Abercrombie & Fitch, once the priciest teen store in American malls, is now hawking $12 T-shirts.
The company is "committed to providing our customers choice and value through a balanced assortment at good, better, and best price points," Chief Financial Officer Joanne Crevoiserat said at a conference yesterday. "We are now featuring select styles with entry-level price points that are accessible to more customers."
"Entry-level" means cheap. Abercrombie's "Essentials" include $12 T-shirts and $10 crop tops, while Hollister's "Must-Haves" begin at $9.95. Those are especially low prices for Abercrombie, which for years was able to sell T-shirts bearing its label for $30 to $50 a pop.
While Abercrombie's brand has taken a hammering with American teens in recent years, the price plunge underscores the extent to which fast-fashion chains and discount retailers have transformed the world of casual apparel.
With the rise of Forever 21 and H&M and destinations such as T.J.Maxx and Marshalls, brands like Abercrombie are no longer able to command high prices for simple T-shirts and tank tops. And the pressure is only increasing: Forever 21 made headlines last year with the introduction of F21 Red, an even cheaper chain featuring its basics at prices like $1.80 for a camisole and $3.80 for a T-shirt. The company plans to expand F21 Red even further this year, despite questions around how such clothing can be manufactured in a humane and sustainable fashion.
To be sure, part of Abercrombie's price dropping is due to the fact that teens are far less enthusiastic about wearing logos across their chest than they used to be. That, added to Abercrombie's slip in status, has forced the company to cut back on logo offerings and stripped out the premium it was once able to charge for its name on a shirt.
But without that advantage, Abercrombie and other retailers are grappling with the dramatically low prices consumers have come to expect on basic apparel.
Recently, the retail industry has been eyeing British retailer Primark, which will enter the U.S. later this year and put more pressure on clothing prices than ever before.
T-shirts cost a mere $4 at Primark, compared with $6 at H&M and Forever 21, $18 at Urban Outfitters, and $20 at Zara, according to Cowen & Co.
"Primark represents fast fashion 2.0 given even lower prices combined with an appealing shopping environment," Oliver Chen, an analyst at the firm, wrote in a March 17 note. "Primark plans to compete mainly on price, with its low prices undercutting competitors in most categories."
In other words, that means the price of basics may continue to slip even further.