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2015 Aeropostale, Inc. Brand Audit !!!!!!Morgan Elkins September 26, 2015

AEROPOSTALE, INC.

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EXECUTIVE SUMMARY !Like many competitor retailers, Aeropostale, Inc. has seen a decrease in mall traffic and thus a de-crease in sales. While these decreases have caused major store closings, the company is optimistic that the new changes that have occurred this past year will help in the recovery process. !This report will share the unique brand that Aeropostale, Inc. has created in the past 25 years. By un-derstanding the history of this brand and the uniqueness of its promises and personality a careful as-sessment of the brand’s equity has been conducted. The brand’s willingness to adapt and to change with its target audience has shown promise within the brand’s 2015 year. While competitors have gained strengths in customer relations by award programs, Aeropostale, Inc. has revamped their brand and fashion lines to truly connect with their customers. !While this redefining brand is a great start for Aeropostale, Inc.’s turnaround more can always be done to increase sales and profits. This audit has found that competitors with similar merchandise are able to gain customer loyalty with customer award programs, such as store credit cards. As of today, Aero-postale, Inc. does not have a store credit card program. This initiative would not only help with brand recognition and loyalty, but create a smooth transaction experience for customers. !The upcoming holiday season will give the company a better sense of how the new fashion lines are being accepted among their target audience. With affordable prices and updated fashion trends, Aero-postale, Inc. is making progress to regaining their strong market presence. !!!!!!!

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INTRODUCTION !Company Story The mall-based corporation, Aeropostale, Inc. opened its first doors in 1987 (Aeropostale, Inc.). The first store opening came years after the brand was established as a separate department store within R.H. Macy & Co., Inc. As of 1998, Macy’s, Inc. no longer owns Aeropostale, Inc., selling it to the management of Aeropostale and Bear Stearns Merchant Banking (Aeropostale, Inc.).

The company started off focusing on clothing that tended more towards the casual look (Aeropostale, Inc.). This can be seen through what they call, Classic Stores still today. The company has recently shifted their focus from casual clothing to more fashion forward ("Girls Clothes - Tops, Graphic Tees, Jeans & Hoodies | Aeropostale"). Fashion icon, Bethany Mota can be seen in the stores advertising as well as in the store with her new fashion line. Stores now also have multiple fashion lines such as Live Love Dream, Tokyo Darling, Brooklyn Calling, and Free State in addition to AERO.

At the end of January 2015, Aeropostale, Inc. owned and operated 860 overall stores (Aeropostale, Inc.) These stores included 26 P.S. Aeropostale stores.

Aeropostale, Inc. has had difficulties the last few years with maintaining adequate ROIs. In the last five years the market value has drastically fallen to a loss of 95% ("Aeropostale Needs to Bring Back Shoppers or Go Private"). As a result, the number of stores that have been closed in the last 3 years has more than doubled.

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!0

35

70

105

140

Fiscal 2012 Fiscal 2013 Fiscal 2014

Stores Closed Stores Opened

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Customer Story

Aeropostale, Inc. consumer targets are 14-17 year old men and woman in the AERO stores. The company also owns another brand, P.S. Aeropostale whose target consumers are 4-12 year old boys and girls (Aeropostale, Inc.). Recently, CEO Julian Geiger, has made several statements about the updated brand that has redefined the target consumer for the company, “We will be a brand that stands for updated classics in its merchandise orientation, but has strong and complementary contemporary additions that results in an exciting, but unique, total store assortment and presentation (Tierney).

One motivation that has not changed within Aeropostale, Inc. recent upgrades has been their coupons. By obtaining customers email addresses at checkout, Aeropostale, Inc. has incorporated a system to help entice customers to come back. Each receipt also has a savings section to spark a positive experience after each transaction.

Declining sales have forced Aeropostale, Inc, to take a look at not only their in-store consumers, but also online consumers. While the company has tried to keep the consumer’s best interests its first priority the following have been found to be possible explanations to deteriorating customer loyalty (Aeropostale, Inc.).

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IN-STORE ONLINE

Mall Traffic/Competitors Adaptability of Website with Mobile Devices

Economic Conditions Technical Failures

Shift to AERO Now Technological Issues

Inventory/Damages Online Privacy Violations

Promotional Events Dates Credit Card Fraud

Weather Online Vulnerability

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!BRAND INVENTORY !Brand Promise

Aeropostale, Inc. has striven to bring “The AERO Way” not only to its customers, but also to its employees ("Girls Clothes - Tops, Graphic Tees, Jeans & Hoodies | Aeropostale”). There are 4 primary values that Aeropostale, Inc. follows; respect, compassion, teamwork, and integrity. These values do not merely involved how the company treats each of their employees, but how they want each customer to be treated as well. Perhaps the most meaningful value for customers is the value of integrity. Aeropostale, Inc. is committed to ensure that their product meets all regulation requirements before it reaches stores ("Girls Clothes - Tops, Graphic Tees, Jeans & Hoodies | Aeropostale”).

“The AERO Way” is a promise that helps create brand loyalty with its customers. When a customer enters an Aeropostale, Inc. store they are met by employees who show respect and compassion. Employees do not see customers merely as potential transactions, but simply as a new friend. With this mindset, customers can shop freely and are well taken care of. Ensuring the integrity of the clothing ensures that customers are left satisfied and without any issues.

!Brand Personality

!What truly sets Aeropostale, Inc. apart from its competitors is its adaptability. Over the past year, AERO Now has become something that teens can identify with. As teens grow up their styles have changed and likewise, AERO has grown up and changed with them. This allows customers to stick with a brand that they know and have trusted while getting the products they want most.

EXCITEMENT SINCERITY RUGGEDNESS COMPETENCE SOPHISTICATION

Adaptive Integrity Active Accountability Creative

Interactive Charitable Edgy Affordable Expressive

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Brand Elements

Over the years Aeropostale, Inc. has created and used numerous logos and symbols to create customer recognition. The most recent logo has simplified the brand and even shortened the name to simply, AERO.

The most recent name change, AERO, has also created a new slogan, “AERO Now” and “Are you who you were a year ago? ("Girls Clothes - Tops, Graphic Tees, Jeans & Hoodies | Aeropostale”). These new changes coincide with the updated fashion styles that can now be found in Aeropostale, Inc. stores allowing for customers to become excited about the change.

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Brand Portfolio

!Aeropostale, Inc. while primarily a clothing retail company also has recently started Aero Room. Clothing can be purchased either online or in-store. However, Aero Room is exclusively purchased online currently.

Girls

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Guys

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Aero Room

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CURRENT BRAND COMMUNICATION STRATEGIES !Aeropostale, Inc. has a very active online presence for marketing. To entice customers to visit their website, exclusive sales and coupons are found on their website daily. To boost sales online only sales sometimes involve clearance and markdowns to help the company make a profit on items that may not be in the stores ("Girls Clothes - Tops, Graphic Tees, Jeans & Hoodies | Aeropostale”). In

addition to the company’s website, the company also is very active on social media. Aero Ambassadors who are part-time employees of the store are asked to share Facebook posts regularly. When these posts are shared through employees High School students, the post becomes viral to the targeting consumer (Facebook).

!Aeropostale, Inc. also has developed a blog on their website that not only has tips and new ideas about upcoming fashion

trends, but allows consumers to participate in contests to win prizes. This interactive feature on the website allows for consumers not only to shop via online, but be engaged with the brand as well ("Girls Clothes - Tops, Graphic Tees, Jeans & Hoodies | Aeropostale”).

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COMPETITOR ANALYSIS

American Eagle Outfitters

•AEO Better World focuses on the customer being the future and American Eagle as a helping hand along the way. “Live Your Life, Love Your Planet, Build a Better World” ("American Eagle Outfitters Men's & Women's Clothing, Shoes & Accessories").

•American Eagle Outfitters is a “Global Specialty Retailer” selling high-quality fashion forward clothing, accessories and personal care products to their target consumers ("American Eagle Outfitters Men's & Women's Clothing, Shoes & Accessories").

• The target consumers are 15-25 year old men and women ("American Eagle Outfitters, Inc.”).

• While mall traffic and competitive teen retail has created a deicing in the past Fiscal years, AEO has regained some market value. Sales data has shows a sales rate of -7% for August 2014, however, in August of 2015 the sales change has jumped to 11%. ("American Eagle Outfitters Men's & Women's Clothing, Shoes & Accessories”).

• A sub-brand of AEO, Aerie which is a intimate and loungewear brand has announced a Fall 2015 campaign featuring Emma Roberts. This campaign will feature #AerieREAL which is eliminates the supermodel standards letting consumers be comfortable in their own skin ("American Eagle Outfitters Men's & Women's Clothing, Shoes & Accessories").

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!COMPETITOR ANALYSIS

Zumiez

• Zumiez, Inc. is an active individualistic lifestyle retailer whose main focus is the customer. Stores are often featured to have couches to make the customer experience much like their own home.

• The products that Zumiez, Inc. is known for are apparel and footwear designed around music, art, and active lifestyles. (Zumiez, Inc.)

• Target consumers are young teenagers who thrive in an active action sports lifestyle.

• Similar to other competitors the stock for Zumiez, Inc. has declined steadily from January 2015 to present day ("Zumiez - Clothing Stores for Skate shoes, Skateboards, Snowboards, & Streetwear”).

• Zumiez, Inc.’s ongoing “The Zumiez Stash” campaign allows for consumers to engage with the website through an awards program. The program entices costumers with prizes from Volcom cell phones to trips. ("Zumiez - Clothing Stores for Skate shoes, Skateboards, Snowboards, & Streetwear”).

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COMPETITOR ANALYSIS

!Kohl’s Corporation

• Kohl’s Corporation is a department store that sales exclusive and nationally recognized clothing, footwear, accessories and home merchandise ("Kohl's Department Stores”).

• In order to help customers save and customer loyalty, Kohl’s Corporation has started a special discount program called Kohl’s Cash. At the end of 2014, 25 million customers were taken advantage of this program ("Kohl's Department Stores”).

• Kohl’s Corporation is meant to be a one stop shopping experience for families. By selling merchandise for everyone in the family plus home products, Kohl’s Corporation encourage customers to make the shopping experience a family event ("Kohl's | Shop Clothing, Shoes, Home, Kitchen, Bedding, Toys & More”).

• While sales have been consisted lower in the first 3 quarters, the fourth quarter has been significantly higher. This can be connected with the holiday season (Kohl’s Department Stores).

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INSIGHTS & RECOMMENDATIONS

!SWOT Analysis

!!!Specific Insights & Recommendations

• Creating a customer awards program/card similar to AEO could make shoppers more likely to buy from the company.

• AERO Room merchandise is not widely known since it is exclusively online. Marketing should be done throughout the stores to promote brand recognition.

• All employees should be trained carefully on opening shipment as well as censoring merchandise to help decrease damages.

• Customer surveys can be sent out with emails that are obtained by stores. These surveys should be created with the local community in mind to help better understand their needs.

• AERO Cares is a great program to give back to the community. This program and the Jean collection each summer should be advertised with local media to help create brand recognition and loyalty.

Strengths Weaknesses Opportunities ThreatsTrustworthy Brand Declining Mall Traffic Customer Awards Similar Competitors

Fashion Forward In-Store Damages AERO Room Store Closings/Employee Loyalty

Affordability Inventory Issues Online Sales

Aero Ambassadors

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References

Aeropostale Needs to Bring Back Shoppers or Go Private. (2015, June 4). Retrieved September 27, 2015, from http://www.bloomberg.com/news/articles/2015-06-03/aeropostale-needs-to-bring-back-shoppers-or-go-private-real-m-a

!Aeropostale, Inc. (n.d.). Retrieved September 27, 2015, from http://www.annualreports.com/Company/aeropostale-inc

!American Eagle Outfitters Men's & Women's Clothing, Shoes & Accessories. (n.d.). Retrieved September 27, 2015, from http://ae.com/web/index.jsp

!American Eagle Outfitters, Inc. (n.d.). Retrieved September 27, 2015, from http://www.annualreports.com/Company/american-eagle-outfitters-inc

!Facebook. (n.d.). Retrieved September 27, 2015, from https://www.facebook.com/Aeropostale?fref=ts

!Girls Clothes - Tops, Graphic Tees, Jeans & Hoodies | Aeropostale. (n.d.). Retrieved September 27, 2015, from http://www.aeropostale.com/girls-clothing/category.jsp?categoryId=3534623

!Google Images. (n.d.). Retrieved September 27, 2015, from https://images.google.com

!Kohl's Department Stores. (n.d.). Retrieved September 27, 2015, from http://www.annualreports.com/Company/kohls-department-stores

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Kohl's | Shop Clothing, Shoes, Home, Kitchen, Bedding, Toys & More. (n.d.). Retrieved September 27, 2015, from http://www.kohls.com

!Tierney, J. (2015, March 16). Aeropostale Redefines Target Customer As It Seeks Brand Loyalty. Retrieved September 27, 2015, from http://loyalty360.org/resources/article/aeropostale-redefines-target-customer

!Zumiez - Clothing Stores for Skate shoes, Skateboards, Snowboards, & Streetwear. (n.d.). Retrieved September 27, 2015, from http://www.zumiez.com

!Zumiez, Inc. (n.d.). Retrieved September 27, 2015, from http://www.annualreports.com/Company/zumiez-inc