Competitor’s analysis

American Apparel does business in an exceptionally competitive landscape. AA has many competitors; however, a few of their main competitors are H&M, Arcada, Inditex, Benetton and Gap. These companies not only offer similar products to American Apparel, but also target a very similar demographic. Their products are intended to appeal to young, “metropolitan” adults between the ages of 20-30. These consumers are mostly nearing the end of their education and moving on to careers in the workforce. They mostly do not have access to a large disposable income, therefore clothing cannot be so expensive that it will be unable to be purchased regularly. However, because of their age, they still want high quality products. Because of these seemingly contradictory considerations, companies like American Apparel and its competitors have an increasingly difficult time straddling the line between those two. The companies that can pull this balancing act off will be successful, and the ones who cannot will be left in the dust.

H&M. Hennes & Mauritz AB, also known as H&M, is an apparel and accessory store founded in 1947 in Sweden known for offering the latest fashion trends. H&M  specializes in taking advantage of the season’s latest looks inspired by design houses around the world and providing women, men, and children contemporary clothing styles at low prices. Targeting the 18- to 34-year-old market, the company manufactures affordable, stylish clothing. H&M operates nearly 2,000 stores in 38 countries and has a sizeable geographic market presence and overall brand recognition. In March 2009 H&M opened its first store in Russia, Moscow and now operates 15 stores in 5 cities.

Benetton. Benetton, incorporated in 1965 in Italy,  empathized brightly colored knitwear. It achieved prominence in the 1980s and 1990s for its controversial advertising an as a network organization that outsourced activities that  were labor-intensive or scale insensitive to subcontractors. But Benetton actually invested relatively heavily in controlling other production activities. Where it was investment-light was down stream: it sold its production through licensees, often entrepreneurs with no more than $100,000 to invest in a small outlet that could sell only Benetton products. While Benetton was fast at certain activities such as dyeing, it looked for its retailing business to provide significant forward order books for its manufacturing business and was therefore geared to operate on lead times of several months. The company was successful in Britain, however, having a long standing in the market, they witnessed failure to keep up pace   with the accelerated high fashion pressure by the other European competitors, which are now the known as Gap, H&M and Zara. Te rise of these competitors on high street has been witness successful because of a higher demand for fast fashion. Styles showed in magazines and other advertorials are what people wish to wear. Top designers have created collection extensions, which cater people who can afford to spend their hard earned cash on triple figure. This resulted success to the affordable collection of European fashion brands. In 1987 Benetton opened its first store in Russia, Moscow which were operated though partnership with Russian company “Green Rock”. Now Benetton operates 70 stores in more than 30 cities.

Arcadia, which is the leading British apparel retailer, operates about half a dozen apparel chains numbering more than 2,500 stores in the UK, mostly in urban areas. Its fashion chains include Dorothy Perkins, Miss Selfridge, Wallis, Topshop, and Evans (women’s clothing), as well as Burton and Topman (men’s clothing). The company has some 420 franchised stores in more than 30 countries and opened a flagship Topshop store in New York in Spring 2010. Therefore, Topshop is considered one of AA’s main competitors. First Topshop&Topman store in Moscow was opened in November 2006. Since that time the retailer opened 18 Topshops in 6 Russian metropolitans.

 Inditex. AA’s third competitor is Industria de Diseño Textil (Inditex), a Spanish company specializing in disposable chic fashions that are here today and gone tomorrow. Inditex sells on a global scale, with some 4,430 shops in 70-plus countries, under eight different banners: Zara, Oysho, Massimo Dutti, Pull and Bear, Bershka, Stradivarius, Zara Home, and Uterqüe. Located mostly in Europe, the firm’s stores answer to popular trends by telling designers in Spain what customers are asking for locally. Zara is AA’s most relevant competitor. The corporation entered Russia as early as 2003, when first Zara was opened in Moscow. In the beginning of 2012 the amount of all Inditex’s stores is more than 250 in 14 big Russian cities.

 Gap. AA’s fourth competitor is Gap, Inc. Gap is known for providing jeans, khakis, and T-shirts. The firm, which operates about 3,150 stores worldwide, built its iconic casual brand on basics for men, women, and children, but over the years has expanded through the urban chic chain Banana Republic and ailing budgeter Old Navy. Other brand extensions include GapBody, GapKids, and babyGap; each also has its own online incarnation. All Gap clothing is private-label merchandise made exclusively for the company. From the design board to store displays, Gap controls all aspects of its trademark casual look. In Russia First Gap store was opened in December 2008. Nowadays, the company operates 9 shops in Saint-Petersburg and Moscow.


Positioning map

Also we have to consider a market positioning map from another perspective: product quality and price as long as one of the AA's main advantages is exceptional quality.