American Apparel: An American Branding Tragedy

Posted by Abe Sauer on August 19, 2010 11:30 AM

Live by the hipster, die by the hipster. American Apparel is learning an important branding lesson about being on the bleeding edge of cool. Nothing "cool" lasts too long.

Crucified on the blogosphere for allegedly discriminatory hiring practices, the company founded by a Canadian, Dov Charney, hit the streets with pro-immigration May Day protesters at its home base in Los Angeles. But now it's May Day for a brand that's on the verge of sinking, as witnessed by its cratering stock price above.

When American Apparel announced its most recent financial results, the company's stock nosedived by 30%. That's a whopping 66% loss in the last year. Currently trading at below $1, 15 shares of American Apparel stock could buy one Organic Baby Rib Brief. With bankruptcy looming, can the brand survive? Should it?

American Apparel founder, head, and all around controversial individual Charney admitted that the dream is done, saying of his brand's focus (to Bloomberg Businessweek), "Hipsters are from a certain time period. The stereotype of a hipster is not something people aspire to anymore. Do you want to be a hipster? Nobody wants to be a hipster." And that means nobody wants to wear American Apparel.

Now, he says, the brand intends to move away from wooing Gen Y and go more All American and preppy. This came as AA admitted that it "may not have sufficient liquidity necessary to sustain operations for the next 12 months."

Charney's "leadership" over the last several years, which has included sexual harassment lawsuits and a general blight upon the brand, a future which Brandchannel envisioned back in 2004, has led shareholders to sue him for mismanagement. The claims in the lawsuit are worth reading as a chilling laundry list of ways Charney torpedoed his own creation. For a complete chronicling of the brand's downfall, there's no better start than Gawker Media's archive of reporting.

By all accounts, American Apparel vastly overextended its brand and capabilities. Its bricks-and-mortal retail saturation drew comparisons to Starbucks. A bunch of caffeine addicts is a much better market to court than a sliver of young, fickle (and broke) fashion progressives.

Will many will care if AA disappears? Sure. Charney's brash childishness rubbed many the wrong way, but American Apparel's in-your-face advertising and unapologetic hubris made the brand as many enemies as friends.

While the brand soared when consumerism ruled the day, it may have missed accomplishing one of the major aims of any strong brand: consumer loyalty.

More about: Retail, Fashion, American Apparel

Alejandrooo says:

They must change the target!
or the concept

I like AA clothes and im not from USA

mm to bad.. no im waitting for the Sales n_n jajaja

August 19, 2010 01:23 PM #

Barry says:

Cool things do last, it's bad management that sinks a brand.

Brands like Burton, Harley Davidson, U2, Apple, Converse, HBO etc have all found ways to remain true to their core and relevant to the times. While their coolness quotient may go up and down, they are brands that remain cool to a great many people.

August 19, 2010 11:28 PM #

A Sauer says:

I agree. Though Harley learned the hard way and managed to pull itself back in time. Anyone remember Harley Davidson wine coolers? As others have noted, it was really a perfect storm of mismanagement of a solid brand, from employment problems, to real estate woes to target market.

August 20, 2010 09:20 AM #

True Fauxhemian says:

Hipster fever .... it's spreading!

August 20, 2010 12:52 AM #

Nat says:

The problem is nothing to do with a lack of hipsters. It's rapid expansion into a load of retail units negotiated at the height of the property boom.

August 20, 2010 04:42 AM #

Amanda says:

There prices were way too high in the UK for their target market. Why would you pay for a pair of £30 leggings or a £45 t shirt if you're a student or a recent graduate when you can get the same items for £7 or £8 in Top Shop or H&M. The prices in AA in the US are much lower but as usual everything in Britain is over-priced and we're all underpaid and simply can't afford their basic items.

August 20, 2010 05:41 AM #

Chris says:

The prices in the US are way overpriced as well. $38 for a plain t-shirt? Who in their right mind would pay that, especially when unemployment is at record highs and people can't afford their houses, let alone overpriced clothing.

August 25, 2010 11:28 AM #

Lydia says:

I honestly think it has a lot more to do with their hiring practices than people realize.
Not to mention their rude pretentious employers, and ridiculously over-priced clothing.

None the less, I still love their shit.

August 20, 2010 05:46 AM #

@flpprz says:

Live by the hipster, die by the hipster.

August 20, 2010 10:42 AM #

Mister Diggler says:

Oh Noez! Am Appy is going under! Quick. Buy overpriced V-Nex & Hoodiez on klearance!

August 20, 2010 10:45 AM #

Gerry Straathof says:

I always bought from them for the quality of materials. I new I could buy a shirt and have it last a long time. But I don't buy everything there. I've seen too many people wearing everything 'buffalo' or 'levis'... one item from a brand at a time.

I also bought from them because I was under the impression that they made their clothing in north america. Has that changed at all? Maybe it's just a leadership change that's necessary here.

August 20, 2010 02:30 PM #

Lorne McMillan says:

Tragedy indeed, nothing wrong with some of the premises of this brand, particularly the 'manufactured in N America' part, expect to pay more for items if they're made in developed countries. But, brand management? Personality to one side, it seems like one should not grow fashion brands or retail too quickly, this one just exploded and has spun out of control. What a shame.

August 20, 2010 03:11 PM #

micky says:

agree with lydia.. met a few people works for AA (not in Australia though). I can't understand their arrogant attitude. It seems they've been brainwashed in the school of "cool".

I like the brand. Have their clothes. Way too expensive for what it is.

August 20, 2010 04:05 PM #

kiki714 says:

being from portland, hipster capitol of the world, AA started 'failing' a while ago. People move on...the target market is over it. i like that they are thinking about rebranding as preppy. i think that will be The Next Big Thing. east coast prep with a little lilly pulitzer palm beach fun thrown in circa 1991. it's only so long before AA partners with Sperry and Lacoste to start producing hot pink and lime green cardigans to tie around your shoulders over your argyle summer-knit polos. think of the new range of socks! want proof? look how successful j crew has been recently! hipsters are done; and have been for a while now...who can predict what will be next? and can AA transform correctly?

August 20, 2010 07:18 PM #

Muraculous says:

Sorry don't see it happening for this company.
The rag trade is brutal at the best of times and now is not the best of times.
Irrelevant comes to mind.

August 20, 2010 11:36 PM #

Ripe, Inc. says:

It's interesting that the very thing that made the AA brand successful and unique is the reason for its downfall. I think the key lesson here is that it is imperative to always be one step ahead of the game. Especially when things are going well... that is the time to have several new strategies planned for the future. A brand must constantly adapt and/or evolve.

August 23, 2010 11:28 AM #

hotfile download says:

Nice explantion. The prices in AA in the US are much lower but as usual everything in Britain is over-priced. Every body must get the reasonable price

August 25, 2010 02:24 AM #