This paper examines the organizational behavior issues plaguing Abercrombie and Fitch, a major fashion retailer. Beginning with the company's history as a sporting goods retailer that transitioned to high-end fashion, the analysis identifies critical problems stemming from CEO Mike Jeffries' exclusionary hiring practices, discriminatory employment policies, and unethical marketing. Using a SWOT framework and ethical leadership theory, the paper evaluates the company's financial strengths alongside its severely damaged public image. The paper recommends replacing senior leadership, decentralizing organizational structure, implementing corporate social responsibility initiatives, and fostering a more inclusive culture to restore stakeholder trust and long-term profitability.
Abercrombie and Fitch face a variety of significant organizational behavior issues. This company has become known for unethical and discriminatory practices. As a prestigious fashion retailer, Abercrombie and Fitch has refused to donate surplus clothing to charities, rejected requests to create larger sizes for customers, and based hiring decisions primarily on physical appearance (Lutz, 2013). One striking case illustrates the company's approach to religious diversity: a woman whose religious faith requires her to wear a hijab in public was repeatedly harassed by a district manager and ultimately fired after being ordered to remove it (Smith, 2013). This incident represents only one of numerous lawsuits brought against company leadership. As a well-known fashion brand, these controversies have generated outrage among millions of consumers and stakeholders.
Abercrombie and Fitch's history is distinctive in the retail industry. Founded in New York on June 4, 1892, the company initially entered the market as a sporting goods store. By 1939, it had become one of the most successful retailers in the industry. In 1904, the company shifted its focus toward clothing after Ezra Fitch and David T. Abercrombie, the two founders, developed differing visions for the business. Three years after Fitch became a partner, he advocated for the new direction. When Abercrombie disagreed, he sold his shares in 1907, marking the beginning of sustained growth for the company under Fitch's leadership. Fitch launched the company's mail-order catalogue, which proved highly profitable. In 1910, Abercrombie and Fitch Co. became the first company to sell clothing to both men and women (Lepore, 2011). Today, the company remains extremely successful in the fashion industry.
By the 1960s, Abercrombie and Fitch experienced significant sales declines, which ultimately led to a complete shift in focus. The company eliminated all sporting goods by 1988, committing entirely to clothing retail. When Mike Jeffries became CEO in 1992, the organization required substantial strategic change. Jeffries targeted the preppy teenage market, a massive demographic segment, and drove the company toward considerable financial success (Lepore, 2011).
The company possesses several organizational strengths. These include high-quality products, a distinctive sales strategy, and ownership of other successful retail companies including Hollister Inc. and Gilly Hicks. Hollister controls over 51 percent of all company net sales, while Abercrombie and Fitch accounts for 38 percent. The remaining sales come from Abercrombie, the company's children's store, and Gilly Hicks, another clothing retailer targeting teenagers (United States Securities and Exchange Commission, 2013). By owning these subsidiaries, Abercrombie and Fitch controls a substantial share of the teenage market. The company has expanded aggressively, operating 1,053 stores worldwide and demonstrating recent financial success (United States Securities and Exchange Commission, 2013).
However, the company faces a critical weakness: a severely damaged public image directly traceable to CEO Mike Jeffries. A consistent pattern of ethical violations has tainted the brand name, possibly explaining why Hollister stores generate higher profits than the flagship Abercrombie and Fitch brand. Jeffries' increasingly opinionated statements have led the organization in an autocratic manner, restricting innovation and creativity that could otherwise strengthen sales. This leadership style has also created friction between shareholders and management, intensifying when "Abercrombie and Fitch said it will extend (Jeffries) contract by a year, days after a shareholder urged the company to replace him" (Huffington Post, 2013).
The company's existing strengths open significant market opportunities. Global market expansion remains largely untapped; while the brand operates in Canada, Germany, the United Kingdom, and other nations, it has not achieved the market penetration in these regions that it enjoys in the United States (United States Securities and Exchange Commission, 2013). The rapid growth of online retail represents another substantial opportunity. As consumer purchasing increasingly shifts to digital channels annually, clothing retailers can capture significant revenue through e-commerce platforms.
Economic challenges pose major threats. The recent economic crisis has reduced consumer spending on premium clothing, and competitors such as AĂ©ropostale and American Eagle offer cheaper alternatives that appeal to budget-conscious shoppers (Lutz, 2014). As a high-end, premium brand, Abercrombie and Fitch faces pressure from value-oriented competition. Many consumers have adjusted their purchasing habits toward lower-priced options for clothing and other products.
The fashion company confronts problems across multiple dimensions. CEO Mike Jeffries has stated publicly in interviews that his brand represents a privilege available only to "cool" people (Lutz, 2013). By voluntarily attaching this exclusionary label to the company, Jeffries has damaged both public relations and sales potential. He has also publicly declared that the company refuses to manufacture plus-sized clothing, triggering a boycott organized by the National Eating Disorder Association (Huffington Post, 2013). Despite being the first company to sell to both men and women, Abercrombie and Fitch continues to lag in gender inclusivity. The company declines to offer XL or XXL sizes for women and does not stock pants larger than size 10 (Lutz, 2013).
Employment discrimination represents another critical issue. Abercrombie and Fitch has been documented exclusively hiring white employees matching the "brand look." The company strategically titles its salespeople as "models," thereby justifying hiring decisions based on physical appearance (Lutz, 2013). The company even reassigned an employee with a prosthetic arm to the back room rather than allowing her to work as a "model" on the sales floor, resulting in lower compensation. Riam Dean filed a successful lawsuit in the United Kingdom, receiving compensation of $14,815 for emotional trauma (BBC, 2009). The modest settlement reflected the court's finding that the company had not engaged in explicit discrimination, despite moving Dean to a different store location rather than terminating her employment.
Workplace conditions raise additional ethical concerns. The retail environment is saturated with cologne, causing reported headaches and health issues for both employees and customers. The company sprays its signature cologne "Fierce" every few hours outside stores and spritzes the interior hourly. In 2010, Teens Turning Green, a student organization focused on toxic chemical exposure, protested outside Abercrombie and Fitch locations (Lutz, 2013).
The company has also faced criticism for selling apparel containing racist imagery and text. T-shirts featured depictions of Buddha and Asian characters with "slanted eyes and cone shaped hats," accompanied by the offensive phrase "two wongs can make it right" (Lutz, 2013). Beyond problematic merchandise, the company's advertising campaigns have been criticized as exploitative and inappropriate, characterized as "soft porn" (Lutz, 2013). These marketing and product decisions triggered boycotts by Asian American organizations and The National Coalition for the Protection of Children and Families and Focus on the Family. Facing sustained public pressure, the company discontinued both the offensive clothing lines and the controversial advertisements. These accumulated scandals have severely damaged Abercrombie and Fitch's public reputation.
The company's unethical business practices have forced Abercrombie and Fitch into a defensive position in recent years. In some cases, such as the prosthetic arm employee incident, the company has crossed legal lines, resulting in multiple lawsuits. Organizational Behavior: Tools for Success defines ethical leadership as "the demonstration of normatively appropriate conduct through personal actions and interpersonal relationships, and the promotion of such conduct to followers through two-way communication, reinforcement, and decision-making" (Phillips & Gully, 2014).
CEO Mike Jeffries has been documented stating: "Are we exclusionary? Absolutely. A lot of people don't belong [in our clothes], and they can't belong" (Lutz, 2013). Measured against the definition above, CEO Jeffries does not demonstrate ethical leadership in any meaningful way. He fails to establish ethical interpersonal relationships, does not model appropriate conduct, and pursues decision-making that contradicts ethical principles. This severely damaged public image threatens the company's continued success. Without reform, Abercrombie and Fitch risks escalating public backlash and potential consumer boycotts that could substantially harm revenues.
To reverse the company's decline, multiple changes are essential. Industry observers and shareholders widely agree that CEO Mike Jeffries' tenure has become untenable (Huffington Post, 2013). A change in leadership combined with organizational decentralization could restore public confidence and stakeholder trust. Currently, the company operates as an autocracy controlled by Jeffries, appearing to outsiders as a rigid hierarchy resistant to innovation. Removing Jeffries and distributing authority throughout the organizational structure could create the appearance and reality of collaborative teamwork focused on collective benefit rather than individual authority.
To improve the company's public image, Abercrombie and Fitch should implement a comprehensive corporate social responsibility initiative. The obvious first step involves expanding size ranges to serve broader customer demographics. The company should go further by diversifying the models who represent its clothing to the public. Featuring plus-sized models alongside traditional models would strengthen public relations while simultaneously expanding the addressable market, attracting new customers and increasing sales. The company could also partner with charities supporting children's health initiatives. While Abercrombie and Fitch maintains an anti-bullying campaign, it has been widely criticized as underdeveloped and inauthentic (Berman, 2013). Strategic charitable partnerships could demonstrate genuine commitment to causes relevant to their teen demographic.
Finally, the company must transition toward a more inclusive and collectivist organizational culture. Contemporary teenagers no longer define themselves by aspirational "cool" status but instead value authenticity and personal expression (Lutz, 2014). The company should align its values with evolving social attitudes. Their clothing products remain popular across diverse demographics, so product style changes are unnecessary. Instead, the company must fundamentally reimagine how it positions, markets, and symbolizes its products. Shifting the brand message from "cool and exclusive" to "high quality and sophisticated" could retain existing customers while expanding appeal to underserved segments. Whatever strategic direction the company ultimately pursues, transformation in brand positioning is essential for survival.
The solution most likely to generate both profit recovery and public image restoration requires eliminating current company leadership. Mike Jeffries remains the primary catalyst driving the company's public relations crisis and the source of many current organizational problems. Removing Jeffries and upper-level management eliminates the source of these damaging behaviors. The human resources department should lead recruitment efforts to identify replacement leaders with experience managing successful large companies that maintain positive public images.
New leadership must completely transform the company's organizational culture and employee treatment practices. This transformation should include implementing workshops promoting improved employee relations, expanding the company's philanthropic activities, and making restitution to individuals harmed by past discriminatory practices.
This recommendation carries acknowledged risks. Mike Jeffries has contributed substantially to Abercrombie and Fitch's rise to iconic status, and his removal could negatively impact financial performance during the transition period. The company would depend on new leadership faces and experience an adjustment period with temporarily reduced operational efficiency. An alternative approach would involve retaining Jeffries while significantly limiting his organizational power. Under this model, the company could hire a dedicated public relations coordinator to improve public perception while preserving the leadership continuity and operational stability that Jeffries has established.
The recommended leadership change would establish the foundation for broader organizational decentralization. New leadership could implement previously discussed initiatives, including corporate social responsibility programs, inclusive hiring and sizing practices, and cultural reform emphasizing fairness and ethical conduct. This transition represents an essential beginning for organizational transformation toward more inclusive values.
Abercrombie and Fitch currently suffers from severe public relations damage that threatens long-term viability. Meaningful recovery requires top-down structural reform, including a transition to more decentralized leadership architecture and substantial reduction of CEO Mike Jeffries' current authority. Without comprehensive organizational change, the company will continue experiencing reputational deterioration and declining consumer trust.
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Berman, J. (2013, June 12). Abercrombie Anti-Bullying Campaign Met With Surprise, Criticism From Protesters. Retrieved from Huffington Post.
Huffington Post. (2013). Abercrombie and Fitch Announces Plummeting Sales Amid CEO Controversy. Huffington Post.
Lepore, M. (2011). ABERCROMBIE: How a Hunting and Fishing Store Became A Sex-Infused Teenybop Legend. Business Insider.
Lutz, A. (2013). 13 Reasons Why People Hate Abercrombie and Fitch. Business Insider.
"Primary and alternative recommendations with implementation risks and strategies"
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