American Apparel made one mistake that led to its downfall

American Apparel ad

What happened to American Apparel?

The brand was synonymous with skimpy designs and sexual advertisements.

For years, this strategy appealed to teens. 

But eventually, the advertisements - paralleled with controversial former CEO Dov Charney's allegedly inappropriate behavior - sent some customers running from stores. 

In an attempt to win back customers, the retailer toned down its image - a move that ultimately drove away American Apparel's fan base.

"I think the biggest error was not adjusting with the times in terms of both brand image and ranges," Neil Saunders, CEO of consulting firm Conlumino, wrote in an email to Business Insider. 

A look at the brand's Instagram shows rising necklines and looser-fitting clothing; the tone has been stripped of provocativeness, which is what set the brand apart in the first place. This, according to experts, appears to represent a lack of identity. 

In order to save itself from becoming another ghost in the retail graveyard, American Apparel will need to find its voice and what it stands for again.

"Big questions remain around both brand and product. On the former, it is still not clear what American Apparel is trying to change to. We know that the company is looking to be more ethical in its marketing, relying far less on the sexual overtones it has used in the past. However, as welcome as this may be, it does mean that a fresh viewpoint is needed in order to give the company a clear and cohesive brand image," Saunders wrote in a note.

American Apparel is not the only brand that has made the mistake of trying to be less provocative.

Abercrombie & Fitch - once known for its racy ads and judgmental ethos - recently tried to tamp down the offensiveness in conjunction with several other steps to bring customers back to stores. But worrying about not offending customers might have been the worst thing the brand could have done. 

"If you don't stand for something, you fall for anything. And what you see right now ... Abercrombie, what they've done, is they're in eternal drift mode," Erich Joachimsthaler, CEO of consulting firm Vivaldi Partners, said to Business Insider earlier this year.

"If you think about it, everything that made them different, they have removed," he said. "But they haven't replaced it with anything."

But even though Abercrombie & Fitch may be struggling to find its identity, it at least has adapted to evolving styles - its most recent collection showed signs of a renaissance for the brand.

 American Apparel will have to scramble and adapt rapidly.

"While the turnaround will be tough, we do have confidence that Ms. Schneider [Paula Schneider, American Apparel's current CEO] understands the issues and has a plan of action," Saunders wrote. "Indeed, at the last set of quarterly results she clearly outlined a number of initiatives - including streamlining costs, new fall collections, and the strengthening of the leadership team - in order to help revive sales and profits."