Abercrombie & Fitch CEO Horowitz Builds Leadership Model for the Digital Age
When Fran Horowitz took the helm of beleaguered teen apparel retailer Abercrombie & Fitch in early 2017, she knew her main task of winning back young shoppers and halting a relentless decline in sales wasn’t just about fighting off competition from cheaper fast fashion brands. Key to her plan to revive the 125-year-old clothier has been expansion of its e-commerce business and ramping up digital marketing.
Despite setbacks in early July when the company announced it had ended talks with potential buyers, over the long term it’s too early to rule out Horowitz’s digital leadership strategy. What Horowitz has excelled at for years, as she earlier oversaw the turnaround of the clothier’s Hollister brand, is to grasp the strategic possibilities that digital technology offers to any industry – from car manufacturing to fashion retailing to food processing – to expand sales and allow executives to keep their finger on the pulse of the company, allowing them to respond quickly to changing client preferences.
Like many iconic fashion companies of decades past, the traditional bricks-and-mortar Abercrombie & Fitch has come under pressure to adapt to digital business models to remain relevant amid changing consumer tastes and declining foot traffic at shopping malls. Its digital transformation has covered multiple business areas, to “engage customers whenever, wherever and however they choose to connect with our brand,” Horowitz said at a conference call with analysts in May. The purpose of this omni-channel approach was to allow “customers to start in one medium, migrate to another and engage the brand in complete sales across platforms and locations,” she said.
Data analytics, social media platforms, a push into the gaming audience, creating video content and optimising for mobiles are just the most visible initiatives helping the company boost brand consideration and engagement in the digital age. But Horowitz isn’t just using the new technologies on the front lines to get closer to customer; she’s also putting them to work behind the scenes, to improve day-to-day operations – from research and development, through the supply chain, the manufacturing process and the distribution network. Digital technologies aren’t limited to separate digital divisions, channels, or functions, but are used across the organisation to support the CEO’s key corporate strategies.
Business is digital
Horowitz’s experience at Abercrombie shows how, as digitalisation brings massive changes to the workforce and workplace, understanding the capabilities of new technology is no longer the exclusive purview of IT companies. “In today’s world every business is a digital business,” as Matt Brittin, president of EMEA Business and Operations at Google, said during a meeting with executives. Leaders across the economy are under constant pressure to stay ahead of digital trends.
That doesn’t mean they have to be high-tech wunderkinds, or understand all the details of how every technology works. But they do need to understand why the technologies they deploy are important, and how to use them in day-to-day operations. Apart from understanding the opportunities and threats of digital business, it is also crucial for leaders to build and communicate a digital vision to the rest of the organisation, and in the end to put in place the people, processes, and technology to realise that strategy.
The payoffs for such an effort are numerous: a better understanding of customers, expansion into new markets, automated processes, lower expenses, higher sales and profits. The gains have been particularly visible in customer relationships. Digital technology allows companies to interact with their customers anytime and anywhere, collect huge amounts of data about their needs and preferences, and use that information to tailor goods and services to meet demand.
Defence against disruption is another reason why going digital is an imperative for every CEO. The rapid pace of change in business and technology means that more and more industries will find themselves being upended by rivals who didn’t exist less than a year earlier. “Any responsible company today should view digital technologies as a means to create a more efficient organisation or a different form of customer engagement,” says Arun Sundararajan, a professor of business at New York University and author of The Sharing Economy.
Nevertheless, digital literacy was only one of many categories of leadership skills rated as most important in a 2016 survey by the MIT Sloan Management Review. The ability to steer a company through business model change was seen as the most crucial in a digital workplace, as adoption of new technologies has to be driven by business goals, and not the other way round. Horowitz seems to have a firm grasp of this, and it can be seen in the steps Abercrombie is taking to win back clients who had been drifting off in the direction of Amazon and other online giants. In her transformative vision, Horowitz is seeking to strike the right balance between online and offline businesses. “The presence of the stores still acts as an important gateway to the brand, both as a physical store presence, but also as a local brand hub for online engagement,” she said during the call.
Starting at the top
It is far easier for companies that are born digital to grasp the true meaning of the new technologies. Function heads at such organisations are usually tech savvy, and many executive roles are blended. What can brick-and-mortar companies like Abercrombie & Fitch do to keep pace? Should they hire a chief digital officer? Replace executives with leaders from Internet companies? Force everyone to learn about mobile computing and digital business models? In fact, the solution may lie in close cooperation across all divisions of the organization. And a business-minded Chief Information Officer (CIO) has a central role to play here, mentoring business leaders to help improve their digital skills and better understand digital trends, starting with being the voice of digital innovation, explaining what’s possible and what competitors are doing. At the same time, companies should invest in both formal and informal learning forums, and provide the means for people to try out new things – another area where IT can help.
Abercrombie’s experience under Horowitz’s leadership is putting this strategy to the test. And initial results are promising; at the end of the day all that counts is deeper connections with customers and healthy operations. As Horowitz put it: “We will be present wherever our customers are.”