Wednesday, July 30, 2008

J.Crew's New Formats

Although this article is from a month ago (click here for original article), I still find it interesting (and I hope you do too!)

New Formats on J. Crew Agenda
By David Moin
Friday, June 06, 2008

NEW YORK —
J. Crew Group wants to discover what's cool and unique and break out new formats for selling the goods, Millard "Mickey" Drexler, chairman and chief executive officer, told shareholders Thursday.

"We are trying to be world curators, in a sense," Drexler said during the firm's annual meeting at the Gramercy Park Hotel here. "Our goal is not to be the biggest. It's to be the best. But as we get bigger, we spend more time on smaller things. Whatever we do is for the long term, although we get measured quarter to quarter."

Drexler outlined a 2008 agenda that includes:

- The first J. Crew freestanding men's store at 235 West Broadway in SoHo opening in mid-summer. The 1,200-square-foot space has a two-year lease, and J. Crew is searching for a bigger and more permanent site in lower Manhattan. It will be followed by a unit in Garden State Plaza in Paramus, N.J.

- The first women's Collection store on 79th Street and Madison Avenue is to open in August.

- The "Just Ask" program for enhanced service is being rolled out. It started at the Rockefeller Center store three weeks ago and offers experts trained to help customers with everything from arranging alterations or appointments with personal shoppers, to getting fabric swatches for bridesmaid dresses.

J. Crew features a growing assortment of brands and exclusives from around the globe, without the J. Crew label, which for about the past year have been appearing in the retailer's catalogues, online and in the stores. Red Wing men's boots from Minnesota made its debut at J. Crew last winter. Globe Trotter luggage from London appeared in the June catalogue and exclusively designed Selima sunglasses launched this spring.

Vintage Timex watches made exclusively for J. Crew will launch in August, and in the past, Land Cruisers and Jorg and Olif bicycles could be purchased by special order direct from the manufacturer.

"Whether it be special luggage, vintage watches, old cars, vintage work boots, very cool straw hats — when something strikes our fancy as 'wow,' or as very cool, and there's not a lot of it around, we just think it's fun to include in the assortments," Drexler told WWD. In addition, the company conducted its first trunk show this week, a two-day event for the Crewcuts kids' division held in an Upper East Side town house. Future trunk shows for Crewcuts or other categories are possible.

Drexler also updated progress at the two-year-old Madewell division, which he considers a work in progress. Madewell will launch e-commerce in July and soon open two stores on Boston's Newbury Street and on Greenwich Avenue in Greenwich, Conn. Six are up and running.

The $1.4 billion J. Crew has a strategy to go after the designer customer, with quality comparable to designer goods, prices that are much lower and with styles and items that are scarce. Drexler wouldn't put a figure on how much volume the company does with products bearing labels that aren't J. Crew. It is a small but growing percentage.

"To be cool today, you don't really have to spend a fortune," he said. "As importantly, the world is always looking for scarcity. As designers get bigger and bigger, they get less special."

"We are seeing a lessening of what we consider special and unique, people are constantly on the hunt for special. If you don't create or innovate, you basically move backwards" Drexler said. "We're getting behind what we think is cool."

The retailer last month reported first-quarter net income up 23.7 percent to $30.5 million, or 48 cents a diluted share, compared with $24.6 million, or 39 cents, in the first quarter of fiscal 2007. However, due to concerns about the economy, some slowing of comp-store sales gains and resistance to summer shorts and T-shirts, the company now projects diluted earnings per share in the range of $1.70 to $1.75, compared with its previous guidance range of $1.85 to $1.87.

What are your thoughts on the article? Do you agree or disagree on any points made by J.Crew? Also, do you think the article meant "vintage Rolex" watches instead of "Timex"? Because I can totally afford vintage Timex (regular price too!), not vintage Rolex. ;) Also, I would like to have known about the "Trunk Show" earlier this year- did anyone get to go or know more about it?

18 comments:

  1. Sounds like a massive amount of expansion...let's hope they are more successful with these plans than with the website update!

    ReplyDelete
  2. I have mixed feelings...I want J.Crew to stay successful and "current" in the marketplace, but I fear that if they continue to try to go after the "designer customer", then they will make the brand unaffordable for me and other's that cannot afford the "higher end" prices...

    ReplyDelete
  3. I agree with @FFM - it seems like they've been moving in that direction for awhile now, and especially with the introduction of Madewell as the "affordable" brand - J.Crew looks to be going the way of J. Peterman (re: Seinfeld). They have great stories to go along with each completely ridiculous pair of glasses or highly priced watch. They're opening the ritzy Men's and Women's stores in NYC - clearly they want to go after a niche market. A niche which comprises very little of the current clientele. I suppose good for them for trying to tap into an new market, but boo to changing the J.Crew the rest of us know and love. I, too, fear I'll be priced out one or two years down the road...

    ReplyDelete
  4. ITA with FFM & ratsonparade. Ugh -- I will sound dramatic here, but it really upsets me to think that I will also feel priced out of the store. I have fallen out of love with Banana Republic. The quality has just gone down for me. So I've been transitioning to J Crew. It's been easy to do it by buying things on sale and seeing how they wear. I've been thrilled so far. I'm even psychologically adjusting to the prices points and the fact that you have to get these asap before they sell out. But I *do* see massive changes just in the past year and I don't like it. Wah!

    ReplyDelete
  5. I echo what FFM said: I understand why they would want to go after the "designer customer" and thats all well and good... and they say that looking good doesnt have to cost a fortune, implying that Jcrew is inexpensive. Well their price points continue to go up and on some pieces I think the quality does match, on others I have been disappointed. Overall, I liked the lower price point.

    I cant wait to take MMiller to the mens store. He will be so excited. I ventured past the new 79th & Madison store last week it is still completely gutted! So we will see when that actually opens. Though I probably wont be able to afford to shop there. :(

    ReplyDelete
  6. as usual, I agree with everyone...:) I really don't like this "get it before it's gone" approach (see previous rants..:), and am also leery of their plans for going after the designer customer. I'm not really sure that it will work (are you really going to buy j.crew instead of tory burch or stella mccartney if you can afford the latter?), but maybe it will given this economy.

    ReplyDelete
  7. kater - had to chime in again to agree with you. Is someone really going to want to pay $160 for a pair of shoes 'from like' a high school or college student? The girl that helped me last week was pretty good but some of them hide from customers. *lol*

    I think they have been very slick in creating gradual change. They could have made a big to-do about the slide up the $cale and 're-opened' some of the stores. They didn't do that and it was probably very smart. I also wonder if Madewell has consumed Drexler's attention and J Crew has suffered as a result.

    And lastly! I remember when a rep told me that BR was joining GAP, ON and Piper Lime online. I thought that was a joke and I anticipated a fiasco. The transition was impeccable and I love shopping through the 4 websites. Not to mention FREE SHIPPING all the time with the BR Luxe card.

    ReplyDelete
  8. "To be cool today, you don't really have to spend a fortune," he said.

    I hope he didn't mean "... and that's why we've created Madewell." :) I like J.Crew already, why do I have to switch?

    However, due to concerns about the economy, some slowing of comp-store sales gains and resistance to summer shorts and T-shirts ...

    I wonder what they mean by resistance to summer shorts and t-shirts? That people thought the charged prices were ridiculous? That people didn't want to buy them anymore? That statement kind of confused me.

    ReplyDelete
  9. slightlyoldersallyJuly 30, 2008 at 12:39 PM

    Re: "To be cool today you don't really have to spend a fortune." I wonder what they'll be charging for these "vintage" timex watches...since when can you make something that's vintage anyway? Doesn't vintage mean old? If you're truly cool, you'll wear your dad's old timex watch or you'll find one at a flea market. I'm sure it would be alot less expensive than J. Crew's pseudo-vintage ones! LOL! The sad thing is, I might end up buying one anyway if they look good!

    ReplyDelete
  10. YES! They're making a mens store in Garden State Plaza! Do you know what that means? More room for womens clothes!! =)

    ReplyDelete
  11. melanie, I didn't really get that either - resistant to summer clothes? Probably because the "seasons" move so quickly in fashion, that the shorts were out in April here when it was too cold for them, and in July the fall stuff is out. Plus, there are tons of other places you can get basics at for a much better price. I just got two great looking tanks at Old Navy the other day for $15 (their promotion is something like, mix and match any 2 tanks for $15). That would've bought me like, half of a JC racerback tank - and if they're going to only last a season anyway (as most summer knits do), then why would I pay twice as much? I'd rather take the $$ I saved and put it toward a great JC skirt or jacket.

    ReplyDelete
  12. This comment has been removed by the author.

    ReplyDelete
  13. I think the one thing that J.Crew will have to address if they continue to move in the higher price point/niche market is if someone wants to pay designer prices, why buy J.Crew? Also, there are lots of great small labels and designers where you can find unique clothing items. There's no need to rely on a national retailer.

    I'm assuming through offering limited edition clothing and items, J.Crew is upping the quirky factor. Of course, what hipster worth their salt is going to admit to finding something at J.Crew?

    ReplyDelete
  14. I hear the point on wanting to focus on small things. But I hope the designer clientele that they're courting is as tolerant of their "attention to detail" as the rest of us with the website fiasco. I wonder if this isn't a ploy to make JCrew goods more scarce and even more difficult to order in the future. Really, why do that when there are loads of fans/aficionadas out there already? ITA w/ FFM, Blumre and Haus_Frau on pricing, quality, and "finds". I mean, if we could only get our orders, we'd be happy and JCrew would be happy.

    ReplyDelete
  15. I actually looked at the transition to higher priced items as a couture versus ready-to-wear thing. If they have the higher priced more interesting items they will appeal to the editorial staffs at Vogue et al. Then much like other designers they will make most of their money with ready-to-wear. That is their bread and butter. Face it, even though Collection is expensive for most of us, it is still only at the entry designer levels. Closer to Tory Burch than Valentino. I used to leave in Manhattan and met a lot of better dressed people who used it for basics.

    ReplyDelete
  16. I was also wondering how VINTAGE watches can be specially made for j.crew...considering that I thought it takes a few decades for something to become vintage. Is Jcrew buying a batch, putting'em into storage, and planning on selling them, appropriately aged, a few decades later?

    ReplyDelete
  17. Regarding the 'vintage' watches. That reminds me of the 1969 line at GAP. They went back to the old designs and reproduced them. So the Timex watches will be reproductions - not vintage.

    I'm rolling my eyes over here. Sounds gimmicky. I wonder if Drexler was instrumental in designers (I.e. Philip Lim) creating limited pieces for the GAP. Most of their customers didn't seem to 'get' the gorgeous white shirts and I ended up getting my favorite one on clearance for $11.97.

    JCrew/Drexler claims that designers are diluting their brands by having lines at Target, Kohl's, etc... but that has been done in a smaller way at GAP. And now JCrew (I.e. Baird McNutt). Interesting.

    ReplyDelete
  18. Got the bling Rolex! It seems a bit overpriced for what it is...but looks great with the Fall 2008 line! :)

    ReplyDelete

Dear J.Crew Aficionadas & Aficionados: Please feel free (and encouraged) to share your thoughts and opinions. :) However, please note that this is still a personal blog. So comments that are considered inappropriate (e.g. obscene, racist, homophobic, personal attacks, rude, and just plain mean) will be removed.

And now back to J.Crew! :)