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How American Eagle is Building the Denim Brand of the Future

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While some of American Eagle Outfitters (AEO)’s peers are fighting to stay relevant (like Aeropostale) and others are rebranding to weather choppy tides (like Abercrombie & Fitch), it’s been smooth sailing for American Eagle. 

In the last year alone, AEO achieved a company record of over $4 billion in net revenue after 17 straight quarters of revenue growth—and their numbers don’t show signs of slowing down.

To achieve its status as a top retailer, AEO executed what on the surface looks like a basic retail playbook: deliver on product quality, customer experience, merchandising, and marketing. As anyone in retail knows though, the playbook is one thing—successfully executing it is another. 

That’s where AEO’s ascendance to a top denim brand comes in. By using denim as a lynchpin for a broad array of branding and marketing initiatives, AEO has created sustainable growth for itself and in 2018 surpassed over $1B in jeans sales.

Below, we’ll explore just how AEO achieved and maintained its status as one of the top denim brands out there.

 

Gen Z Appeal

Established in 1977, American Eagle Outfitters saw mixed success until it gained new management 15 years later, and then went public in 1994. The brand then shot to popularity with Millennials, when it appeared on the hit teen melodrama, Dawson’s Creek. 

Since then, AEO has managed to stay relevant with Millennials as they’ve grown up. 

Miraculously, they’ve also managed to enrapture today’s 15-25 year olds. Speaking with WWD, Chad Kessler, AEO’s global brand president, attributed American Eagle’s success to a “clear focus on our customers”. This means delivering on style, innovation, fit, and quality, while connecting with shoppers in ways that transcend selling them clothing. 

In order to better understand what was important to shoppers outside of the clothing they wear, AEO employed a council of nine Gen Z teens (coined AExME). With their first meeting in February 2019, the council meets periodically with participants having a say in important company initiatives. 

Thanks in part to the council, AEO understood that their target audience broadly supported a range of progressive issues including curbing gun violence, LGBTQ rights, and body inclusivity. These topics are somewhat divisive to older generations, but table stakes for Millennials and (more so) Gen Z. With that in mind, AEO engages in brand activism by supporting these causes. 

In a larger sense, the brand itself is all-in on inclusivity. One way American Eagle brings this to life is by working with young activist influencers across a variety of races, identities, and body sizes. The brand had each influencer style themselves in American Eagle and share their photos, many of which are now placed on store walls across the country. The goal was simple—to connect with every customer who walks into an American Eagle store by reflecting back someone who looks like them and projects values similar to theirs. 

For more tips on how to reap the benefits of influencer marketing, check out CB4’s “7 Tips to Supercharge Your Retail Influencer Strategy.” Now back to AEO…

 

Well-Timed Additions to Assortment

In 2006, American Eagle launched Aerie, its underwear, swimwear, and lifestyle brand. If AEO is hot, you can safely say that with 29% sales growth in 2018, Aerie is on fire. 

A foil to the flagging Victoria’s Secret—notorious for push-up bras, impossibly thin models, and over-the-top runway shows—Aerie’s atmosphere is one of body positivity. In 2014, American Eagle announced the launch of #AerieReal with a promise to stop retouching all Aerie photography to empower women and promote realistic beauty standards.

Catapulting off such success, American Eagle plans on opening between 60 and 70 new Aerie locations next year.  As AE continues to grow Aerie’s presence, so too does it continue to expand the products on offer there. When Aerie launched, it was just intimates. Since then, it’s successfully expanded to athleisure and apparel.

But Aerie isn’t the only business category in which American Eagle is making bold moves. Its two most buzz-worthy additions of late include size expansion and the addition of CBD-based products. 

According to analysts from the cannabis-focused research firm Brightfield Group, the CBD industry has the potential to become a $22 billion business by 2022. To that end, in July, American Eagle announced a partnership with Green Growth Brands to begin selling CBD-infused body products (i.e.: balms and lotions) online and in stores.

Besides putting it at the forefront of CBD sales, this partnership helps AEO:

  • Compete even more closely with one of its closest rivals, Abercrombie, which also announced plans to sell CBD products this year.
  • Expand its product offering beyond clothing into self-care, another burgeoning category.

And that’s not even the biggest milestone launch from AEO this summer. Coresight Research reports that women’s plus size clothing in the United States is nearly a $31 billion dollar market. So, to ensure its stronghold as a top denim brand, American Eagle expanded its size offerings from 00 to 24 in all of its 1,000 plus stores. In so doing, AEO:

  • Picks up market share that most of its competitors ignore.
  • Delivers on its promise of inclusivity and acceptance.

In both cases, American Eagle Outfitters has shown an eye for innovation and aptitude for agility to capture market share and resonate with their target audience, which further secures its status as a top denim brand.

 

Smart Collaborations

Partnerships with progressive social media influencers and innovative vendors aren’t the only ones in American Eagle’s toolkit. Now, the brand is tapping Lil’ Wayne for a new collaboration just in time for back-to-school. 

The collab, AE x Young Money, is made up of 25 different tie-dye and color-blocked garments from graphic tees to hoodies, boxers to jeans, and even skate decks (owing to Lil’ Wayne’s love of skateboarding and Gen Z’s obsession with all things 90s). Prices vary in cost from $8 to $100, making products both accessible and aspirational. 

The partnership continues AE’s dedication to knowing their audience—Lil’ Wayne is popular among the brand’s targeted demo. On top of this, the iconoclastic rapper amplifies the brand’s progressive image. The pairing is also fitting given AE’s well-established entrenchment with music. The retailer has for several years sponsored concert stages at Governor’s Ball in New York City and Lollapalooza in Chicago, an easy way to capture a share of serious social media coverage. 

 

Product Innovation

Ordinary denim is to closets as white sugar is to cupboards. Each is a staple that can do work on its own, but both items become more interesting once they’re mixed with something else. With this in mind, in 2017, AEO rolled out the Ne(X)t Level 360 style jeans. 

One of the newest members of AEO’s denim repertoire, these jeans are made from a combination of denim and a stretchable fabric that conforms to the curves of their owner’s body. This feature dovetails nicely with AEO’s commitment to body positivity, as these jeans are not only designed in a variety of washes, fits, and wears to suit a person’s unique style, but also designed to comfortably be worn by all shapes and sizes.  

Innovation can often lead retailers to needlessly spend resources pursuing an opportunity that doesn’t fit within the brand’s ethos. Instead of practicing innovation for its own sake, AEO devised a way to create a product built around its brand persona and what it stands behind⁠—individuality and inclusivity⁠—and delivered a product that physically encapsulates both. 

So, just like you can’t have a cake without sugar, you can’t be a multifaceted apparel retailer without plain denim. In each case, a simple, vital ingredient acts as a building-block for the creation of a far more interesting end-product. Thus, AEO became a top denim brand by innovating on the basics to produce exciting new products that capture maximum market share.

 

Conclusion 

American Eagle didn’t just become a top denim brand overnight. The brand’s continued ascendance is born of its understanding of its customer cohorts. This allows them to capitalize on emerging trends and phase out what’s passé. 

But AEO’s success is linked to more than its ability to stay current. Anyone in the retail industry will tell you that personalization is king. American Eagle offers products and experiences that feel personal to its shoppers because of their ethos of individuality and commitment to inclusion. For some retailers, it’s lip service. For American Eagle, it’s a way of life. 

CB4 helps apparel-sellers rise to the increasingly complex demands of shoppers in their stores. Ready to learn more? Let’s get started.

Editors note: At CB4, we’re inspired by retail industry innovations and the brands leading the way. The retailers we highlight are not necessarily CB4 partners, but simply ones we find interesting and think you will, too.

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