Essay on Marketing and American Apparel

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Integrated Marketing Strategy
Jieli He
Sona Martirosian
Christina L Oresajo
Oguzhan Iskenderoglu
Channon Chiu
NYU MS Integrated Marketing

Company Overview

American Apparel is a vertically integrated manufacturer, distributor, and retailer of branded fashion and basic apparel.

Production
• Vertically Integrated – All operations done in
Downtown Los Angeles factory
• “Made in the USA”
• Use high quality fabrics
• Sawing facility ranked #1 in size and value in western hemisphere
• 53,000,000 garments produced in a year
• Fare wages and benefits for employees
• “Sweatshop Free”
• Average factory worker earns $12 an hour
• Environmentally friendly production
• Use all residues of fabrics
• Solar panels used in factory

Product
• Wide range of products
• For men, women, children, babies, pets
• Clothing, hosiery, shoes, bags, accessories
• Wide range of colors
• Produce 499 styles in 614 colors
• Style - simple basics mixed with retro inspired pieces
• California Selects
• Vintage clothing
• Multibrand – products by other brands that fit the culture and look of the company
• Watches by Swatch or Casio, nail polish by Nail
Lacquer, water bottles by Bobble…
• Varies based on culture of store location

Distribution
• Retail
• 285 stores worldwide
• Locations in 20 countries
• In metropolitan city centers
• E-Commerce
• AmericanApparel.net
• Operating since 2004
• 10 localized store fronts
• Wholesale
• Operates from Los Angeles Headquarters
• Sold to 10,000+ screen printers & specialty shops. Target Market
• “Young Achievers “ lifestage group on the Neilson Prizm
• Young, metropolitan adults
• Aged 20 to 32
• Culturally sophisticated
• Creative
• Independent-minded
• Well educated -a bachelor’s degree or higher
• Income between $50-90K per year
• Tech savvy
• Interested in world events
• Fashion conscious
• Shop online
• Looking for well-designed, high-quality fashion essentials
• Prefer companies with good corporate cultures

Macro Environment
PESTEL Analysis
Political/Legal
• The National Minimum Wage Act
• The Working Time Regulations
• The Employment Rights Act
“The average sewer with experience at American
Apparel is making about $25,000/yr, or $12 an hour, almost twice the federal minimum”

Economical
• Recession in 2008
• Another factor of declining share prices (from $15.80/a share to $1.55/a share in the same year.
• Influencing shopping behavior towards apparel industry downwards by 36%.

Macro Environment
Social
•

Increased importance for consumers of the role of corporate social responsibility

• Ability to easily access and spread information about a company through social media

Macro Environment

Technological
• E-commerce has been gradually replacing retail shopping. the apparel and accessories industry will eventually lead ecommerce sales with the predicted sales gain of 20.2%.
• By 2016, it will reach $73 billion of US online retail e-commerce sales.
Environmental
As if 2011, American Apparel’s cost per pound of cotton went up to $2.34, from $.40$.50 per pound in 2010. This was due primarily to the weather conditions that affected cotton producing companies and restrictions by governmental policies.

US Apparel Industry
• 100, 000 stores in total
• Combined annual revenue of
$150 billion
• Rapid shifts in fashion trends
• Consumer demand volatility
• High competitive pressure
• Imports account for over 80% of domestic demand

US Apparel Market
• Competition is based on brand image, marketing, fashion design, quality, price, customer service and store location
• Apparel products differ in function, and each product segment contributes to a certain portion of the industry revenue

Market Growth
•

•

•

Industry revenue of women’s clothing stores
• Annual growth of 3.4% over five years
• Will reach $47.9 billion in 2017
Industry revenue of men’s clothing stores
• Increase at an annualized rate of 1%
• Will reach $8.3 billion in 2017
Store growth
• 2% over the next five years
• 56,879 locations.

Market
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