American Eagle Outfitters piqued analyst interest yesterday (Aug. 29) when it announced an ambitious plan to open as many as 80 physical stores for its sub-brand, Aerie, over the next three years. On the company’s second-quarter earnings call, chief executive Jay Schottenstein called Aerie “the key growth engine within [American Eagle’s] strategic plan”.
Founded in 2006, Aerie is known for its affordable lingerie, lounge, and activewear, targeted towards 15- to 25-year-old female customers. In 2016, the brand made headlines when it became a forerunner of body-positive marketing with its #aerieREAL no-airbrushing campaign. Aerie has since established itself as a standout in diversity marketing by featuring models of different body types and ethnicities, including women with visible disabilities and illness this past year.
Aerie continues to add in-store features to support #aerieREAL, and its fall campaign for 2018 focuses on men with different body types. (Incidentally, the company came under fire in 2016 for running a satirical #aerieMAN campaign as a tawdry April Fool’s joke, but this latest campaign is a genuine expansion of its body-positive efforts to include men).
Based on Aerie’s expansion plans, it’s clear customers have responded positively to these campaign. The label is starting to pose a serious threat to lingerie giant Victoria’s Secret, which continues to face criticism from customers and experts for its advertising approach, which relies on scantily clad women in racy ad campaigns. Data from brand insights firm YouGov revealed that women’s perception of the company has declined since 2013, particularly in the #MeToo era, largely due to its oversexualized ads.
While Aerie expands its physical and digital footprints, the L Brand-owned Victoria’s Secret (which includes college and teen-oriented intimates label Pink), announced plans to shutter 20 stores in response to poor sales. The downfall of Victoria’s Secret contributed to a swan dive for L Brands that began in 2015 and resulted in a 72% share drop over three years. What’s more, Victoria’s Secret announced the discontinuation of its apparel and swimwear businesses in 2016, the latter of which continues to grow for Aerie. In short, if Aerie’s diversity-driven business strategy is winning out, perhaps struggling brands will get the hint that inclusivity is as important for business as it is for society.