Hollister - Marketing Strategy Analysis

Contents

I.        Introduction        3

II.        Situation analysis of Hollister        3

1.        Retail life cycle        3

2.        Current external environment elements (PESTLE)        3

3.        Marketing mix        5

4.        SWOT Analysis        8

III.        Suggestions        8

Reference        10

1. Introduction

Hollister is known as an American brand owned by Abercrombie & Fitch Co, which aimed at teens and young adults between the age of 14 to 18 as its original concept. Hollister actually established in 1922 therefore there are many of their products have the label of 1922 as a marker. Hollister has introduced many various of product lines such as fragrance, accessories but the most famous is clothing which meanly on college preppy style with beach theme. According to Dishman (2015), a studied about Abercrombie & Fitch states that the unchanged in style could lead to a decreasing in popularity. From this perspective, the report will identify and discuss which elements of the business are working well and areas which require improvement by looking at their current external environment elements (PESTLE), marketing mix, key competitors and financial report.

1. Situation analysis of Hollister

1. Retail life cycle

Hollister is a single brand store that only sells products of their brand. It is a fashion store that lies independently or is located in shopping malls. In terms of offline competition, Hollister is  faced with competitors such as  with a traditional fashion model. When it comes to online fashion, . Finally, regarding the substitute fashion trend, fast fashion, Hollister is in danger of losing all of its market share to the brands such as Zara, H&M, Forever21. In fact, competition is so fierce that according to Hollister Annual Financial Statement 2014 and 2015, their sales appear to slightly decline from 3.7 to 3.5 billion. Based on these facts, it can be concluded that Hollister is now at least in the mature stage. It should change its strategy or product propositions soon.

1. Current external environment elements (PESTLE)

Economics

The UK has now been stricken by a new housing bubble. With house price soar highs, most citizens now cannot afford to buy a house on their own and have to borrow money from others to pay their mortgage (House prices: ‘Bank of mum and dad’ lends £5bn a year, 2016). In addition, increasing tuition fees and limits on student grants (Young-Powell, 2016)and scholarship have increased the burden on students as they are to borrow and use their wage to pay their school fee, assuming that they get a job after graduating. Moreover, the interest rate has been kept at 0.5% for 7 years, which is proof that the economy has not recovered enough to raise the rate (BBC, 2016). Slow growth and low disposable income encourage customers to downscale from high end products, look for cheap alternatives or forgo the whole category if it is not necessary.

Hollister target customers are affluent teenagers. However, as disposable income decreases, they will have to think twice before buying an expensive product. High-end retailers like Hollister are not welcomed in an era of frugality.

Social

According to the population pyramid for the UK in 2000 and 2015. The area of 25 to 54 remains as the largest group with the slightest change each year. And, Hollister target group, which ages from 12 to 24 accounts for 12.41% in 2015 (CIA World Factbook, 2015).  With the aging population prominent and lifespan, it is unwise for Hollister to continue to focus on the same segment, as demand from younger customers will decrease relative to overall market demand.

Technology

With the development of 3G/4G networks, the consumer experience has now moved from fixed to mobile. Customers can now see advertisements and make their decision on the go, unlike in the past when they have to sit at home or their office to browse through merchandise on the computer. The advent of omni-channel retailers have changed the way people interact with products and services. Thanks to the ease of shopping across online and brick-and-mortar platforms, customers have now developed a new shopping habit: they browse in the store to enjoy a wonderful lifestyle experience, then visit online retailers such as Amazon where prices are much lower to buy the products. This practice is known as showrooming (Teixeira and Gupta, 2015). Hollister is more vulnerable to this activity, since its price is considered high in the target market.

With the development of the Customer Relationship Management, data about customers can be collected and analyzed to derive information about customer behavior. In the case of fashion, the CRM system, which is built into POS systems, provides details about fashion trends. Retailers that make the most use of these data will attract more customers. However, Hollister seems unable to take advantage of this system, as their variations of each product range cannot be compared to that of fast fashion retailers: “beefing up US-based supply sources to adjust more quickly to changing styles” (Lublin and Germano, 2014b)

Environment

Global warming or climate change has now become an alarming issue and the youth, with their energy and self-confidence, are interested in making a change to that issue.

Legal

All Hollister products have to meet the UK textile labeling conditions under Textile Products (Labeling and Fabre Composition) Regulations 2012. Moreover, Hollister also has to follow closely with the Labor Standard to avoid facing issues about employment discrimination like Abercrombie & Fitch was faced in 2009 (BBC, 2009) and others.