacks positions that hopeful store managers and their sales associates can aspire to (Gonzalez, 2009). Once one is hired as a sales representative for the brand, they typically are confined to remaining as such (Gonzalez, 2009). While raises can be given, there is no room for advancement within the company (Gonzalez, 2009). Furthermore, to be considered for the role of assistant manager, a bachelor’s degree is required (Gonzalez, 2009). So, for those without a college degree, the door of opportunity stays shut.

3. High Price Points: Are They Necessary?

Although Hollister Co. carries far less expensive clothing compared to its parent company, Abercrombie & Fitch, their prices are still considerably high, especially in terms of their target market. Hollister Co. was developed to cater to a much younger crowd than does Abercrombie, and the price somewhat reflects that (Anna N., 2007). However, their prices still remain higher than some of their competitors for very similar products (Anna N., 2007). A signature Hollister Co. t-shirt will cost you $15.50, blouses run around $40, jeans are $50-$60, and full-sized fragrances $30-$50 (, 2009). Young teens working minimum wage jobs have trouble affording the brand and will sometimes turn to cheaper alternatives, since they are so readily available (Anna N., 2007). The parents of teens, who sometimes purchase for their children, tend to also opt for less expensive brands that sell the same basic t-shirts and jeans (Anna N., 2007).

Despite the fact that the company has lost significant amounts of money due to the troubling economy, $26.7 million in total, Abercrombie & Fitch Company has, until now, refused to cut prices (Steigrad, 2009). Owner, Michael Jeffries, has acknowledged the fact that their prices are unreasonably high compared to the actual costs it takes to produce their garments (Steigrad, 2009). As of August of this year, the company has decided to reduce price points within their various retail stores in order to attract new and returning customers (Steigrad, 2009). In an effort to better cater to their target market, and to survive the recession, Hollister Co. will be making the most dramatic price cuts it has in the history of the brand in the next fiscal quarter (Steigard, 2009).

O: Opportunities

This section will be centered on opportunities in which Hollister Co., as a brand, a retail store, and a company, can further advance its placement in the market. Through these suggestions, Hollister Co. may be able to increase brand awareness, profits, and longevity within the retailing business.

1. Increased Market Share: Hollister Co. as a Global Brand

It is likely that Hollister Co.’s largest opportunity, international expansion and growth, will be highly profitable for the brand. Although Hollister Co. already operates more stores than any of the other Abercrombie & Fitch Company segments, it still has plenty of room to grow. Hollister Co. is expected to compel future growth, as it is only currently operating at 50% of its domestic store potential (Mulugetta, 2007). Hollister Co. is expected to be central to Abercrombie & Fitch Company’s growth in revenues (Mulugetta, 2007). Until 2008, Hollister Co. stores had only been located in the United States and Canada; however the retailer was able to successfully develop a strong brand image and popularity overseas. The brand’s international direct-to-customer business grew 78% in 2007, giving Hollister Co. representatives the reason to believe that, “this is additional proof that there is global demand for our brand and it gives us further confidence that we can be successful with our international expansion initiatives” (Hunter, 2008). After successfully launching its first store in the United Kingdom in 2008, Hollister Co. now operates six other retail stores there, which are expected to be in the top ten performing stores in upcoming years (Mulugetta, 2007).

While they hope to three more stores in the United Kingdom in the near future, Frankfurt and Rome are targeted for stores next (Hunter, 2008). The company has expressed that although their initial introduction into an overseas market was slow, further expansion will be at an accelerated pace (Hunter, 2008). Ultimately, Hollister Co. plans to open a total of 1,200 stores globally (Hunter, 2008). Ideally, the company would like to operate around 700-800 stores in the United States and 400-500 stores internationally (Hunter, 2008). So far, Hollister Co. has already reported to have a £1.5 billion turnover in the United Kingdom, which will increase significantly once they expand into other European countries (Hunter, 2008). European markets seem to mesh well with Hollister Co.’s objectives, as much of the continent contains beach communities. European men and women have also been traditionally smaller in size overall from Americans, and an insight into American culture is welcomed there. In the future, expansion into China would most likely prove to be a very lucrative venture for Hollister Co.

2. Additional Target Markets: Expanding the Repertoire

While Hollister Co. has taken full advantage of the niches it’s carved into teenage men and women’s closets, the brand recognizes that an expansion of their target market may be a possibility in the near future (Hunter, 2008). Demographically, the brand appeals to a relatively broad age range, many different races, and both genders, however its target market still only includes those customers looking for a southern California look, those that can afford the steep pricing, and those that fit into their narrow sizes (Hunter, 2008). With the success that Hollister Co. has had in its launch, representatives believe that broadening their repertoire of customers would be relatively easy as they “have the infrastructure, the muscle, and the financial backing” to do it (Hunter, 2008).

Giving the rapidly expanding population of Hispanic teens, it may behoove Hollister Co. to revamp or introduce new merchandise that will effectively attract this new demographic. Hollister Co. should also be aware of the obesity epidemic in America as well, as that will eventually have an effect on their sales as long as they continue to be sticklers about their standardized sizes. The company should also remember that much of the time purchases within their stores are being completed at the hands of parents. Hollister Co. should not only promote brand awareness and loyalty to the teens that shop there, but also to the parents that either personally make the ultimate purchase or provide the money with which their children buy the clothing. Expanding beyond their current boundaries will open up new markets for the brand, creating more possibilities for revenue.

3. Product Development: Varying the Merchandise Mix

Although the accessory, bag, and shoe market can be very lucrative, that particular product offering at Hollister Co. is very minute and lacks in variety (, 2009). A couple choices in flip flops, necklaces, and bracelets make up most of this mix, plus a small amount of bags and hats (, 2009). Developing a larger assortment of these products would be relatively inexpensive, and would appeal to many customers, as accessories know no size (Hunter, 2008). It has been documented that, “the way some retailers try to [increase sales] is to try and tweak the mix that they’re selling and they focus more on accessories because accessories tend to be a more productive category in terms of being able to jam a lot of goods into a small amount of real estate” (Hunter, 2008).

Additionally, a move into performance gear and surf equipment would allow the company to attract an even larger share of the market. Because the brand is already highly recognizable and accurately depicts the southern California way of life, surfers may be very interested in sporting Hollister Co.’s logo on their surfboard or wetsuit. Furthermore, allowing a little more space in the store for trendier pieces, not so casual tops and bottoms, and heavier seasonal garments that don’t have so much to do with the beach, may just result in an increase of sales, as well as an increase in a variety customers.

T: Threats

Our final section centers on identifying possible threats within the marketplace to Hollister Co.’s current operations and profits. Competition from other retailers, scandals within Hollister Co.’s business practices, and socioeconomic factors may all affect the success of the brand.

1. Competition: Standing Out in a Saturated Market

The stores in competition with Hollister Co. include American Eagle Outfitters, Aeropostale, Zumiez, and PacSun (Hunter, 2008). Aeropostale has proven to be tough competition for Hollister Co. due to the fact that they offer very similar merchandise, but at a lower price point (Aeropostale, 2009). Polo shirts from Aeropostale typically cost between $20-$30 and often go on sale, while Hollister Co. polos can cost from $30-$40 (Aeropostale, 2009). Jeans from Hollister Co. will cost you $50-$60, while similar styles can be found at Aeropostale for $40-$50 (, 2009). In order to differentiate themselves from competitors like Aeropostale, Hollister Co. should keep a tight grasp on their target customers by, “producing truly compelling merchandise and providing superior environments for trying them on, as Aeropostale and Coach do” (Karonis and Riley, 2009). Because Hollister Co. lacks price as being one of its stronger competitive advantages, it needs to specialize in another aspect.

American Eagle Outfitters is commonly compared with Hollister Co. mostly because of its use of an eagle logo which closely resembles Hollister Co.’s seagull (McDevitt, 2009). Some customers have expressed their discontentment with the way in which Hollister Co. adds their logo to their garments. While American Eagle Outfitters matches the color of their eagle to the garment, Hollister Co. seems to place little concern in color matching and places their red seagull on all their garments (Answer Bag, 2006). Recently, American Eagle Outfitters has also been competing with Hollister Co. regarding pricing. A pair of American Eagle Outfitters jeans will cost $40-$50 compared to Hollister Co. jeans which are $10-$20 more expensive (American Eagle Outfitters, 2009). Both American Eagle Outfitters and Aeropostale have been positioning as “budget friendly,” by offering online promotions, while Hollister Co., “stubbornly clings to luxury while everyone else cuts prices” (McDevitt, 2009).

Other competitors, such as Zumiez and PacSun, stand apart from Hollister Co. in the ways in which they market their brands and in their product offerings. Zumiez has been known to cater to the customers that don’t want to conform to Hollister Co’s preppy, conservative look (Hunter, 2008). Zumiez also offers more of a variety within their product line by selling national brands (Hunter, 2008). PacSun is also very similar to Hollister Co. in terms of price and product (Pacsun, 2009). However, they have completely revamped their retail stores in order to reconnect with their customers, by now offering both private and national labels (Hunter, 2008). Hollister Co. only offers their own private label merchandise (, 2009).

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Hollister Co. In Comparison with its Competitors (Hunter, 2008)

2. Economic Conditions: External Forces Beyond Control

External forces such as a sudden change in population size, demographics, the economy, etc. can be very detrimental to retailers because they are beyond their control and often unexpected. Due to the current economic recession, retail casualties have already begun. Hollister Co. has felt the pressure of the declining market, witnessing a decrease in sales of 15% since the last fiscal quarter ended in October 2009 (PRNewswire, 2009). And in that same time period, net sales have decreased from $896.3 million to $765.4 million (PRNewswire, 2009)

Unfortunately, The U.S. is still in the early stages of the reformation of the retail industry due to the recent recession. During these tough economic times, retailers must utilize compelling marketing strategies and differentiate themselves using their most competitive advantages, such as low price (Farfan, 2009). Within this saturated market of thousands of similar retailers, consumers have multiple suitable alternatives and they could also chose not to consume at all (Farfan, 2009). Hollister Co. must make sure that they maintain their loyal customers while attracting new ones, in a time like this, customer satisfaction is essential to survival (Farfan, 2009).

3. Lawsuits and Counterfeiting: Disastrous Disputes

There is very little that Hollister Co. can do about counterfeiting of their products that occurs in other countries. In Thailand, markets hawking counterfeit products from popular brands such as Hollister Co. are illegal, but also extremely common (Sheban, 2007). Sellers are known to lie about how they obtained the merchandise, saying that it was stolen but is 100% authentic and has a binder full of pictures printed from Hollister Co.’s website to prove it (Sheban, 2007). However, upon closer inspection, one can see that the garments lack any sewn-in labels (Sheban, 2007). The unfortunate part of all of this is that the customers at these markets, comprised of Asians and Western tourists, seem to either not know or care whether or not the merchandise is legitimate (Sheban, 2007). It is estimated that the sale of these phony goods, cost companies like Hollister Co. $600 billion a year in lost sales (Sheban, 2007). However, counterfeiting is also detrimental to consumers and retailers because they are made from outdated, leftover, or stolen parts and could possibly be hazardous, and because the forged goods could falsely skew the consumers perception of the brand (Sheban, 2007).

Lawsuits can be another injury to retailers such as Hollister Co., whether garnered at the hands of employees, state laws, or customers. Many Hollister Co. employees have voiced concerns over the company’s business practices, citing low hourly wages, a lack of benefits, and no job security (Job Vent, 2009). Parents have voiced their disapproval of Hollister Co.’s sensual advertisements, strong odor within the store, small sizes, and high prices (Complaints Board, 2009). While reputations may be harmed by such comments, entire businesses can fall at the hands of a hefty lawsuit against them. Hollister Co. has had to come to terms with many lawsuits over the years, such as that brought by California labor regulators regarding the fact that Hollister Co. forced its employees to buy and wear their clothes while working (Cosgrove-Mather, 2003). Another lawsuit was made by an artist who claimed that Hollister Co. used his unauthorized copyrighted art and sold them as their own (Cosgrove-Mather, 2003). All of these allegations whether true or not hurts the company’s image.

As previously mentioned, Hollister Co.’s sales staff are typically young “model-esque” men and women who portray the southern California vibe. The company employs youthful men and women in their teens and early twenties that are in high school or just entering college (Wicked Local, 2008). Because of some of the sales associates’ ages, Hollister Co. needs to be very careful in terms of the amount of hours and times that these adolescents work. In 2008, during the holiday season, Hollister Co. got was charged with fifteen counts of child labor law violations in Cape Cod, Massachusetts (Wicked Local, 2008). In Massachusetts, it is illegal for juveniles under the age of 18 to work past 10:00 PM (Wicked Local, 2008). However, Hollister Co. scheduled the young employees, who were under the age of 18, to work over night until as early as 5:00 AM-6:00 AM (Wicked Local, 2008). Massachusetts also found Hollister Co. guilty of 37 instances in which they employed minors without work permits (Wicked Local, 2008).

Suggested Improvements:

This final section of our paper is a complete summary of what we believe Hollister Co. should change about various aspects of their business such as marketing operations, retailing strategies, sourcing practices etc. Upon implementation, these changes should increase the company’s profits, brand awareness, and longevity.

1. Better Customer Service: Relating to Your Target Market

Unfortunately, in some cases, portraying an image of an ideal Californian surfer can lead to sales associates being somewhat haughty and even unfriendly at times. In the words of their competitors, “Hollister Co., in my opinion, has some of the worst customer service. Long gone should be the time of ‘vibey’ shop kids at front counters or doors...and the times when parents or insecure kids would feel uncomfortable coming into stores. This is the new day and age of specialty retail” (Hunter, 2008). While this type of attitude might have aided in building Hollister Co.’s popular brand image, it’s no longer needed. Poor customer service may not impact Hollister Co.’s sales and customer loyalty now, but could in the future. Making the customer feel more welcomed when entering your business would certainly lend longevity to you and your target customer’s relationship. Hiring and training sales staff to be more friendly, helpful, and responsive to Hollister Co.’s customers may help this matter.

Another import aspect within a retail store is its employees’ knowledge of the merchandise, the brand, and the overall theme. Hollister Co. has been lacking in this aspect, not properly training their employees to learn about surfing and the industry. In the past, customers who asked questions about boards or the sport have been met with ignorance (Hunter, 2008). Though Hollister Co. is not an actual surf company, employees should possess some basic knowledge to lend to the brand’s authenticity. Overall training in service standards and surf knowledge would give the store more appeal.

2. Advertising: Increasing Brand Awareness

Hollister Co. considers itself a self-promoting brand, and for the most part, lets its stores and product speak for themselves. While conventional advertising isn’t always necessary, moves to create publicity will only further increase the brand’s popularity and top-of-mind awareness. Avenues for this vary, but Hollister Co. will be best served by becoming involved in the surf community through sponsorships and competitions. In addition to creating publicity, organizing and sponsoring surf competitions would make great leaps to establish Hollister Co.’s authenticity as a true surf brand.

Furthermore, Hollister Co. could also benefit by advertising online, as their target population spends a lot of time on computers. Using their own website as a tool through online promotions, sales of specialty merchandise, etc. could be a good start, followed by advertisements on other websites. Myspace, Facebook, and Twitter are all very popular social networking sites that teens and young adults use frequently. Advertising on sites such as these would directly impact Hollister Co.’s customers. Besides paying for ad space, the cost would be minimal as Hollister Co. wouldn’t need to create separate ad spreads, when they could just use the ones they use on the walls of their stores.

3. Satellite Store Launch: Hollister Swim and Board Shack

Hollister Co. has the very rare yet highly profitable option of creating satellite specialty retail stores that sell actual surfing and water sport equipment. Here, Hollister Co. has an opportunity to bring their already loyal customer further into the surf culture, and attract previously unreachable customers. While the majority of the brand’s customers don’t surf, branded board shops could spark an interest in the sport (Hunter, 2008). Additionally, beach swim shops do a high volume of business, but a large part of the merchandise is offered from generic, unrecognized manufacturers (Hunter, 2008).

A recognized brand like Hollister Co. with an established following could easily move in and take a major piece of the market. Small surf and swim stores positioned in popular beach destinations will have the potential to bring in large amounts of tourist and beach culture revenue. Making the already strong label and brand image an authentic surf brand will give Hollister Co. the opportunity to penetrate even deeper into its market. Hollister Co.’s fictional vintage, west coast surf background has turned off most potential customers who are involved in the surf community (Hunter, 2008). Steps to produce Hollister Co. brand boards and become involved in the sport will bring the brand new credibility and customers, further securing its hold on its niche market.

4. Manufacturing and Distribution: Increasing Control

Though considered a completely vertical company, Hollister Co. does not own any of its facilities for manufacture or distribution (Abercrombie, 2009). This means third parties are responsible for product quality and timely arrival at stores (Abercrombie, 2009). Because Hollister Co. is such a large company, it would greatly benefit from owning and operating its own factories and distribution centers. Ultimately, by owning its own manufacturing plants and distribution centers, Hollister Co. could cut costs.

Despite the initial investment, Hollister Co. could garner higher net sales as lead times for products would be lessened and the company would have complete control of its merchandise. Hollister Co. would be able to make sure that the quality of their merchandise meets their expectations and that garments are made and delivered on time. More communication between product development levels would also lead to a decrease in the probability of manufacturing faulty merchandise and increase the amount of fast-fashions they would be able to carry. Designs would take a much shorter period of time to go from concept to the shelves and Hollister Co. would be able to carry trendier merchandise. Stock would remain better regulated and stock-outs could be eliminated through the use of regional distribution centers.

5. Ethical Responsibility: Reducing Brand Opposition

As time goes on, retailers must be prepared to change and adapt to varying market conditions, aging customers, different demographics, and overall adjustments in societal factors. As previously mentioned, the United States is experiencing two major trends. One is the growing obesity epidemic and the other is the fact that the Hispanic population is rapidly growing in size. Many companies have used these changes to their advantage, by creating plus-sized product lines or by increasing their sizes physically, but not inside the label in order to flatter customers. Other clothing brands have done the same in relation to the growing Hispanic population, and created merchandise to better cater to that expanding market.

While Hollister Co. should certainly remain loyal to the image of its brand, there will inevitably be times when aspects of their business are in need of revamping. It may help Hollister Co. to think about adding a more liberal sizing method to their garments. They could keep the sizes they have and just cut them slightly larger in order to accommodate a broader range of teens and young adults. Hollister Co. may also want to try and appeal to the growing number of Hispanic teens frequenting their stores. It would be relatively easy to incorporate a tough of Hispanic influence into their line, as southern California has one of the highest Hispanic populations in the United States.

Internal operations such as store policies could also stand to be tweaked a bit in Hollister Co. First and foremost, the brand needs to pay close attention to child labor, copyright infringement, and counterfeiting laws and practices in order to prevent future lawsuits and loss of sales. Hollister Co. may also want to re-work their employment practices as to better include individuals who do not fall into their “ideal.” The company would garner a significantly less amount of opposition and criticism from past and current employees if they were more liberal in their advancement procedures as well.

Reference List

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