I was shopping with my wife at the gardening store, looking – in true millennial fashion – for plants we can’t kill. Suddenly, apropos of nothing, I wondered “what the hell happened to Aeropostale?”
Aeropostale was everywhere when I was in high school from 2006 to 2010. You couldn’t go ten minutes without seeing someone wearing one of their ostentatiously-branded shirts. Yet now, it’s really, really hard to find a teenager wearing their clothes.
I became intensely curious, wondering if the company shriveled up and died when I wasn’t looking. Or, perhaps, did they see a generation of kids tired of being billboards and decide to tone it down? Did Aeropostale die along with the malls that are probably going to become Amazon fulfillment centers?
What I thought was going to be a simple Google search wound up bringing a much more complicated story to my attention. This old teeny brand had died and been reborn when none of us were looking, and I think it’s worth talking about why that is.
What is Aeropostale anyway?
Founded in 1987, Aeropostale was a popular clothing brand company whose wares wiggled their way into malls all over the United States. It’s hard to overstate just how ubiquitous their clothing was in high schools by the late aughts if you weren’t around to remember it. This is particularly impressive when you consider that Wikipedia shows no fewer than FOUR pronunciations of the brand name.
While the different pronunciations of the brand name might lead you to expect a sloppy, confusing brand, that’s just not the case. Aeropostale was actually exceptionally good at branding themselves. In 2006, they had $1.41 billion in sales, which is almost $2 billion in 2021 when you adjust for inflation. Some quick back-of-napkin math suggests that they probably got 50-100 million articles of clothing into customers’ hands in that year alone.
But 2006 was a long time ago, and a lot of young adults today probably don’t even know the brand exists. If you’re not familiar with Aeropostale, you can think of them as a cheaper alternative to Abercrombie & Fitch, Hollister, and American Eagle. All four of these companies, at the time to their customers, seemed to be quite different. With the benefit of hindsight, it’s clear that they all had two things in common:
- They were comfortable and affordable clothes.
- All clothing had to be ostentatiously branded with the company’s name written as big as possible across the chests of many a teenager.
That may sound garish now, especially with so much anti-corporate sentiment in the world. But at the time, it was a trendy look and the sales figures proved it. And for what it’s worth, as dated as the late 2000s style looks now, I consider Aeropostale to be the good guys in this story.
Their prices were agreeable and gave working-class kids a chance to actually look cool. They avoided controversy that their contemporaries brought upon themselves. (“Candidly, we go after the cool kids. …Are we exclusionary? Absolutely.” – Mike Jefferies, CEO of Abercrombie & Fitch.) And, as you’ll see in this article, they didn’t fall into brankruptcy because of foolish, decadent mistakes. They were squeezed to death by a thousand different factors all at once.
The surprisingly vanilla origins of Aeropostale
While the Aeropostale that millennials remember is essentially a less expensive Hollister, that wasn’t the case for the first sixteen years of the company. All the way from 1987 to 2003, Aeropostale made a point of targeting the “vanilla middle class.” How often do you hear of a clothing company explicitly doing that?
The tactic worked, though, and they had 273 stores in 33 states by May 2002. “Everybody goes to Paris and London. We go to train stations, Great Adventure, Ohio and Indiana. We get a better handle on what kids are wearing than we would in Barcelona. …If the customer wants vanilla, give him vanilla.” The lack of gutsiness in this strategy was, itself, pretty gutsy.
There is an important caveat here, though. The concept of vanilla here was carefully defined. The company organized focus groups in high schools to figure out what teens would wear, then they handed out merchandise to college athletes to spread the word of their brand. Teenagers around the turn of the millennium flocked to fleece, denim, and knit shirts. Girls generally bought more than boys, so the brand inched a bit closer to a female target audience than a male one, but never far enough to alienate the guys.
Sticking to the basics worked really well for Aeropostale, and it makes sense. In the world of high fashion, clothing is used to make a statement. In the world of high school, clothing is used to fit in.
The halcyon years of 2004 to 2010
By 2003, Aeropostale had over 400 stores and was spreading to the west coast and the midwest. Then, subtly, things started shifting to the Aeropostale that you and I probably both remember. You know, the one with the flashier branding that looked more like this…
By the back-to-school season of 2004, we were starting to see button-down shirts, woven tops, knit polos, and other preppier merchandise fill up the Aeropostale shelves. At the same time, the company was pushing its branding more and more, and eschewing the subtler style that had defined its older clothing.
And you know what? It worked! The mid-2000s were a strange time, but these folks really caught lightning in a bottle. They were so zeroed in on their target audience of high schoolers, that they ended up making clothes that stood toe-to-toe with Hollister, Abercrombie & Fitch, and American Eagle. The prices were cheap, the clothing was good quality, and this affordable brand could splash its name loudly upon a 15-year-old’s torso with the same confidence of a big-dollar name.
It’s usually such a risk to make inexpensive items with prominent branding and a style to match its more expensive peers. It seldom works and almost always looks like a knock-off. And perhaps Aeropostale was, but it sure didn’t seem that way. Objectively, their sales were through the roof during the glory days of this time period.
As a marketer, some may expect me to authoritatively and defensively give an answer for Aeropostale’s success. Truth is, I’m still trying to figure that out. But I have two working theories.
First, Aeropostale knew what their target audience wanted and was able to provide it for cheap. Aeropostale in its peak must have had both extremely talented creators who could spot a trend a mile off AND the sourcing / supply experts to get clothes made cheaply.
Second, Aeropostale was really good at mimicking luxury. Around the mid-2000s, Aeropostale stores were starting to have skylights and bamboo, backlighting and transparent doors. Going into their store was a mood and the good customer experience reinforced teens’ perception of the quality of the clothes. (I’d go so far as to argue their stores were better than Hollister’s, which had about as much lighting as your average underwater cave.)
The slow death of Aeropostale from 2010 to 2015
You saw the title of this post, and the title of this headline. So reading how Aeropostale succeeded as a result of expertise and competence at every level, you must be left with a creeping dread.
To keep prices as low as Aeropostale, you have to be a straight A student in all the business basics. Your supply chain has to be efficient and effective. Nearly every item needs to sell well. You have to always have your finger on the pulse of your target audience. And you need to maximize the lifetime value of every single customer.
Starting in the early 2010s, Aeropostale slipped from the Principal’s List to the Honor Roll in a few courses.
First, there was an issue with MGF Sourcing. It is a clothing manufacturing and supply chain company that Aeropostale depended on. They started imposing tighter payment terms, which Aeropostale blames for sinking the business.
But a single greedy sourcing company shouldn’t sink a business. Let’s be real: all the major teen clothing retailers started to struggle by 2013. A single sentence from this article can sum up the generational change that was rapidly occurring. “Kids nowadays don’t want to be boxed into one look — they want to mix, match and stand out.” It cannot be understated just how different this attitude was from the one prevalent in teens five years prior, and indeed, how much it clashed with Aeropostale’s established business model.
Aeropostale didn’t understand its teen audience quite as well as it used to. Kids were starting to buy from local boutiques, Forever 21, H&M, Zara, and Urban Outfitters. They didn’t want their whole look coming from one shop. Generation Z wanted to stand out.
Which brings us to the next problem – the rise of fast fashion. All the stores I mentioned in the last paragraph were starting to crank out clothes at an unbelievably fast rate so they could always be ahead of the trend. This isn’t good for the planet, but it sure is good for profits.
Now normally, when a company starts to lose its edge slightly like Aeropostale, they can limp along for decades. But retail is cutthroat, and retail for young adults even more so. Retail has slim margins and young adults are finicky.
Aeropostale kept prices low, margins tight, and clothing quality high. That means when sales started to wobble, the margins vanished into thin air. And, of course, since teenagers grow up, the customer lifetime value isn’t as high as that of, say, someone who started shopping at Macy’s in the 1970s and has been brand loyal ever since.
And as if that weren’t bad enough! Malls were dying. So the primary method of distributing clothes was falling out of favor.
The inevitable tragic result: death by a thousand cuts, or perhaps a thousand snagged threads.
The bankruptcy of 2016 & a new lease on life
Starting in 2013, Aeropostale experienced thirteen straight quarters of losses. Its stock got ripped out the New York Stock Exchange. In May 2016, Aeropostale filed for Chapter 11 bankruptcy.
“Aeropostale has always been the weak link in the chain,” Cohen said. “They never had a signature collection in terms of denim like Eagle, and they never had the presence within the consumer space like Abercrombie. It’s all about low price, and they can’t protect themselves from themselves. The lights start to dim and they go out, and they don’t come back on. My guess is there’s no ‘there’ there, and they’ll have terrible trouble coming out of Chapter 11 intact.” – Mark Cohen, business school retail studies professor.How Aeropostale crashed and burned—and what’s next, Retail Dive
In a textbook, the above quote I pulled from a Retail Dive article should be absolutely, unambiguously correct. But somewhere underneath poor fundamentals, there was a beating heart and soul of a brand that refused to die.
That article was written over five years ago, and with the benefit of space and time, we can see that what happened to Aeropostale wasn’t nearly as bad as it could have been. In fact, they were later purchased in September 2016 for $243 million through a mix of companies including Authentic Brands Group, Simon Property Group, General Growth Properties, Gordon Brothers, and Hilco Merchant Resources. This corporate resuscitation gave Aeropostale a chance to start again under new management.
But then the damndest thing happened. Aeropostale roared back to life. Now it has another 500 stories and in 2020, sold $1.5 billion in merchandise. If you look at another graph, you can see that Aeropostale actually benefited from the pandemic despite any conventional wisdom that would suggest the contrary.
There is a disappointing lack of analysis on the Internet describing why Aeropostale is doing so well, so I will pose another theory here. Take a look at the top handful of clothing items in the Guys’ section of the website at the time I’m writing this.
They’ve downplayed their branding and gotten back to the basics. In a way, they’ve picked up where they left off in 1987-2003 and have started providing a wider variety of clothes. I wouldn’t be surprised if they’re using the fast fashion model of business, or maybe even some form of dropshipping.
In short, they’ve recalibrated their business around what teens want, leaned into eCommerce, and found a way to embrace a wider variety of goods. They’ve been quietly succeeding ever since then, not drawing too much attention to themselves.
When the idle though occurred to me in the gardening store with my wife about what happened to Aeropostale, I thought the answer would be a Google search away. Perhaps they were still going strong and I never noticed since I’m approaching 30 now. Perhaps they went bankrupt in 2014 and no one cared. Yet the truth, as it often is, was far stranger and more interesting.
It’s not often that a brand can bounce back from bankruptcy. More surprising still is just how much humanity and humility there is to the Aeropostale brand. I’ve long since outgrown their clothes, and truthfully only wore them to fit in anyway, but nevertheless wish them well.
After surviving bankruptcy, a pandemic, and two apocalyptic recessions, I’m feeling bullish on Aeropostale. They’ve managed to keep a sense of what teenagers like for all but a few years between 1987 and 2021. That is a Sisyphean task, and anyone able to complete it is to be commended.
Good luck out there, you guys.