American Eagle Outfitters consistently innovates and looks for ways to incorporate technology into its business operations. This is true throughout the company’s manufacturing, distribution, and marketing departments. American Eagle Outfitters’ shares dropped at the beginning of 2017, but the company’s technology investments will help keep its operations running smoothly and aid in the company’s recovery.
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Situation: American Eagle Outfitters’ Shares Drop
American Eagle Outfitters is a clothing brand that was established more than 40 years ago. The company targets college-aged individuals and young adults with its hip clothes and accessories. American Eagle Outfitters has almost 1,000 store locations open around the world. Its competitors include Abercrombie & Fitch, Gap, Forever 21, Zara, H&M, and other fashion retailers typically found in malls.
Despite American Eagle Outfitters’ size and reach, shares dropped at the beginning of 2017 because of slumping sales in the fourth quarter of 2016. Competitors have been pushing cheaper goods that enable them to rotate inventory faster. Many investors worried about American Eagle Outfitters’ ability to recover and sold their shares to compensate. This is typical behavior for investors when they see sales that are lower than anticipated.
Approach: American Eagle Outfitters Invests in Technology
To combat slumping sales, American Eagle Outfitters has been investing in technology to improve business processes and reach more customers. Over the past few years, American Eagle Outfitters has been working hard to improve and upgrade the technology it uses in its distribution process as well as its marketing.
In 2016, the company launched its first responsive mobile web app, as well as an international website. Lance Wills, Vice President of Digital Technology at American Eagle Outfitters, said, “More than 50 percent of our customers shop with their phone … Our goal is to take away the friction that often exists when shopping on a mobile device.” Technology investment is the solution to reaching more customers and improving sales.
American Eagle Outfitters also opened a highly automated, 1.6-million-square-foot distribution center in Hazle Township, Pennsylvania, to replace an older facility and improve its distribution technology. The new distribution center is designed to handle all of American Eagle Outfitters’ omnichannel needs with automation.
Impact and Advantage
Even though American Eagle Outfitters has been losing sales to its competitors in recent months, the company’s growth remains more reliable than its competitors’ over time. This can be attributed to the company’s investment in technology. American Eagle Outfitters understands that one key factor in keeping costs low and profits high is automation in distribution and innovation in marketing. There’s more to clothing retail than pushing cheap goods.
It’s too early to tell what will happen with American Eagle Outfitters in the coming months and years, but the company has proven its resiliency and is still investing in technology. This isn’t behavior you would typically see from a struggling company. Shares have slowly been rising, and American Eagle Outfitters doesn’t show any signs of further distress. Technology investments will likely help the company recover and see higher sales in 2017.[/show_to]
