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Aeropostale Swot Analysis

Essay by   •  April 24, 2017  •  Case Study  •  1,155 Words (5 Pages)  •  2,112 Views

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SWOT

What are Aeropostales strengths?

  • Large pool of talents and access to capital: In mid-September Aeropostale was purchased by a consortium of buyers(Teresa Novellino,2016). The consortium is led by the retailers Simon Property Group inc. and General Growth Properties, who were joined by branding and licensing firm Authentic Brands Group LLC and liquidators Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC(Teresa Novellino,2016). The collective efforts of many firms benefits Aeropostale. They can pool their capital, skills, intellect and workforce to be a great competitor in the clothing market(Teresa Novellino,2016).  
  • Exceptional sales compared to store size: Aeropostale is a mall based retailer, causing the size of their stores to be small in comparison to their competitors American Eagle Outfitters and GAP (Trefis Team, 2013).  Despite the small size Aeropostale can generate higher revenue per square feet, specifically $50 - $160 more than Gap and American Eagle Outfitters (Trefis Team, 2013). Aeropostale can achieve these optimal revenues because of the large variety of apparel and accessories they offer.
  • Able to sell products at heavy discounts: One of the key advantages that Aeropostales has is that they offer a lot of their merchandise at relatively lower prices and heavy discounts (Trefis Team, 2013). This has been the focal point of all their success.  
  • Success of P.S. from Aeropostale: P.S. from Aeropostale offers casual clothing and accessories for children in the age group of 4-12 years old. P.S. faces low competition after the closure of  American Eagle Outfitters’ “77 kids” and serves approximately 12% of the population (Trefis Team, 2013).

What are Aeropostales weaknesses?

  • Small fraction of fashion focused products: During the recession of 2008 Aeropostale had become the most successful retailer, as it maintained cheaper costs by offering basic clothing (Trefis Team, 2013). After the economy improved and U.S. consumers started shifting to other fashionable brands, Aeropostale has more or less stuck to its basic offerings (Trefis Team, 2013).
  • Weak women merchandise business: The woman’s merchandise category, which should contribute to over 60% of Aeropostales revenues, has been the weakest performer (Trefis Team, 2013). Aeropostale fails to recognize and adjust to the fact that women tend to be more sensitive towards fashion than men(Trefis Team, 2013). Addressing this weakness is important as women’s merchandise represents over 50% of total apparel sales in the U.S (Trefis Team, 2013).

  • Limited internation presence: Aeropostales international presence consists of 26 stores, located in the Middle East, Asia and Europe (Trefis Team, 2014). A by-product of this is Aeropostale becoming almost fully dependant on the U.S market and them missing out on growth that international markets offer.

What are Aeropostales opportunities?

  • International expansion: International markets are wide open for Aeropostale to enter. Aeropostale can garner success in lucrative markets such as China, whose apparel market is the second largest worldwide with annual sales that cross $200 billion (Trefis Team, 2014). Another great market is the middle east, which is one of the fastest growing apparel markets in the world. The United Arab Emirates annual per capita spending on apparel is the highest amongst all developing countries ($785 in 2010) (Trefis Team, 2014).
  • Expansion of P.S. From Aeropostale: P.S. from Aeropostale name sake brandserves a much larger demographic than Aeropostales namesake brand (12% of Americans) yet they only have 100 stores operating in 20 states (Trefis Team, 2013). This presents an opportunity to expand into a lucrative market and significant value to Aeroposale (Trefis Team, 2013).

What are Aeropostales threats?

  • Delay In Internation Expansion: While Aeropostales competitors have been aggressively expanding into global markets Aeropostale does not have any strong plans for international expansion (Trefis Team, 2014).. This poses a problem as their competitors will have established their brands already making it harder for Aeropostale to compete (Trefis Team, 2014).
  • Dependence on few vendors: About 84% of Aeropostales inventory is sourced from 5 vendors (Trefis Team, 2013). Any change in any of the vendors supply or strategy could have adverse effects on Aeropostales store sales growth. Aeropostale should mimic competitor Urban Outfitters who have 4,100 vendors and do not buy more than 10% of inventory from one vendor (Trefis Team, 2013).

PEST

Political-

Aeropostales has many suppliers located in Hong Kong and other locations with similar political policies. Their government has distinct control over its legal system which could affect standard pricing laws, labor laws, environmental laws and other regulations(Abhijeet S,2010).

Economic-

The majority of Aeropostales retail stores operate in the United States. Referring to the business cycle the economy is currently in a point of expansion (Kimberly Amadeo, 2016). This means that consumers have more disposable income which benefits Aeropostale as consumers will be more willing to spend.

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