Discussions about the fashion industry thread

[jah786]

M.Drexler is leaving the CEO position but still owns 10% of the company and will be chairman of the board. I go back to the leveraged buyout and the debt from that transaction as being the overriding factor for this disaster. the company couldn't pivot and be nimble with all of that debt hanging over it.

the next question is what will happen to J.Crew? Will the new CEO try to turn J.Crew into a lean manufacturing company like Zara? Will they not have a creative director like GAP? That means J.Crew will cease to have identity and become some kind of weird smoothy of current fashion trends taken from runway shows and boiled down to blah for the average consumer. I guess one of the things that bothers me about the demise of J.Crew, more so than say GAP (which owns BR) is that J.Crew has (or had) a point of view. It was not always cutting edge, but it was there. I remember when they first launched redwing shoes and chambray shirts. I was not into fashion then the same way that i am now. I wasn't watching runway shows. seeing those looks was totally new to me. it was radical. it was exciting. i feel like we are losing a voice of American fashion that was similar to Brooks brothers but younger and more cool and that bothers me.

 

[dieworkwear]

I agree, they need to find a voice.

Part of the problem is that, right now, they seem to be jumping back and forth between basics that excite nobody (and mostly seem targeted at discount shoppers) and trends that don't really add to a coherent vision. So, between boring Secret Wash shirts and Bowery chinos, you'll find something like joggers. The field jackets are nice, but a bit basic. They've also been around for so long (e.g. that "mechanics jacket"), it's hard to justify return trips just to look at the same old stuff.

It would be great if they could be relevant again by setting forward their own voice, but their natural voice is tied to a kind of contemporary prep, workwear, and Americana aesthetic that feels dead. Or, at least, dead in the editorial sense. J. Crew has never been that high-level fashion brand, but they were a big name once for guys who cared more about how they dressed than the average Joe. They need to capture that kind of customer again, but it's unclear how you drive their interest. The press doesn't write about that Americana aesthetic in the way they once did.

Lots of brands survive with a J. Crew aesthetic, but they're small. Sid Mashburn, for example, is basically just an upscale J. Crew. But they only need to sell X number of button-downs and chinos to survive; J. Crew has to sell like 1000x that number.

Adidas and Calvin Klein have done an incredible job in the last couple of years of becoming relevant again, but they've done it by latching on to a much harder edged fashion look. I feel like the general principles here could be the same though for J. Crew. Find a no-name designer for the next year, then fire that person and get someone that's both talented and can drive press. That way, the designer isn't constantly compared to Jenna Lyons and Frank Muytjens. Do some high-profile collaborations -- basically just excuses to drive press. Essentially plan for a media blitz in 2019 around the narrative "guess who's back and is exciting again?"

That said, I'm sure J. Crew has deep pockets and there are smarter people than me working on this. People with access to data. I just think if they do the "relatable, basic affordable brand" reinvention that Mickey Drexler talked about during his last couple of months at the company, it'll be a death knell. J. Crew isn't lean enough to be Uniqlo (cheap and interesting). It'll either become GAP or JC Penney, neither of which have been doing well.

 

[cadmonkey]

I feel like Jcrew will go the way of gap unfortunately. They had their moment, but now they are more or less Abercrombie 2.0 when Abercrombie got hot in the mid 2000s with all the graphic tees. Now post peak, they are too large of a scale with not only a dwindling consumer base, but a consumer base whose taste level has degraded into trend cheapies with a product assortment that's an entirely different animal.

 

[jah786]

another article on the fall of J.Crew
https://qz.com/999867/j-crew-ceo-mickey-drexlers-rise-and-fall-in-one-chart/

 

[dieworkwear]

I thought Cam Wolf's article today in GQ was pretty good:

http://www.gq.com/story/jcrews-next-era-will-leave-less-room-for-fashion

In retrospect, it looks like Drexler had two paths: go more upmarket, in both price and style, or stick with the quality sub-$100 goods that had made the brand such a success. He chose the former. J.Crew started showing at fashion week, it put its goods for sale on luxury e-tailer Mr Porter and even started selling at Nordstrom. J.Crew was stuck as a mid-level retailer trying to fit in with the rich kids. It's a strategy that only worked for Kim K in the 2000s. "We gave a perception of being a higher-priced company than we were—in our catalog, online, and in our general presentation," Drexler recently admitted to The Wall Street Journal. "Very big mistake."

There are two ends of the spectrum: basic and cheap or luxury. J.Crew started somewhere on the lower end of that scale and Drexler tried to push the brand all the way to the top—it ran out of steam somewhere in the middle. Instead, Drexler could have taken J.Crew to the lower end of the scale. In fact, the signs along the road pointed in that direction.

Sounds like it's just a bunch of things: the debt they saddled themselves with, which Jacob notes that made them less nimble; the collapse of the Americana trend; their failure to transition into a higher end brand; their reliance on sales to move merchandise; then the flip flopping between boring basics and more fashionable things that didn't resonate with core customers. I imagine a lot of this is also about the womenswear side of the business. QZ's timeline suggests that the menswear stuff followed the womenswear trends -- where you see growth and decline in that timeline, it's always a few years before the menswear side headed in the same direction (from my memory, anyway).

Hard to imagine the boring basics direction will work out.

 

[jah786]

@dieworkwear I think you summarized the reasons for their demise better than any of the articles!

So here is a pivot in conversation from what has happened to what will happen. I personally agonized over the loss of a mass market American brand with a point of view. So now a hypothetical question - if you were named J.Crew CEO, what would you do? What's the strategic play for this company? If you named me J.Crew CEO I don't have a clear vision myself. Retreat to past catalog glory and play up gingham and camp fires? This isn't 2003. We can't go back in time. Turn into an Everlane with personality? Do a bad job at being Zara because you don't have nimble manufacturing and you won't get it with 3b in debt? It's not just about manufacturing...J.Crew needs to make a decision about its brand vision and its manufacturing strategy and there are no clear and easy paths for either. for the people reading this thread, what direction would you take?

 

[ClambakeSkate]

sell to a Chinese investor for pennies on the dollar and close up shop.

 

[Epaulet]

Regardless of what J.Crew can do for their men's collection, it's just a side business to their women's line. Fast fashion and online shopping have taken a fatal toll on that, and no one sees a way for it to return. The reality is that traditional large format traditional retail stores simply can't support their rent and wage costs in the face of falling in-store customer traffic.

One bright spot is "Madewell," and it's an interesting concept if you ever go inside one. It takes many of the things that J.Crew does best (casual womenswear and accessories) and presents it in a small store that's manageable for shoppers and economical for staffing. Madewell is actually doing quite well, and most of the executives there were retained despite the layoffs. They definitely see store concepts like that to be the pathway to a future revival. There may be a mens version as well, but it's hard to support a mens-only store at J.Crew pricepoints anywhere outside of major metro areas.

 

[LA Guy]

Regardless of what J.Crew can do for their men's collection, it's just a side business to their women's line. Fast fashion and online shopping have taken a fatal toll on that, and no one sees a way for it to return. The reality is that traditional large format traditional retail stores simply can't support their rent and wage costs in the face of falling in-store customer traffic.

One bright spot is "Madewell," and it's an interesting concept if you ever go inside one. It takes many of the things that J.Crew does best (casual womenswear and accessories) and presents it in a small store that's manageable for shoppers and economical for staffing. Madewell is actually doing quite well, and most of the executives there were retained despite the layoffs. They definitely see store concepts like that to be the pathway to a future revival. There may be a mens version as well, but it's hard to support a mens-only store at J.Crew pricepoints anywhere outside of major metro areas.

Madewell also has a following amongst Millennial women and does not have the same Americana/preppy branding as J Crew. It's pretty close to that "uniform of everywhere" that was discussed earlier.

 

[dieworkwear]

^ Was just going to say the same thing. I feel like the J. Crew redemption story takes place on the women's side, as it's a much bigger share of their business. I unfortunately don't know anything about what's going on in womenswear, so commenting on menswear might not mean much for J. Crew's real strategy.

An aside, but I thought this story at Bloomberg was interesting. About the changes in B&M retail. Lots of theories on what's behind it.

https://www.bloomberg.com/view/articles/2017-06-07/it-s-not-just-retail-that-s-changing-it-s-us

The problem with these kinds of stories is that there's little research or data, or even proper comparative case studies. It's hard to tease out casual effects if you have variables flying all over the place (or, sometimes not flying at all. If a bunch of variables all move in the same direction, you don't know what's causing what). Not that every online article has to be a research paper, but man -- there are a million articles now on the death of B&M retail. It would be nice if someone applied some academic rigor to these hypotheses (maybe they have and the findings just don't make it to popular press).

 

[Epaulet]

Madewell also has a following amongst Millennial women and does not have the same Americana/preppy branding as J Crew. It's pretty close to that "uniform of everywhere" that was discussed earlier.

@LA Guy yeah it's true, the branding on Madewell is much better and simpler. They make it at the same factories and in most cases, Madewell merchandise is directly in line with J.Crew collections. And outside of the preppy angle, Madewell isn't tainted with the constant drum of markdowns and discounts that J.Crew is. People buy things full price at Madewell. You'd feel like a fool if you did that at J.Crew.

But it's really all about the store format. They focus on the best-performing categories and show them in a small place. The economics of it work, and it's been shown that young people would rather shop in a condensed and pleasant space. I think that it boils down to: if you're not huge and cheap (Amazon, F21, Zara) then you'd better be cool, small, and targeted. Not boding well for many of the stores that we know.

 

[LA Guy]

I thought Cam Wolf's article today in GQ was pretty good:

http://www.gq.com/story/jcrews-next-era-will-leave-less-room-for-fashion



Sounds like it's just a bunch of things: the debt they saddled themselves with, which Jacob notes that made them less nimble; the collapse of the Americana trend; their failure to transition into a higher end brand; their reliance on sales to move merchandise; then the flip flopping between boring basics and more fashionable things that didn't resonate with core customers. I imagine a lot of this is also about the womenswear side of the business. QZ's timeline suggests that the menswear stuff followed the womenswear trends -- where you see growth and decline in that timeline, it's always a few years before the menswear side headed in the same direction (from my memory, anyway).

Hard to imagine the boring basics direction will work out.

This happened once already. to the Gap in 2000 or so, after initial huge success with their khakis campaign, again under Drexler, and which recovered, to some extent (or at least, the group did - look up the historical stock prices if you care about pinpointing this). They just went completely off script in their product mix and were constantly on huge markdown. There were pretty decent leather jackets at the Gap for about $400-500 in the late 90s, early 2000s, and, even more off brand, $400 leather pants... for men. Not even kidding. I nearly bought a pair marked down to about $70, for a costume party, but chickened out (leather pants in LA suck).

And remember, it wasn't so long ago that Mickey Drexler was creditted with bringing in Andy Spade and revolutionizing merchandising.

It seems like Mickey Drexler led companies are victims of their own success in branding.

 

[cb200]

News doesn't seem to stop in the industry this year. Hudson's bay co is going "rationalize" away 2K positions by 2018 and Nordstrom might being going private. Interesting times.

 

[jah786]

@Epaulet @LA Guy @dieworkwear so what i hear you saying is that Madewell is great but the rest of J.Crew is not. but that doesn't constitute a business strategy. are you suggesting J.Crew becomes Madewell or that all J.Crew stores close and the brand continues as madewell. don't know if the debt obligations support shrinking the business that much.

I've been into Madewell, there is actually one steps from my office and i go in now and again for inspiration because it's a beautiful store. If madewell sold some of the exact same styles in men's i would buy them.

 

[clee1982]

So can we say RL (the mass brand not purple label or RRL etc) has same problem as j crew?