Abercrombie's laid-back little brother is dominating teen retail
The beachy California-themed teen brand has helped Abercrombie & Fitch's parent company reverse negative sales for the first time since 2012.
Sales were up 4% in the most recent quarter, compared with a -2% decline for the namesake brand.
Hollister invited Business Insider to see one of its newly remodeled stores, and it's evident why the company is succeeding while its parent company's namesake brand, Abercrombie, is trying to improve.
"We put the customer at the center of everything that we do today," Abercrombie & Fitch Co. President and Chief Merchandising Officer Fran Horowitz said during a recent store-walk through at the Westfield Garden State Plaza in New Jersey.
That's more important than ever, especially considering the ever-increasing demands of Gen Z - the generation to which Hollister aims to cater.
First: the company retired its storefront porches for a more modern look: video screens.
You can't see it, but the company has also reduced the potent scents of its perfumes throughout the stores. (Abercrombie & Fitch is more infamous for its heavily cologned stores, but Hollister is guilty of it too.)
Most noticeably, the remodeled stores open up the space, so that sales associates can see shoppers and focus on them, rather than just on their own appearances and how the stores look.
Horowitz conceded that before the remodeling, the stores were "difficult to shop."
"Before, someone could be in one of the rooms [and] we wouldn't even seem them ... in the stores."
The company is also filtering out incessant heavy promotions. Horowitz pointed out that the lower-priced, discounted items are still there, as they are important for the younger consumers in the store, but they might come back with their parents to buy something more expensive, like outerwear.
Hollister is also capitalizing on the ever-important experience component of shopping. The retailer was the first to adopt a Snapchat geofilter, Horowotiz said. That way, teens can take photos of themselves in the dressing room and send the Snaps - complete with Hollister's continually changing geofilter - and send it to their friends.
"It's something that I think all retailers today are debating," Horowitz said. "You have an opportunity to shop online [but] there's also an experiential and social part of their lives that is still about ... going to the mall." And Gen Z is all about experiences.
These changes have been happening rapidly; Horowitz joined in October 2014.
Hollister reported a 4% increase in comparable sales for the fourth quarter of fiscal 2015, compared with a slight decline for Abercrombie's namesake brand.
Once these changes are implemented in more of Hollisters units, the company anticipates double digit growth. (There are 414 Hollisters in the United States, and 139 international stores as of the fourth quarter.)
But in the meantime, even though Hollister does sell looks as trendy ne might find at Zara, it has a reason for holding strong in an otherwise troubled time for malls and the apparel sector: it hasn't abandoned its target audience.
"Hollister is benefiting from a consistency of positioning in ... both in terms of target customer, lifestyle [and] life stage," Abercrombie & Fitch Chairman Arthur Martinez said to Business Insider last month, adding that the "product is designed for that customer in that place."
Its apparel indicates that, too.
.jp2)
Hollister also is free of Abercrombie & Fitch's troubled history.
"The Abercrombie brand itself carries with it, if you will some of the ... baggage that has befallen the entire company," Martinez said in March. "The brand as we go to market and the name of the corporation is the same and any short falling of the corporation's performance [and] attitude ... translates to the brand."
And Hollister has big ambitions that go beyond merely succeeding.
Horowitz wants Hollister to be the "first brand [teens] think of."
"Our goal is to be the global high school consumer brand."