Blog Two: American Eagle Reinvents its Way of Production

To read the article of discussion, please visit http://online.wsj.com/article/SB123362245399041753.html?mod=todays_us_marketplace.

American Eagle (AE) is a well known company for producing and selling trendy jeans and t-shirts at a relatively low price. The company is currently in the process of reengineering it's way of producing clothing to lower costs in this current economic struggle. This "reinvention" involves changes from "where the garment is made, to how it's shipped, to how it looks."

American Eagle is not the only teen chain retailer thinking of new ways to survive. Abercrombie and Fitch Co., has marked down their holiday items but do not want their high-end image harmed with cutting prices.

At the conclusion of AE's fiscal year, ending November 1, the profits and the sales of the company both fell. AE hopes to cut costs in manufacturing by moving production out of Southeast Asia and into India and cutting cost by 4%. The challenge with moving manufacturing to India is that the countries' infrastructure is very limited and the quality of their production is not as high as that of manufacturers in Asia.

I think that the changes the AE are making will help significantly with the company's cost but the company does run the risk of having lower quality garments in it's stores. The company has also considered reducing the price of all it's garments in addition to lower manufacturing cost , but this could cause the company to be seen as another "cheap" store, which is not the image that AE currently does not hold and should not strive for. AE as to continue to set itself apart from the Old Navy stores and other stores that are known for selling relatively cheap clothing. I feel that AE will be successful in its strive to change the company internally and boost it's sales by creating a fresher and more hip image for its' customers.

Post by Christina Degreaffenreidt