Abercrombie & Fitch is well-known as a high-end leading specialty retailer of apparel and accessories for men, women, and kids through five renowned brands.
One of its lower-priced offspring, the Hollister brand, is most popular for the teens and young adult demographic, as well as the parents of this demographic.
While the store is not unique in its appeal to its target market, its prices are noteworthy for being higher priced than stores that sell similar merchandise.
Why is this?
Read on to find out why Hollister is so expensive:
Why Is Hollister So Expensive? (Top 10 Reasons)
1. Product Positioning Strategy
Many of the reasons Hollister’s prices are so high are the various marketing techniques that focus more on the customer’s experiences rather than on their merchandise.
Selling high-quality products at fair prices is not necessarily a guarantee of success.
This is why the Hollister stores take a different, more effective approach than its main competitors, such as American Eagle Outfitters, Ralph Lauren, Gap, Inc., and Under Armour.
They mark up their prices because higher prices have been shown to instill feelings of accomplishment or elation in those who purchase them.
Hollister’s business model supports more of a psychologically-oriented view of shopping that relies less on the quality of the merchandise, and more on giving their customers psychologically rewarding shopping experiences.
The ambiance of the store is such that customers remember the dim lighting and the seductive scents that waft through the air.
When people shop at Hollister, the merchandise is an afterthought.
They are paying for the experience.
This means that they market their merchandise in such a way that middle-to-upper class parents will buy clothing for their high school and college-age students there because they relate to ways it resembles clothing that was in style when they were teenagers.
The Hollister Look
The store goes for a clean-cut or “preppy” look or a fun-filled surfer style that is popular, easily relatable, and instills a sense of identity in the teens who wear it.
Much of their merchandise is geared toward sports.
Hollister also sells a line of women’s lingerie and certain cosmetic items that appeal to young teenage girls.
The clothing is of average quality, and not unlike the quality of the aforementioned competitors’ merchandise, yet is marketed to convey more inherent value by virtue of its brand name.
Hollister places store logos on many of their products and sells them only in Hollister stores, giving them the impression of exclusivity.
Part of the company’s product positioning strategy is to give its target customers the impression that they are “strong, sexy, and desirable” by providing a memorable shopping experience.
This is actually what the customers are paying for.
Upbeat music and men’s cologne fragrances filled the air of Hollister stores in the beginning, luring customers in for an entirely new experience that, perhaps, took their minds off the store’s higher prices.
Selling clothing at higher prices seems to instill the feeling that the clothes are special and that those who wear them are special as well.
Hollister promotes a lifestyle and gives inspiration rather than a specific quality of merchandise.
2. Deals, Promotions, And Oxytocin
When approaching a Hollister store, consumers are commonly lured into the store by signs that advertise a specific sales item.
Once they have entered the door, they will see several signs near the entrance that advertise “deals and promotions.”
However, there is a caveat to this strategy that can end in convincing customers to spend more than they had originally intended to spend.
Just inside the door are attractive tables full of assorted merchandise with sale signs that can be seen as soon as the customer enters.
Some of these signs will often offer deals that inform the same customers who may have only intended to spend $30 originally, that if they purchase $75 worth of regularly-priced products, the customers will receive something for free, such as some small-dollar cosmetic item or a clearance-destined tee shirt.
Without fail, the customer will exit a Hollister store with a much emptier wallet than when he or she entered.
This strategy enables Hollister to charge more than its competitors for their merchandise and to more easily persuade shoppers to purchase it, resulting in a hefty profit for the company.
In other words, Hollister gives the impression of selling their clothing at deep discounts, but customers end up spending more money than they had normally planned to spend.
Neuroscientists have discovered specific motivators that drive consumers to specific types of promotions that Hollister uses.
This type of promotion changes the way customers think and feel.
Often, buying something on sale will lead the customer to experience feelings of happiness, excitement, pleasure, and other outcomes that feel positive.
This is because making these types of purchases increases a hormone in the brain called oxytocin, otherwise known as the “feel-good” hormone.
Offering a discount has been shown to drive customers to purchase something even if they had not planned to buy anything at all, and even if the item purchased is not something that they necessarily need.
Hollister, itself, is an American company.
However, it sources its merchandise from countries that can manufacture it for much less than an American company could.
These include Sri Lanka, Guatemala, Bangladesh, Vietnam, China, Indonesia, Cambodia, and India.
The company omits this information from its website and sells styles that are aimed toward an upper-middle-class American teenage demographic that enjoys certain activities popular in America, such as surfing, football, and other sports that are popular in America.
Even though these sources manufacture clothing for less, the tariffs on some items, such as clothing that comes from China, are cost-prohibitive for retail establishments.
Therefore, they make sure that the customers absorb these extra costs by marking their items higher than they normally would.
4. Perception Of Cost And The Marketing Placebo Effect
A study conducted by Harvard University suggests that the actual cost of merchandise is not as important as its perceived cost.
Hollister is known as an expensive brand.
Therefore, when buying merchandise branded with Hollister logos, the perception arises that this person has expensive taste.
Hollister takes advantage of this psychology by keeping its prices high to attract a certain type of customer.
Studies suggest that customers tend to value more expensive items over items that cost less because of something psychologists call the “marketing placebo effect.”
Rather than manufacture superior quality clothing, Hollister, a store that gets its clothing from low-cost manufacturers overseas, gives customers that impression without actually stating it.
Researchers conducted a study in 2017 that revealed how much customers’ enjoyment of something represented as expensive influenced whether or not they purchased it.
American teenagers have demonstrated the willingness to pay more for items that, if not for the Hollister logo, could be purchased for much less elsewhere.
The study involved wine.
The subjects of the study were all given the same kind of wine but were given different information about how much it cost.
They were told that the more expensive wine—which was exactly the same wine as the “inexpensive” wine—tasted better than the rest.
MRIs were administered and the brain activity that was measured showed higher activity with the implication of higher prices.
This means that if customers were given a choice of something sold by Hollister as opposed to a comparable item from a less trendy store, they would be more likely to purchase the Hollister item.
Using this information, Hollister charges more for its merchandise.
5. Popularity And Brand Name Recognition
Because of its unique variety of marketing, Hollister has become a very popular brand.
Consumers enjoy wearing popular brands.
Studies show that they do so because they may have had good experiences with a specific brand in the past, or because they wish to portray a specific image.
This is especially important to teenagers, who are Hollister’s primary and most important customers.
Buying name-brand clothing helps teenagers who have a desire to fit in with social circles, school or work tend to buy name brands because they are under the impression that the brands will help them be more socially accepted.
Since teenagers are in crucial stages of their development, brand names can also help them create a “look” that is part of developing their own self-images.
Hollister spends extra money on printing merchandise with its logo on it.
This includes everything from shirts to hoodies to sports bags and windbreakers.
To maintain its image of popularity and name recognition, Hollister has kept its prices high to capitalize on this psychological approach.
6. Supply And Demand
Because of the aforementioned marketing strategies, there is a steady demand for Hollister clothing, especially since it is geared toward a teenage demographic.
When customers continually want specific products, those selling the products are free to raise their prices because they know that customers will buy them regardless of their cost.
It is part of the aforementioned experience that customers associate with the brand.
7. Hollister Has Revised Y2K Trends
Much of Hollister’s appeal is its ability to convey that its clothing is the latest, in terms of what is currently trending.
The Insider notes that Y2K clothing is currently trending, and that is exactly what Hollister has on its shelves at this time.
Their marketing teams pay close attention to what the hip and cool people are wearing and promote this with costly ad campaigns, the monetary brunt of which is paid for by the customers.
Because Hollister is such a popular brand, teenagers know exactly where to go to get the latest trends.
The store has been around long enough to have established its reputation as a trusted source of current fashion trends, even if they cost more, and they do.
The Hollister company has vowed to make teenagers feel more comfortable in their own skin by making slight changes and adapting more closely to current changes in fashion.
It does so, however, without changing its core concepts.
Their clothing has small styling differences that set them apart from their competition.
Hollister has a recognizable look that serves as a sort of status symbol among certain young people.
8. Limited Fashions
One disadvantage of shopping at Hollister is that its styles are geared toward one demographic only.
This means that they lose a lot of money by not catering to other demographics and fashions that suit them.
Hollister loses business, for example, by not carrying fashions for plus-sized people, or for women who have curvy bodies.
Hollister has to up its prices to make up for the business it loses by not catering to a more diverse customer population.
The people who most frequently shop at Hollister are primarily the Gen Z generation.
Hollister is not going with the inclusive trend that other stores are demonstrating.
They are staying in the exclusive category and cater only to a specific body type.
Were Hollister to broaden its horizons and begin to make clothing suitable for curvy or heavy people, it would surely be able to lower its prices based on the increased sales volume alone.
9. Increased Shipping Charges And Surcharges
Before the pandemic, e-commerce sales were already steadily increasing.
However, once COVID set in, shipping prices exploded beyond imagining, so much so, that the brunt was felt by consumers everywhere.
Online customer shopping increased by 44% between 2019 and 2020.
Online sales jumped from 15.8% to 21.3%.
On the surface, this looked like great news for retailers, such as Hollister.
However, increased shipping costs quickly began to eat into their revenue, so again, the costs were passed on to the customers.
Large shipping containers are used to bring Hollister merchandise into the United States from its foreign manufacturing plants.
Prices for this type of transportation have skyrocketed.
Furthermore, major shippers UPS and Federal Express have raised their shipping prices as well.
When Hollister stores as a collective ship over 25,000 packages during a single week, they are now required to pay an extra fee per package.
If they ship more than 1,000 packages that require any type of extra handling, or that are particularly large, they are required to pay a $3.00 surcharge per package and another $31.45 surcharge that is assigned to large packages, as defined by the company.
Rather than absorb these costs themselves, Hollister passes these increases on to their customers.
Additionally, Federal Express has increased all of its shipping charges with no regard for the number of packages being shipped by retailers.
National shipping charges by the US Post Office have also steadily risen, so there seems no way around this issue.
There literally is no alternative shipping outlet that will prevent Hollister from passing the higher prices along to their customers.
10. High Overhead
Malls may not be the busy shopping hubs that they once were, but even so, they remain some people’s go-to resources for finding favorite fashion items and for discovering new ones.
Even though Hollister now has a thriving online presence, there are still those customers who like to shop at the brick and mortar stores so they can examine the merchandise in person, try on their items and check out any unadvertised sales that might be going on.
For this reason, Hollister remains open fashion malls across America and sales are still high.
Renting a store inside a mall is not an inexpensive endeavor.
Some malls charge as much as $30 a square foot.
The Mall of America, which is the largest mall in the country, charges a base rent that is as high as $9,000 a month.
Add to that the costs associated with the massive renovations that Hollister has undergone and the employee salaries, and it is easy to understand why they charge more than their competitors.
There is also the matter of staffing their stores.
At this time, there are more than 5,000 employees who work for Hollister in jobs that range from $11 per hour for sales associates to $26 per hour for store managers and even higher for regional managers and company executives.
In order to pay their employees to provide service to their customers, prices need to compensate for the higher overhead costs.
These overhead costs are, once more, absorbed by its customers.
At first glance, it would seem that Hollister is arbitrarily selling merchandise at intentionally higher prices.
As part of the Abercrombie and Fitch organization, the store brings in more revenue than any other A&F revenue stream.
Last year, the Hollister brand added $313 million to the organization and its growth rate is still climbing, even though some stores were closed due to the pandemic.
Still, they stay afloat because customers are willing to pay more for their merchandise.
The new Hollister stores are smaller than the pre-COVID stores, but the higher prices now reflect the higher rental rates of struggling malls.
There are also costs associated with remodeling the Hollister stores that remained open during the pandemic.
These costs have resulted in higher merchandise prices in the stores.
Great News For Shoppers
Hollister’s high prices may well be a thing of the past as the company phases into a new sales model process that calls for lower pricing throughout the Abercrombie and Fitch spectrum.
The new model is called “Fast Fashion,” and it takes a whole new approach to sales as the store’s demographic reflects the hardships inflicted by the pandemic.
Rather than its previous focus on “better” clothing, the new model dictates that the store sells more inexpensive items that are disposable and the types of clothing that American teenagers have flocked toward, such as that found in H&M and Forever 21 stores.
The new clothing is trendy, but it does not have the same quality as Hollister stores have had up to this point.
It is called, “disposable” because it is the type of clothing that one might purchase with the intent of wearing it for a few months only.
However, it is stylish and trendy.
The company is also considering selling through third-party venues, such as name-brand department stores, rather than sticking to its Hollister-store-only model that worked so well in the past.