Knowing how to listen seems to be the key to the success of Abercrombie & Fitch Co.’s chief executive officer Fran Horowitz. She’s using that ability to stay close to the customer in repositioning the Abercrombie and Hollister brands, as well as at company headquarters to change the retailer’s culture. And while retail is now more reliant on data, Horowitz in a discussion with Gene Manheim, managing director of Herbert Mines Associates, said that as a merchant at heart, she believes there needs to be a balance between art and science.
Gene Manheim: Abercrombie is a global brand with around $3.5 billion in global revenues across multibrands, with over 800 doors worldwide, 300-plus Abercrombie and 500-plus Hollister doors. Since joining the company as ceo in February 2017, the stock is up around 70 percent. The S&P is up 20 percent. Speaking of data points, there are 54 female ceo’s in the Fortune 1000. Fran is one of them. There are only nine in the retail segment. I want to start with that, whether there have been challenges and opportunities that you’ve faced in addition to the ones that you would ordinarily face as a ceo that are specific to you being a female ceo?
Fran Horowitz: Everybody loves to ask me that question. My genuine answer is I like to be myself as a ceo, and not really base that on my gender. And that I am in the position that I’m in based on my experience, my talent, the success that I’ve had through this industry over the past 37-plus years.
We run a company very focused on diversity and inclusion. And so I really like to think of myself as just a ceo. With that said, you have to stay grounded. You have to stay very close to your associates. We have a campus in Columbus, Ohio, filled with 2,000 associates, and an average age of 27.
About a year ago, there was a request to update our maternity leave policy and have parental leave. We have lots of couples on campus, single gender and dual gender, and it was very important to them to make sure that everybody was treated equally and that we had parental leave. We passed that and I can’t even tell you the enthusiasm on campus when you stay close to your associates and you give them what they are looking for.
I am a female ceo and with that comes some wonderful responsibilities. I love to tell the story that when my daughter was younger, when she was five or six, she looked at me with these big beautiful brown eyes and she said, “I don’t want to be a working mommy.” And I said, “Wow, she’s really telling me something.” And even at that young age, you have to kind of think about what does that mean and what was she trying to tell me and I took that as a fantastic challenge to say, “You know, she’s got to understand why I love what I do, why I’m passionate about what I do and why I’m driven and why I make sure I strike a nice balance in my life.”
Twenty years later, she’s now 25, and she’s here with me today enjoying this moment. She has started her career in New York, and for me one of the most fantastic chapters as a female ceo is to be a friend, a mentor, and cheering her and her friends from the sidelines and helping them understand what it’s going to be like to enter the working world and help them along, and I’ll do the same for my son in a few years when he joins the working world. When you mentioned when I became ceo in February 2017, I wouldn’t say anything specifically since becoming ceo. Certainly during my career, I think there are lots of times when you look back and you reflect and think about the way that certain things went and did they go a certain way because there was gender potentially involved. There’s no way to prove that out. Those are just personal feelings watching promotions along the way and things that may have happened because of that.
G.M.: When we were preparing this, you said something about, “You’ve got to remember to send the elevator back down.” Can you talk about that?
F.H.: Sending the elevator back down is a big part of walking the walk, and making sure that you don’t ever keep yourself secluded from those on your team and around you that are very important. I make sure every day — we have a beautiful campus in Columbus, 500 acres — I walk to the café. I get my own coffee, I get my own lunch, make sure that you’re connected. It gives me the opportunity to hear great things because people love to talk to you when you’re standing on line checking out, and you learn. You learn a lot and it’s very important to just send it [the elevator] down and stay grounded.
G.M.: When you took over, you inherited a very unique, and some would say controversial, culture from the Mike Jeffries era. How did you address that, and how did you modify the culture?
F.H.: A lot of what you’ve heard through the years was very, very true. I’m sure a lot of people thought I was crazy for taking this position. I started at the company at the end of 2014 as the president of Hollister. With everything that you’ve heard about the culture and the opportunities, I’ll tell you what I found.
I found the most amazing, smart, young, curious associates. They had two incredibly iconic, global brands. And brands matter. Brands matter today, more than they’ve ever mattered. And so what I saw was a huge opportunity. Now, with that, we had to literally transform everything in the company and everything that we were doing.
The single most important thing from a cultural perspective that we had to change, and I don’t want this to sound like a cliché, was keeping the customer at the center of everything that we do because we didn’t. I walked into a company where presentation was what mattered. From the associates to the stores, everything was viewed and reviewed all based on presentation. I had to teach one by one what that meant, to keep the customer at the center of what we do. Our store associates had no exposure to financials, to KPIs. They literally were graded on presentation. And so we started a very methodical change in the way we think about things.
G.M.: Let’s talk about the brands, Abercrombie and Hollister. With all the segmentation that’s going on in the industry, can you talk about what the differences are and how you’ve tried to build those brands?
F.H.: Back in 2014 when I got the call and started to research the company, I went to the mall and started to do my competitive shopping, and tried to understand what was happening. There was no light between the brands. You could walk through a mall and you could see exactly the same product, with essentially different labels on it.
Since that point in time, we have done a tremendous amount of work in brand building to really pull the brands apart and set them on their own separate paths. We do have a kids’ business, which caters to the five- to 12-year-olds. We have now really established Hollister as the iconic teen brand around the world, and Abercrombie, which is really for the young adult populations. We were able to parse them out and set them on their own way.
Going back to even keeping the customer at the center of everything that we do, I’ll tell you another really fun story. When I joined and I did all of my competitive shopping and we looked at the brands, every single jean, men’s jeans, in kids, in Hollister and in adults had a button fly. And I had the opportunity to listen to the customer feedback and it was like, “You know, we love your jeans. Could we just get some zippers?” And the truth was we just weren’t listening to the customer. So we fixed our assortments, we got lots of balance in them. We’ve gone on to have a really nice opportunity in our denim business. That first year in Hollister when we made that switch was the biggest year we’ve ever had and we’ve since grown that business significantly.
G.M.: What about the ambassador program? Has that helped you with the differentiation and learn more about differentiation and reinforcing it?
F.H.: Absolutely. We kicked off the first high school ambassador program called H Collective in Hollister a couple of years ago. We started that program with 12 kids, and this back-to-school we had close to 90 agents around the country. We will start to launch that globally, as well, next year. These kids, they love the brand. We bring them to campus once a quarter for training, and just spending a few hours with them is the most energizing, exciting thing that you get to do and they create UGCs, which is user-generated content. And that is very meaningful to our consumer, who really wants authenticity. Authenticity is very, very important to our consumer.
G.M.: You refer to Abercrombie as a lifestyle brand. I think for everybody here, you hear lifestyle brand all the time. Ralph Lauren’s a lifestyle brand, Casper that makes and sells mattresses is a lifestyle brand, Away is a lifestyle brand, what makes Abercrombie a lifestyle brand?
F.H.: We use the word lifestyle a little bit differently from how other people use it. When we think about lifestyle, it really leads us to something that we call our “playbook.” Everything that we do strategically on campus for all of our brands is based on a playbook. That playbook takes product, voice and experience and brings it all together so that our consumer has a real 360-degree view of our business.
Hollister this year, for our back-to-school campaign, we worked with Khalid and Noah Cyrus. They appeared on our TV show on AwesomenessTV, they appeared on Instagram, they appeared on Snapchat, they appeared in in-store marketing, they appeared in our e-mails. Everywhere that our consumer went, from YouTube to Snapchat and any social that they saw, they saw the same faces and the same excitement about the brand. We had such a strong reaction to it.
We learned that Khalid had been, unfortunately, bullied in high school. We do an annual antibullying campaign, so we brought him into our campaign this year and [worked with another company where he appeared at concerts]….We continue to evolve all of those touchpoints with our consumer and make sure that that’s all completely connected. That’s how we think about lifestyle.
This year, we partnered with this young woman who created an app to make sure nobody sits at lunch alone because, unfortunately, a lot of the bullying happens during lunchtime. And with Khalid showing up at all of these concerts and all those UGC’s, it was just wildfire through social media. That has culminated [with us receiving] a nomination for our partnership through the Billboard Music Awards, so stay tuned for Nov. 16 to see if we win.
G.M.: You’ve said the company was previously store-driven, and now the company is digitally driven. How would you define that as it relates to your company?
F.H.: The history is that we were able to market the company entirely through our stores. It was a very different time, a very different era back then. We realized, and honestly before my time, the shift that was happening to digital and we made a tremendous investment — we’ve invested over $400 million — since 2010 to make sure that we have those digital opportunities.
We are omni, globally at this point, not with every single functionality, but we are on our way to making sure that we have every function around the world. Everything that we do is digitally focused. We created our loyalty programs, we’ve gotten 20 million members in less than two years because of our digital focus and how they are able to interface with us. We just launched two learning labs for the Abercrombie brand. We opened two new prototypes on the OSU campus in Columbus and at USC in California — those have new digital-selling platforms in them and they have a tremendous omni capability at OSU. You could order from your dorm room before noon and have that package waiting for you in the afternoon.
From a digital perspective, we’re still learning, trying, and we’re constantly out there seeking what’s happening. We announced recently that we’re the first apparel retailer to have Venmo apps because that’s the way our consumer wants to pay for their product.