American Apparel is a well-known clothing brand and company across the world. Basically AA is a manufacturer, distributor, and retailer of clothes with its headquarters based in the Los Angeles, California, U.S. Today it is known to everyone that this company is a sweatshop-free, vertically integrated, with a robust CRS stance which strongly supports the workers’ rights and tries to legalise the illegal foreign workforce of the American clothing industry. American Apparel is also known as a corporation that rejects the typical fashion ads and performs its own design, marketing, and advertising of fashionable clothes. If American Apparel is such a cool and innocent company how come they lost consumer interest and experience a downturn in sales revenue?
This research will take In-depth look at the key platforms of AA mentioned above and will carry out an analysis to examine, if any of those platforms contributed to the company’s current downturn. In addition American Apparel and its business model will be compared with its main competitors in the industry, to uncover what other (if any) business models are successfully in operation.
Dov Charney and American Apparel
Dov Charney is a Canadian-born founder, president and Chief Executive Officer of American Apparel Inc. According to Reuters (2013) AA operated 251 fully owned retail stores in twenty countries as of January 31, 2013 and still runs an online website that serves customers from more than sixty countries worldwide up-to-date. It is not an easy job to run such a big business, no wonder AA employs more than twelve thousand employees worldwide. It is also understandable that the competition is very strong in fashion apparel industry, as it has many major players like Inditex, H&M, GAP, Arcadia, and Benetton. Companies and their owners have to be aware of their behavior all the time, because any inappropriate conduct can cause lot of problems and this can damage the brand image. That is no news that American Apparel had many scandals in the past. For instance Miles (2013) reported that Dov Charney has been accused of sexual harassment many times and this fact impacts the brand image very negatively. Basically this is just one of many other accusations and allegations that faced D. Charney and AA; other will be discussed later on.
AA Vertically Integrated Manufacturer
It is true that business model of American Apparel is to be vertically integrated manufacturer. Basically all process tasks are performed in one big manufactory located in downtown Los Angeles, California. Tasks include fabric storage, cutting and sewing, dyeing and knitting, designing and marketing, wholesale and retail, and warehouse distribution. Essentially the company does not need to rely on outsourcing as many other major clothing companies do nowadays. Vertically integrated business model gives an advantage of an increased flexibility and it also helps to achieve faster turnaround times compared to other...