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Distribution Strategy of American Apparel

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Distribution Strategy of American Apparel
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Rohini Upadhyay
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Distribution Strategy of American Apparel - April 9th, 2011

American Apparel (AMEX: APP) is a clothing manufacturer in the United States. It is a vertically integrated clothing manufacturer, wholesaler, and retailer that also performs its own design, advertising, and marketing. It is best-known for making basic cotton knitwear such as T-shirts and underwear, but in recent years it has expanded—to include leggings, leotards, tank tops, vintage clothing, dresses, pants, denim, nail polish, bedding and accessories for men, women, children, babies and dogs.

Distribution Strategy
The company has also used adult film actresses in some of its ads including Lauren Phoenix, Charlotte Stokely, Sasha Grey and Faye Reagan. Some of the company's other ads, which feature nudity or sexual themes, have been banned by various advertising authorities. Most recently, American Apparel agreed to comply with a UK ruling to not run an ad that appeared in VICE Magazine because it had the potential to "widely offend" people
In 2005 the company was named "Marketer of the Year" at the first-ever LA Fashion Awards. Women's Wear Daily published a survey in April 2007 from Outlaw Consulting, a creative research firm tracking the habits of 21-to 27-year olds, which ranked American Apparel as the 8th most trusted brand, ahead of such clothing brands as H&M and Levi's.[69] In January 2008 the Intelligence Group, a trend and market research firm, listed American Apparel as their number two Top Trendsetting Brand, behind only Nike.[70] In 2008, The Guardian named American Apparel "Label of the Year".
In 2007, Imp Kerr created a fake American Apparel ad campaign in New York. The stunt lasted almost a year, until it was revealed that the fake ads were actually Photoshop mockups. In a final twist, American Apparel ran a tribute ad on the back cover of Vice magazine showing a compilation of the fake ads.

American Apparel, Inc. engages in the design, manufacture, and retail of fashion apparel for women, men, children, and pets. It primarily offers T-shirts, denim, sweaters, and jackets. The company also operates a wholesale business that supplies T-shirts and other casual wear to authorized distributors, screen printers, and advertising specialty companies. American Apparel sells its products through retail and wholesale distribution channels, as well as through its online retail e-commerce Web site, americanapparel.com. As of March 20, 2010, it operated 280 retail stores in 20 countries, including the United States, Canada, Mexico, Brazil, the United Kingdom, Ireland, Austria, Belgium, France, Germany, Italy, the Netherlands, Spain, Sweden, Switzerland, Israel, Australia, Japan, South Korea, and China. The company was founded in 1998 and is headquartered in Los Angeles, California.

Apparel manufacturing remains one of the most in-demand businesses today. According to the American Apparel and Footwear Association (http://www.americanapparel.org), apparel sales for 2000 reached $315 billion, representing a 90% growth from its 1990 levels.

Starting a clothing business is just like any other business: you need to have the resources to jumpstart your vision, skills and know-how in managing the business, and marketing savvy to promote the business. You must also have a business plan that will serve as your detailed guide that will walk you through your first couple of years in business. Having gone through the process of thinking through a plan for your business will enable you to always know what steps to take next.

However, there are a number of unique factors that a would-be apparel manufacturer needs to know about the clothing business. Small businesses face an increasing competition from big firms given their marketing muscles and economies of scale. In the United States, at least, the industry is reeling from a shrinking availability and high cost of skilled labor (hence, big companies can outsource the manufacturing of their apparel to contractors in developing countries).

There are also a growing number of small manufacturers that significantly tightens the competition. Plus, small companies need to have the resources to cope with the rapid changes in apparel trends and styles.

merican Apparel's sales were down 10 percent last year and the brand is forecasting another ten percent decrease for the first quarter of this year, WWD reports. This, combined with stopping overseas expansion and in-store investments, and production problems, has put the retailer in a sticky spot.

"We are a young company and we haven't worked out all the kinks. Right now we are in a period of rationalization, in a period of working with less and deploying our assets more productively," Dov Charney, founder and chief executive officer of American Apparel told WWD. "That means reducing inventory, paying down debt and getting more sales out of the stores we have. We're upgrading software, improving distribution methodology and updating our point of sale systems. If there weren't any problems--then I'd be worried."

The sector supplies accordingly to different segments, such as men and woman apparel, formal eçwear, informal wear, denim jeans, enfant apparel, children apparel, sport apparel and lingerie segments.

The second segmentation is made accordingly to type of shop, such as large stores, traditional shops, shoppings, supermarkets, outlets and franchising stores.

The market research shows the marketing strategies and the market shares for the main retailing stores and key players.

The report includes an in-depth analysis of the sector, the factors influencing the market evolution and future developments. Also, it shows a comprehensive analysis on market structures, the competitive strategies followed by the main players, competitors attitudes, competitive forces, with emphasis on market and services diversification, marketing policies and strategies, positioning against main success key factors, market shares and yields.

The Competitors and Distribution Channel Market Research Series by CLAVES (C) are written by senior marketing and management consultants, and focus on market structures, strategies, attitudes and behaviours, competitive forces and actual & future perspectives on the most interesting and attractive sectors.

Basic information is gathered from field research thru in-depth personal interviews with key management from main companies, customers, suppliers, distributors and retailers into the sector. Also other documental information is obtained in public sources, as well as in private databases.

The report latest edition is November 2006, with 250 pages, 14 tables and graphics, 25 companies are included and is offered in text (hard cover) with digital version as optional.

The report was developed by Claves in Buenos Aires, Argentina. Language is spanish.

You may order just the hard cover and as optional, the hard cover plus digital version in CD. Please send us an e-mail for price and payment details.

Last edited by rohiniu; April 9th, 2011 at 11:57 AM..
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