American Apparel: An American Branding Tragedy

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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?[more]

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.

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