Abercrombie & Fitch Discrimination Case Study

Abercrombie & Fitch is one of the leading clothing companies in the world. They manufacture and sell apparel that target the 18-24 year old demographic who represent the “All-American Look.” Many people argue about the definition of what is “All-American,” since the United States continues to evolve and include many different cultures and races. Abercrombie & Fitch has been successful for over 100 years, but recently has come under constant scrutiny about its hiring practices.

This case study examines Gonzalez v. Abercrombie & Fitch, the largest discrimination lawsuit filed against the company in all of its years of existence. What did the company do to change its policies? Did they change their definition of “All-American?” Do they still enforce the new diversity policies in their stores today?

Abercrombie & Fitch continues to operate and successfully sell their apparel in the United States and around the world. This case study investigates the changes that have been made inside the company, as well as changes to their marketing, advertising, and hiring strategies.













Situation Overview

In June 2003, Eduardo Gonzalez, along with several other African American, Hispanic, and Asian former Abercrombie & Fitch employees, filed a class action lawsuit against the company for racial discrimination. The former “brand representatives” felt that the company assigned them specific tasks and areas to work in based on their ethnicity.

The lawsuit, Gonzalez v. Abercrombie & Fitch was originally filed in U.S. District Court in San Francisco in June 2003 by the Mexican American Legal Defense and Educational Fund (MALDEF), the NAACP Legal Defense and Educational Fund, Asian Pacific American Legal Center and the law firm of Lieff, Cabraser, Heimann, & Bernstein, LLP. The suit was consolidated with other cases charging employment discrimination against women and minorities filed by the Equal Employment Opportunity Commission (EEOC), the law firm of Minami, Lew, & Tamaki, LLP., and the law firm of Kohn, Swift & Graf, P.C.

Even with overwhelming evidence being present and several employees coming forward to attest to these allegations, Abercrombie & Fitch denied that they were discriminatory in any way. There were several testimonies and stories from former employees that clearly depicted prejudiced practices by the company.

At an Abercrombie & Fitch store in Costa Mesa, California, one former employee came forward with her experience. Jennifer Lu, a brand representative at the Crystal Court Mall location for over three years, worked at Abercrombie & Fitch while she was a student at the University of California, Irvine.

While at work one day, a corporate executive came for a store visit. While looking around the store, he pointed to a poster of a white, shirtless male and told the staff: “This is the ‘A&F’ look – you need to make your store look more like this.” A little less than a month later, Lu and five other Asian American sales associates were terminated. Several African American employees who also worked at the Costa Mesa store were transferred to the stock room in the back of the store – out of customer view.

“I was very distressed after I was terminated for being an Asian American woman,” Jennifer Lu stated.

Her story was just one of many that came out to further prove that Abercrombie & Fitch practiced discriminatory practices in the workplace.
Eduardo Gonzalez

Eduardo Gonzalez was the lead plaintiff in the case. A senior at Stanford University from Hayward, California, Gonzalez applied at for a job at the Santa Clara store. He claimed that when he filled out his application, managers urged him to apply for the overnight stocking crew. When he went to the store for his group interview with 13 other applicants, he noticed that the manager favored the two white candidates.

“I remember how discouraged I felt when I applied for a job at the Santa Clara store and the manager suggested that I work in the stock room or on the late night crew in a non-sales position,” Eduardo Gonzalez told reporters. “I felt it was because I was a Latino – but there was no one I could report this to at the time.”

Anthony Ocampo

Anthony Ocamp was a recent Stanford graduate when he decided to apply for a job at a southern California store. When he went to the location and asked for an application, he was told my management that he could not be hired because there were already “too many Filipinos” working there.

“It is important that Abercrombie seek out employees of color and provide them with training and opportunities for promotion,” Ocampo stated in an interview.

Carla Grubb

Carla Grubb was an African American student at California State Bakersfield, worked at an Abercrombie & Fitch store at the Bakersfield Valley Plaza Mall. After working there for a short time, she began to get assigned cleaning and other menial jobs. She was fired soon after.

“I felt demoralized being the only African-American employee and being specifically assigned to dust the store, wash the windows, and clean the floors,” Grubb told reporters. “I was always doing cleaning – they said I was a good window washer. I should have received the same treatment as everybody else. It made me feel bad. No one should be judged by the color of their skin.”



Company Overview

Abercrombie & Co. was founded by David Abercrombie on June 4, 1892. In 1900, Ezra Fitch joined the company and it then became known as Abercrombie & Fitch. Since the very beginning, the two did not see eye to eye on the direction that they wanted to take the company. Abercrombie wanted to sell outdoors gear and apparel, while Fitch wanted to sell more mainstream clothing. After years of feuding, Abercrombie left the company in 1907.

Despite his departure, the company continued to grow without Abercrombie. Fitch still kept the outdoor feel of the company – a campfire was burning in one corner of the store. He also sold hunting, fishing, and camping gear, but also sold clothing for the average person.

In 1909, Abercrombie & Fitch started a mail-order catalog. The 456 page catalog was mailed out to 50,000 customers, and included many of the same items that were sold in the store. In addition to merchandise, the catalog included articles and advice columns. Although the cost of the catalog almost caused the company to claim bankruptcy, it was an effective marketing tool and increased their sales.

The company kept expanding and opening up stores in a few different locations. A flagship store was opened in 1917 on Madison Avenue in New York. At the time, this was their largest store. In the basement there was a shooting range, on the mezzanine there were items for skiing, archery, and lawn games. The second through the fifth floors were reserved for clothing that was suitable for any climate or terrain. On the sixth floor, there was a picture gallery and a bookstore that was mainly about sporting themes, a watch repair area and a golf school. There was a professional on hand to assist customers with any questions that they had about a particular sport. The seventh floor included a gun room, stuffed game heads, and several hundred shot guns and rifles. The eighth floor was all about fishing, camping, and boating.

Ezra Fitch retired from the company in 1929. Even with his departure and under new ownership, Abercrombie & Fitch continued to expand. It gained a reputation as the “Greatest Sporting Goods Store in the World.”





Company Overview (continued)

Abercrombie & Fitch began opening stores in shopping malls across the country. These included malls in Chicago, San Francisco, and New Jersey. Although sales remained constant for several years, in the 1960s they saw a decline. In 1977, Abercrombie & Fitch claimed bankruptcy. This coincidentally occurred the same year that modern competitor American Eagle began their business.

Even though they were suffering financially, Abercrombie & Fitch continued to operate for the next several years. In 1988, clothing giant The Limited Inc. acquired the distressed company. They re-launched Abercrombie & Fitch with a new look and sales strategy.

Stores began to be opened and operated in upscale malls across the United States. The new target demographic was specifically 18-24 year old college students. Their new apparel was “upscale” and “preppy” and they described their image as “sexy, classy, casual, and All-American.”

With its newfound success, Abercrombie & Fitch expanded to target other audiences. In 1998, abercrombie kids opened. This store targeted young kids. In 2000, Hollister Co. opened its doors. This brand targeted younger high school students ages 14-18. Prices at Hollister were also about 30% less than at Abercrombie & Fitch. Most recently, in 2004, a fourth brand called Rhuel No. 925 was launched to target the older, post college graduate audience ages 24 and up. Prices at Rhuel No. 925 were significantly higher than those at Abercrombie & Fitch.














Other Controversy

In recent years, Abercrombie & Fitch has faced several controversial lawsuits and boycotts because of the content and style of their merchandise.

Uniform Lawsuit

In 2002, several Abercrombie & Fitch employees complained and filed a lawsuit stating that they were forced to buy and wear the company’s clothing when at work. In a settlement, Abercrombie & Fitch agreed to pay $2.2 million to 11,000 workers employed from January 1, 1999 to February 15, 2002.

Each employee was awarded $200 to $490. This settlement was the first of its kind, and today, workers at any Abercrombie & Fitch run store is only required to wear clothing that reflects the look of the company.

Asian Boycott

In 2002, Asian Americans refused to buy clothing at Abercrombie & Fitch because of a controversial line of t-shirts. Earlier that year, the clothing company printed t-shirts that had, what some claimed, racist slogans. One shirt in particular had a cartoon of two Asian men and the words “Wong Brothers Laundry Service. Two Wongs Can Make It White.”

That is just one example of many controversial Asian t-shirts. Abercrombie & Fitch sales suffered because Asian Americans boycotted the store. The t-shirts were eventually pulled off the shelves.

West Virginia Controversy

In 2004, Abercrombie & Fitch began selling a t-shirt with the slogan, “Its All Relative in West Virginia.” Shortly after the release, Governor Bob Wise sent a letter to the company asking them to remove the shirt from their stores.

“The shirt depicts an unfounded, negative stereotype of the state,” Governor Wise stated. Abercrombie pulled the shirts from the shelves.

Girl-Cott

In 2005, the Women & Girls Foundation of Southwest Pennsylvania protested Abercrombie & Fitch after they started selling t-shirts with the slogan, “Who Needs Brains When You Have These?” The slogan referred to breasts. Another controversial slogan that appeared on t-shirts said, “I Had a Nightmare I Was a Brunette.”

Although Abercrombie & Fitch claimed that the shirts were meant to be humorous, many women all over the country were offended. They reached an agreement with the group and stopped selling several of the t-shirts in question.





























Advertisements and Commercials

Abercrombie & Fitch has been under constant scrutiny over the sexuality in their advertising and marketing campaigns. More often than not, commercials and advertisements for the clothing company feature scantily clad young men and women in controversial positions.

A&F Quarterly, the company’s magazine that is distributed 4 times a year, received the majority of the backlash. When paging through the publication, it is evident that sexuality overpowers the images.

Not only did Abercrombie & Fitch face controversy over the sexuality of their ad campaigns, but the models featured were predominately white. This sparked debate and prompted investigation of racial discrimination within the company.

The summer 2003 A&F quarterly features 67 models, all of whom are white. There is one woman pictured whose features are racially ambiguous. The back-to-school version, which was released after the Gonzalez v. Abercrombie lawsuit, featured about 100 models, and all but four appeared to be white. There is one exception, where a black coupled is pictured at the window of an old house. They are outside looking in. Some saw this as a metaphor, for the way the company treated minorities.

Abercrombie & Fitch’s only defense was that they used models that they felt reflected the clothing company’s “All-American” image. Law officials and employees did not agree. Many people felt that it was unfair to define what “All-American” is, and demanded that more multicultural models be featured in advertising and marketing materials.








Objectives

After Abercrombie & Fitch settled the Gonzalez v. Abercrombie lawsuit, they set several objectives to meet that would change the way they hire their employees, advertise, and market their brand. Since the suit was filed, the public developed a negative opinion about the company. Abercrombie & Fitch would strive to meet the objectives set so that the public would regain their trust and positive connection with the brand.

Change Marketing Direction

Abercrombie & Fitch decided to change their marketing and advertising tactics. When hiring models for their campaigns, they will keep an open mind more than ever before.

“This agreement promises to transform this company, whose distinctiveness will no longer stem from an all-white image and workforce,” stated Thomas A. Saenz, vice president of litigation of the Mexican American Legal Defense and Educational Fund (MALDEF).

Change Hiring Practices

Abercrombie & Fitch decided to change the way that they hire new employees. In the past, managers targeted fraternities and sororities for new brand representatives. Now, the company will be open to hire people from all cultures and races and not narrow down new hires only to a certain population.

“Abercrombie had a back-of-the-bus mentality,” said Kimberley West-Faulcon of the NAACP Legal Defense and Education Fund. “Now instead of hiring them in the back of the store, they will have diversity recruiters. It sends a message to young people that we are moving past this kind of thing.”







Tactics and Responses

Abercrombie & Fitch responded to the Gonzalez lawsuit in a number of ways. They set objectives and goals for the company to reach, and went about reaching the goals in a very effective, structured manner. The first thing that they did was settle the class action lawsuit that was brought against them for discrimination.

Lawsuit Settled

Abercrombie & Fitch settled the Gonzalez lawsuit and agreed to pay $40 million to Latino, African American, women and Asian American past and present employees who felt discriminated against. A San Francisco judge approved the class action settlement for the company to pay the millions to several thousand minority and female plaintiffs.

In addition to the $40 million dollar payout, Abercrombie & Fitch also agreed to pay an additional $10 million to cover the plaintiffs’ court and legal fees.

Consent Decree

The class action lawsuit settlement also required Abercrombie & Fitch to follow a very detailed 70 page consent decree. The document set rules and goals for the company to make a positive change in the way its image is perceived. The decree sets specific goals and changes in the way that Abercrombie & Fitch uses marketing, advertising, and the way they hire and promote their employees.

Line 12, Page 15 of the decree states:

“Abercrombie is hereby enjoined from enacting, maintaining, or implementing any policy or engaging in any practice or procedure that discriminates against African Americans, Asian Americans, or Latinos on the basis of race, color, and/or national origin.”






The general equitable provisions are as follows:

2. Abercrombie is hereby enjoined from enacting, maintaining or implementing any policy or engaging in any practice or procedure that discriminates against women on the basis of gender.

3. Abercrombie is hereby enjoined from enacting, maintaining or
implementing any policy or engaging in any practice, conduct or procedure that retaliates or has the purpose of retaliating against any future, current or former employee or applicant of Abercrombie because he or she opposed discrimination on the basis of race, color, national origin or gender; filed a charge of discrimination on the basis of race, color, national origin or gender; testified, furnished information or participated in any manner in any investigation, proceeding, or hearing in connection with any charge or complaint of discrimination on the basis of race, color, national origin or gender; testified, furnished information or participated in any manner in connection with the monitoring or implementation of this Decree; or sought and/or received any monetary and/or non- monetary relief pursuant to this Consent Decree.

4. Abercrombie will implement or maintain non-discrimination and nonharassment policies and an internal complaint procedure designed to assure equal employment opportunity.

5. Abercrombie will make available to Minority and female associates and
applicants the same employment opportunities and terms and conditions of employment, including but not limited to recruitment, hiring, job assignments, and managerial promotions, as Abercrombie affords similarly-situated white male employees.












Recruiting Changes

After the settlement, Abercrombie & Fitch had to change the way that they go about recruiting and hiring their prospective employees. The company is no longer allowed to target fraternities and sororities, two places where the majority of their sales associates came from. They are no longer allowed to discourage any one of any race from filling out an application. In past cases, managers discouraged people of other cultures from applying to Abercrombie & Fitch. Along with the hiring of more minority and people from other cultures, stores are strongly encouraged to promote people of color and different races.

The recruitment and hiring provisions in the consent decree are as follows:

1. No later than four months after the Approval Date, Abercrombie, in
consultation with the industrial organizational psychologist, shall develop and implement a written Recruitment and Hiring Protocol to recruit and hire job applicants for all hourly in-store positions and the Manager- in-Training position. The Recruitment and Hiring Protocol shall require that Abercrombie affirmatively seek out applications from qualified African Americans, Asian Americans, and Latinos of both genders.

2. Abercrombie’s recruitment and operations materials will reflect diversity in race, color, national origin and gender in the United States, including the use of African Americans, Asian Americans and Latino models of both genders.

3. The Recruitment and Hiring Protocol shall prohibit Abercrombie from
discouraging the submission of an application by any qualified person, or discarding or otherwise diverting any application submitted. In addition, the Recruitment and Hiring Protocol shall instruct Managers to make available and accept applications for Manager- in-Training at all of the places and through all of the means that applications for Brand Representative are made available and received.

4. The Recruitment and Hiring Protocol shall require clear and concise
written job descriptions for each in-store non-managerial position and the Manager-in-Training position.




5. Job descriptions will be made available to anyone who requests them, and
non- management job descriptions will be made available in a single package so that potential applicants are made aware of the differences among positions.

6. The Recruitment and Hiring Protocol will contain instructions for
dissemination of applications, the conduct of structured interviews, programs to train involved staff, hiring decisions, documentation, and the hiring process generally.

7. The Recruitment and Hiring Protocol shall instruct Managers that Minority associates shall not be disproportionately assigned involuntarily to any particular positions on the basis of race or national origin.

8. Within sixty (60) days of the adoption of the Recruitment and Hiring
Protocol and continuing every twelve (12) months thereafter, Abercrombie will use Best Efforts to train all involved staff in the conduct of structured interviews and other elements of the Recruitment and Hiring Protocol.

9. Abercrombie will provide Lead Counsel and the EEOC with the
Recruitment and Hiring Protocol and the job descriptions in order to provide an opportunity for comment regarding the adequacy of the Recruiting and Hiring Protocol. If the parties cannot agree on the Recruitment and Hiring Protocol, any disputes will be submitted to the Special Master for resolution and the Recruitment and Hiring Protocol shall be affirmed by the Special
Master unless Lead Counsel and /or the EEOC demonstrate that said protocol is clearly improper and not in accordance with accepted industrial organizational psychologist professional standards. Any decision of the Special Master is final and not subject to appeal.

In addition to the statements in the consent decree, Abercrombie & Fitch was required to hire 25 diversity recruiters. The recruiters are people of color, Asian Americans, and Latinos. Another mandatory position to be added to the company is the Vice President of diversity, who will oversee the progress of the company’s rate of completion of goals stated in the decree.

Recruiters will organize and attend various multi-cultural recruiting events, to encourage people of all different races and ethnicities to apply to Abercrombie & Fitch.


Marketing and Advertising Changes

Abercrombie & Fitch received a lot of publicity for the content and models in their advertising campaigns. They contained overly sexual poses, and also did not include a very multicultural cast of models. Critics often compared their advertising and marketing techniques to that of other clothing companies like J.Crew and Ralph Lauren. These companies sell merchandise and apparel that reflect an “All-American” or “waspy” look, yet they incorporate models from all different ethnicities and cultures.

The consent decree required Abercrombie & Fitch to include a more multicultural look on posters displayed in their stores, shopping bags, and online commercials. Having a company change so many aspects of their marketing technique was a first in the retail industry.

Several important excerpts from the decree are as follows:

1. Abercrombie believes that the artistic aspect of its marketing materials is a
critical factor driving the success of Abercrombie and its brand. As a company committed to achieving diversity in its store associates, as reflected in the other terms of this Decree, Abercrombie will reflect diversity, as reflected by the major racial/ethnic minority populations of the United States, in its marketing materials (taken as a whole).

2. Marketing materials include specifically, but not exclusively: quarterly
magazines and similar materials, shopping bags, store posters and video, website, A&F TV, and purchased advertising.

In addition to having models of color and minority, Abercrombie & Fitch was required to have their advertisements in minority based publications. They will have ads in media that target minority groups so that anyone can apply for a job with the company if they feel they want to do so.








Benchmarks

The consent decree states that Abercrombie & Fitch will have to reach certain “benchmarks” in order to comply with the demands in writing. The decree stressed the fact that these are not quotas, but in fact goals to guide the company through its change.

For the first few months that the decree is in effect, Abercrombie & Fitch will have certain goals that they need to reach by a certain deadline – when hiring a specific amount of employees from other cultures. The company will need to at least meet or exceed the percentages stated in writing.

Some important “benchmarks” from the consent decree are as follows:

First six-month period:
African American: five percent (5%);
Latinos: six percent (6%);
Asian Americans: Maintenance Level; and
Women: fifty-three percent (53%).

Second six-month period:
African American: the greater of Percentage Level of six-and-a-half
percent (6.5%)
Latinos: the greater of Percentage Level of seven percent (7%)
Asian Americans: the greater of Maintenance Level
Women: the greater of Percentage Level of fifty-three percent
(53%)

Third six-month period:
African Americans: the greater of Percentage Level of seven-anda-
half percent (7.5%)
Latinos: the greater of Percentage Level of eight percent (8%)
Asian Americans: the greater of Maintenance Level
Women: the greater of Percentage Level of fifty-three percent
(53%)




Advertising Campaign

To supplement the changes being made internally, Abercrombie & Fitch launched a multicultural advertising campaign. The photos featured models of different ethnicities – African American, Asian American, and Hispanic – wearing Abercrombie & Fitch clothing. In each photo, there was a slogan about diversity. The theme of the fall 2005 recruiting theme was “Diversity is Who We Are.”

Below are examples of the models and slogans used in the campaign:













The slogans included in the campaign use words to describe their new recruiting and marketing efforts. In the photo on the left, the slogan reads:

“Inclusion is about enabling those differences to equally contribute.”

Abercrombie & Fitch is trying to point out that they are now including everyone, no matter what race, color, or creed. The second photo has a slogan that reads:

“Diversity is about who we are as individuals – what is seen and unseen.”

Again, Abercrombie & Fitch is trying to highlight that they are now a multicultural brand – including people from all cultures and ethnicities.

The campaign was launched on their website under the new diversity section. It sent a strong message to customers that the company is ready for change. It was a smart idea, but I do not think it reached the amount of people it needed to just through the website.
Evaluation

Professional Opinion

T.J. Tauriello: Publicist – Atlantic Records

I spoke with T.J Tauriello, a publicist for Atlantic Records in New York City. He handles the majority of press and publicity for artists on the east coast. Most recently, he worked with Kid Rock after his Video Music Awards fight with fellow musician Tommy Lee. T.J. helped to salvage Kid Rock’s image in a timely manner before his new album came out. Thanks to T.J., the public’s opinion about Kid Rock remained positive, because his album debuted at #1.

Before he became a publicist at Atlantic Records, T.J. worked at Abercrombie & Fitch and Hollister. He was familiar with their policies and hiring practices. I asked T.J. what his thoughts were on the company’s hiring practices.

“I definitely saw discrimination while I was employed at Abercrombie & Fitch,” Tauriello said. “Sometimes the managers would deliberately try to talk someone who wasn’t white out of applying for a job. They would make excuses like there were no positions to fill, but at the time we were always hiring. As a white male, I never felt discriminated against, but I did notice how they treated employees of other races and ethnicities a little differently.”

I also asked T.J. if he thought that Abercrombie & Fitch handled the lawsuit properly.

“I think that they followed the rules and took every necessary step,” T.J. said. “I think that the consent decree was a step in the right direction, and made the public see that they were actively trying to work to solve the problem. From a P.R. standpoint, I think that they did everything they were supposed to do. As an employee during this time, it seemed to me that they were following the new rules because they had to. There was still a sense of discrimination in the store.”

My next question for T.J. was if he thought the multicultural advertising campaign was effective.

“I think that they tried a little too hard with this one,” T.J. mentioned. “It seemed to me like they were trying to shove their new ‘multicultural’ image in everyone’s face. It seemed like a little too much too soon. If they wanted to get a bigger effect, I think they could have published the images in media other than their website. Nice try, though.”

For my final question, I asked T.J. if he thought that the lawsuit changed the company for the better, and if he thinks there is still discrimination in the workplace.

“I definitely think there is still some discrimination within the company,” T.J. stated. “Although they now employ people from all ethnicities, the workforce is still overwhelmingly white. I think that the lawsuit changed the company for a short time while they were under a microscope, but I think that they are slowly regressing back to their old ways – and that’s a problem.”

My opinion

I agree with T.J. on many levels. I was employed for a short time by Hollister Co., but left the job after I saw discrimination still being a factor in the workplace. There are still people of color in the stockroom, and the employees on the sales floor are almost all white. However, I did see a copy of the consent decree and several anti-discrimination notices all over the back room.

I think that the lawsuit was a wakeup call for Abercrombie & Fitch, but they still have a long way to go as a company. I personally saw discrimination still present in the workplace, and I think that they need to be under constant watch if they want to truly change their ways. The lawsuit put the company under the spotlight only for a short time. I think that they behaved during that time only to make nice with their customers, and stay in business. But now that the attention is not on them so much anymore, like T.J. said, they are slowly regressing back to their old ways.

From a P.R. standpoint, I do think that Abercrombie & Fitch took the correct steps and went about solving the problem in the right way. Settling the lawsuit was one of their smartest moves. It showed the public that they accepted the fact that they were wrong and took responsibility. I think it was good to settle the lawsuit because it showed that as a company, they cared about their employees and if they had done any wrong to them.


Overall Evaluation

Abercrombie & Fitch could have suffered worse consequences if they did not handle their lawsuit the way that they did. They took the necessary steps to save them from a possible disaster. If their loyal customers and other businesses did not stand by their side and keep them afloat during this critical time, Abercrombie & Fitch easily could have gone out of business or went bankrupt. But because they put together a plan and were proactive about solving the problem, people still remained with the company.

Perhaps it is still a little too early to tell if the company has made any significant progress. The lawsuit settlement and company changes are still relatively recent – 2004 was only a few years ago. As time goes on, if they continue to follow the consent decree and make steady progress with meeting their benchmarks, Abercrombie & Fitch can bounce back from all of the negative press and disappointment in the eyes of the public.

The most important thing for Abercrombie & Fitch to do is to make sure that the public does not see them as a discriminatory company. It is vital that they reassure their customers that they are making the necessary changes and are still working to make the workplace a multicultural environment. They need to make sure that the public is certain that the changes within Abercrombie & Fitch are not temporary, and that they are progressively making a permanent change.