PESTLE Analysis

PESTLE analysis analyses the external environment of a brand.

The PESTLE acronym stands for:

Political 

Economic

Social

Technological

Legal

Ethical / Environmental 

Political:

> Tax policies -  An increase in income tax which will lead to a decrease in sales for Abercrombie and Fitch as customers will be more cautious of spending as they will have less disposable income.

> Industry policies - Changes in industry regulation laws could mean that A&F have to change the way the business is run to abide by the new laws which could financially impact them.

Economic:

> Exchange rates - If exchange rate were to rise it could be more expensive for Abercrombie and Fitch to export and import goods.

> Consumer incomes - If consumer incomes were to increase sales for A&F would increase as people would have more disposable income and so would be more likely to buy more expensive products. On the other hand if consumer incomes were to decrease then sales for A&F would decrease as customers would most likely shop somewhere cheaper as they will have less disposable income.

Social:

> Change in consumers tastes - A change in trends can effect a brands sales, for example if their typical style isn't on trend then their products won't sell. For example with Abercrombie and Fitch peoples views tend to be that it used to be very popular but it is now becoming out of date.

> Social Media - Social media allows brands to connect with their customers directly to help them find out exactly what their consumers want.

> Pressure groups - Pressure groups can effect a brand finically and impact their reputation. For example with Abercrombie and Fitch and the petition to make them stock larger sizes.

Technological:

> Online shopping - With the invention of online shopping, smartphones and apps its now easier than ever for people to shop and it also opens up brands to multiple distribution outlets therefore increasing sales.

> Mobiles - Smartphones and social media can also have a negative impact on a brand with instant news updates, for example if Abercrombie and Fitch were to find themselves in a controversy, consumers would know about it straight away, which could negatively effect their reputation.

> Online resources - With companies financial performance available online Abercrombie and Fitch can see how their competitors are performing.
> Manufacturing processes - Using the most up to date manufacturing technology and equipment can make the manufacturing process the most efficient and helps a brand to stay innovative and above their competitors.
> Stores - Abercrombie and Fitch stores have introduced customisable fitting room experience which will help increase sales if customers can have a positive experience in store and view the products in a specific way that will make them more likely to buy and come back to the store.

Legal:

> Health and safety laws - Abercrombie and Fitch need to abide by health and safety laws for employee well being and for their reputation.
> Employment laws - A&F need to stick to employment laws as they have suffered from problems in the past, such as refusing to employee a Muslim woman because she wore a hijab

Ethical / Environmental:

> Ethical sourcing / manufacturing - A brand needs to think about ethically souring materials and manufacturing products as it creates a positive brand image. This can also add value to a brands products and increase demand as people will see the product as worth more if it is ethically sourced. With added value a brand can increase their prices and therefore increase revenue. Abercrombie and Fitch have had issues in the past with sandblasting and deforestation.