Abercrombie Brings in Big Blue to Crank Up Web Sales

Abercrombie & Fitch (NYSE:ANF) has announced that it is working with IBM software to help the company transform its online business to achieve the speed, efficiency and adaptability of Smarter Commerce. ^[1] The initiative comes as a part of Abercrombie’s goal of becoming $1 billion e-commerce brand, and reflects the growing importance of direct business in the current apparel industry. Abercrombie & Fitch competes with other specialty retailers such as Aeropostale (NYSE: ARO), American Eagle Outfitters (NYSE: AEO) and Gap Inc. (NYSE:GPS) in teen apparel space.

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The initiative depicts the growing stature of direct business in apparel industry

The partnership with IBM Smarter Commerce comes as another step in Abercrombie’s pursuit of becoming $1 billion e-commerce brand. We expect Abercrombie’s partnership with IBM to benefit the company’s international expansion, and support cross-channel commerce. With other different channels of direct business such as m-commerce and f-commerce (f for Facebook) also increasing at a rapid pace, cross-channel commerce is becoming an essential feature in the development of direct business for apparel retailers.

With apparel industry continuing to be heavily promotional, direct business has assumed a high importance, as direct sales carry much higher margins compared to retail sales. Additionally, the growth in direct business is at a much higher pace compared to that in brick and mortar business. The trend has emerged even more strongly during the holidays 2011 with holiday online sales expanding at a rate of 15% whereas retail growth for the season lingered around 3-4%.

See our article: The Holiday Spirit Travels Online For Teen Apparel Retailers

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1. Abercrombie & Fitch partners with IBM for smarter e-commerce, Source: IBM IR [↩]