It’s no surprise that American Apparel is on the brink of filing for bankruptcy – just that it has taken this long.
After posting less-than-pleasing second-quarter sales figures – which saw a 17.2% drop over the past year – it’s hard to see how the retailer will come back. And trimming $30 million from its spending – as it plans to do – will be no small feat.
American Apparel has put on a pretty poor show in recent years. The product, merchandising, design and retail are all hugely unimpressive. If you took away the identity and POS, people would think American Apparel was nothing more than a surplus shop.
What was always a fad brand and product lifecycle has been exacerbated by the character of the founder. Not to mention the totally substandard product marketing and service.
The only thing that it had going for it was also partly to blame for its demise: its controversial advertising driven by ex-CEO Dov Charney.
The retailer tried to be the next Benetton in the advertising stakes but the founder was so naive and showed such poor judgement that, in fact, he couldn’t recognize the necessary difference between the genius of Benetton and his own creative output.
Consumers say "enough"
Unfortunately for American Apparel, shoppers have had enough of crude sexualized imagery – just look at how the world reacted to Protein World’s Beach Body Ready campaign.
And while new CEO Paula Schneider claims she is seeking to tone down the retailer’s trademark in-your-face sexualized advertising, if the product, quality, range and overall shopping experience don’t change, then there’s very little use in pumping millions into a new advertising strategy.
In an interview with the Financial Times, Schneider said of American Apparel: "This is a brand that people care about. This is the Cinderella story. This one deserves to live... If it doesn’t live no other one will because the barriers to entry are simply too high and no one will ever do this again."
I suppose American Apparel can survive, but only if it quickly readdresses its offering and delivers what its core audience is looking for: quality clothing at a great price and sold with a high-end experience.
The most likely outcome is that the retailer will be bought up by a Mike Ashley type who will pillage what provenance and equity the brand has left and then discard it in a few years’ time. If this happens, Charney will have got what he deserves.
A couple of years ago I launched a similar tirade on the American Apparel brand, recommending that Dov Charney should stop using it as a plaything and start running it more like a business.
Either that or he should sell up while the brand was still worth something and let someone run the company whose attitudes didn’t interfere with serious business goals.
Too high a price?
Unfortunately his exit has come too late and at too high a price. Its shoppers have voted with their feet.
As someone with a vested interest in seeing the retail industry future-proof itself and our high streets flourish, it might seem surprising that I would so openly will a retailer into the void. But that’s only because this one is clearly no longer serving a purpose.
Yes, the retail industry needs mavericks. Selfridges is one, and opening its Christmas store in August is a great example of its maverick mindset.
But if being maverick means the business is suffering, or will suffer – as we have seen with American Apparel – then it’s time to do things differently. And unfortunately for this brand, time might have just run out.
Nick Gray is managing director at Live & Breathe.
This article first appeared on marketingmagazine.co.uk.