In Recession, J. Crew’s CEO Is Ready to Take RisksBy Jennifer Saranow
December 8, 2008
Mickey Drexler, chairman and chief executive officer of J.Crew Group Inc., says he wasn’t surprised by the recession and thinks it will take a while before the economy improves.
“We were in some kind of fantasy bubble over the last five to seven years,” he said in a speech at an International Council of Shopping Centers conference in New York, noting that the last few years reminded him of the technology stock bubble.
To survive in this environment, Mr. Drexler said shopping mall owners and retailers both need to innovate and take risks, ...
J.Crew is trying to adapt, he said, by making small investments in new concepts, implementing a hiring freeze, consolidating its direct and retail divisions, being pickier about which leases to sign and looking at lowering opening price points for its crewcuts kids line. “I think you are going to see a dramatic change in the next couple of years in the makeup of our industry,” he said.
"Thanks!" to Lauren who let us know that there is another interesting article about J.Crew at GlobeSt.com (click here to view the article in its entirety):
J.Crew’s Drexler Doesn’t Promise Holiday CheerBy Ian Ritter
December 9, 2008
...Apparel chain J.Crew has initiated a company-wide hiring freeze Drexler revealed, even during the holiday season, which he said falls on a terrible calendar year retail selling-wise. “If someone wants to hire someone, someone’s got to leave,” Drexler said. ...
...So did Drexler have any words of hope at all? He said that leadership is extremely valuable in this market, and he gets irritated when he walks into a J.Crew or on of its other chains and it isn’t obvious who is in charge of the store. And, ironically, Drexler, the former leader of Gap Inc. stressed that chains should temper their store growth and focus more on the quality of their products. “I’m not in a race to be the biggest or fastest,” he said. “It gets you going where your faster, not better.” ...
What are your thoughts on the articles? Disagree or agree with any points made?
I would understand a hiring freeze at the corporate level, but do they really have a hiring freeze for store associates? That is going to be a nightmare as Christmas approaches, and for the post-holiday sales. Yuck.
ReplyDeleteyes i don't know if i believe this, as i have seen quite a lot of new employees at the store i usually go to. i've been led to believe they were just hired for the season.
ReplyDeleteSuch poor timing to choose to go upscale--hope it doesn't hurt their business too much. I know we would ALL hate to see our stores disappear:(
ReplyDeleteDefinitely no hiring freeze in the warehouse..they hired plenty o' idiots this Christmas!
well, the only way to survive is to cut costs, or boost sales ~ so, i guess mickey is cutting costs by not hiring, but have to agree, maybe they already hired all Christmas help? Cut price points at women's and you'd sell a whole lot more than crewcuts.
ReplyDeleteHow come new stores and outlets stores keep opening up then?
ReplyDeleteI don't believe a word Mickey is saying...sorry but doesn't make sense with what is actually taking place....
Also, I would really like to know what is happening with all the shipping problems.
JCrew needs to fess up and explain. They are loosing me as a customer.
I'm glad they're considering lowering the price point on Crewcuts. It is really hard to justify paying the same price for kids' clothes as I would for myself.
ReplyDeleteOr maybe I'm just cheap, lol!
HAUS_FRAU aka PATS!! HA-LOL--I LOVE your AVATAR!!
ReplyDeleteHi Alexis,
ReplyDeleteHave you heard any info. on what is going on with all the shipping problems?
Truthfully, I am really afraid to order so if you have any info. Thanks ahead of time:)
Did anyone see Tim Gunn on ABC News last week talking about retailers offering Sales? He said that Saks is leading the way, and that any retailer who doesn't follow is just not going to survive...he even went so far as to point to a couple of Sale signs in a window and said they are too SMALL! I wonder if Mickey happened to watch that...not that Tim Gunn is THE authority, by any means...but he has been in the business long enough to speak knowledgeably about the state that the fashion industry is in. I know Mickey hates having Sales, but at this point it seems that if he doesn't follow Saks and every other retailer offering super sales, then J.Crew just may not survive the recession.
ReplyDeleteI'm glad to hear there's a hiring freeze. I know in our market there are way too many people on payroll. J, management takes care of hiring for Christmas way before the Christmas season. Plus that's when all the seasonal college kids come home so it all works out.
ReplyDeleteAnon at 9:57 AM: You make a great point about all the store openings! It got me thinking... *maybe* the new store openings were decided a long time ago, and the leases already signed, so they have to move forward with them?
ReplyDeleteAnon at 10:09 AM: I would love to know what is going on with all the shipping issues. ;) To be honest, I have no clue. :) When one of my orders three weeks ago got messed up, I felt that each customer service (CS) rep (all 5 of them) gave me a different explanation of what went wrong. I am not sure if J.Crew's CS is being told what is going on either.
bug pin, your avatar is on the same level of awesome.
ReplyDeleteYou know, I haven't been to a mall store in a couple of months to even check out whether there is a lot of seasonal help or not. I can't imagine doing the Christmas season on a limited staff, though. Everyone would be over-worked and absolutely cranky.
OT - Anyone have a lord & taylor near them and want a 25% in store friends and family coupon?
ReplyDeleteunfortunately no more L&T near me:(
email
LAS7118 AT GMAIL.COM
My husband works in corporate real estate and deals do get signed in advance, *however* leases are negotiable and many other companies are cutting their losses by breaking leases, or simply letting existing ones in poor markets run out. Maybe some low profit J crews will start closing if they let them run out on their leases...
ReplyDeleteAlexis,
ReplyDeleteSorry to hear your order got messed up too...and thank you for your reply. I appreciate your time:)
I just wish I had some inside info. as I am just truly frustrated beyond belief with JCrew right now! Who want to open a box and be repeatedly disappointed! So sorry to be negative but it is hard sometimes.
I totally agree w/Drexler on one point in particular. When you walk into a store you should know who is in charge. The pecking order is fairly clear in Walnut Creek and I trust the store. Also, they have a new manager named Christian and he is stupendous. The whole vibe of the store has changed and I am convinced it is because of him. The employees are happier. They are very eager to help customers. And they engage with each other as a team. I used to cautiously enter the store, wondering what type of service I'd get -- if any. Now the store is humming all the time. They definitely have great leadership. The same with Pleasanton. If a few clones could be made of Melissa, the company would be very lucky. She and her employees at that store are phenomenal!
ReplyDeleteInteresting articles, thanks for posting them Alexis! I'm glad to hear they are going to focus more on quality and less on expansion but hope that doesn't mean more uber high prices for leather from some obscure alpaca!
ReplyDeleteAlso, if Drexler doesn't want to be known as a "Sale" brand than why do they start their prices so high and mark them down so dramatically in such a short period of time? I'm not against paying retail and do for items that I know will not be marked down dramatically but if I know that the J.crew new arrivals are going to be half their price in a couple of weeks I'm willing to wait.
Don't mean to sound so negative, esp because I just got my tartine and melanie cardis which I *love*!
Re: sales, Saks is definitely doing crazy discounts. Bloomies is as well. Even though I keep telling myself not to buy more stuff, I have a hard time saying no when I see in-season cute designer items for 40-70% off retail, plus free shipping. This may be the only way to stimulate sales now--people think they may never see prices like this again on high-end designers so they are buying now!
ReplyDeleteBug pin: Actually, it was a great idea to go upscale. No matter what the price, luxury goods will always be purchased by the rich & affluent. A matter of $1000 difference wouldn't matter to them. They'll purchase the item if the like it. Unfortunately, this is bad news for the run of the mill customers.
ReplyDeleteI think in terms of hiring freezes, they might mean more permanent staff. Many stores hire extra people over the holiday gifting season, but they're on a limited, non-renewable contract. Even if they do stay after the holidays, they're not there full time.
ReplyDeleteJeff: Even the rich and affluent are feeling the pinch these days, just look at Wall Street those guys never thought they would lose their jobs, and the very affluent have lost boatloads on the stock market. and for the run of the mill mall people they need our business as well.
ReplyDeleteThanks for the post Alexis. It's nice to hear what the big guys are thinking too.
ReplyDeleteI overheard a cs in store calling seasonal ee's telling them to call the store before coming to work on certain days...they might not need them. Judging from my local JCrew, they're not very busy. The mall had very little traffic which is highly unusual for this time of year.
Jeff,
ReplyDeleteI don't agree...this economic crisis effects the rich as well...trickle up (or down) effect!
I just have to say Kudos to the CSR's at option 1 of the 800 #. They are nothing less than top-notch, polite and helpful representatives for JCrew!!
ReplyDeleteI never said that the rich were not affected. They lose millions, but they still have millions left over. Even as an economy recesses, prices for luxury goods still go up & the rich still buys them. Simply because they're rich.
ReplyDeleteJeff: Even the rich are not buying as much that is why the high end retailers are also into deep discounting right now.
ReplyDeleteI think the bottom line here is..BAD TIMING for J CREW to decide to start SPENDING MORE to develop PRICEY items for a store that the general public equates with mid-pricing and even better markdowns/sales. Thus mass mark-downs on ludicrously $$ items and in fact mass markdowns on their plain old average items.
ReplyDeleteJeff - technically a luxury good, economics-wise, is one that drops in demand as soon as disposable income drops. So, with everyone's disposable income becoming tighter, J.Crew items (which are luxury since you can find less expensive clothing) will become less in demand. No matter whether they are considered upscale or not.
ReplyDeleteP.S. by no means am I an economist, just remember this from high school econ! Please correct me if I'm wrong.
In a way I agree with Jeff that higher end is doing better. However, I think that it is the firmly established high end brands that will better weather the crisis. Someone able to spend a few K on new fabulous leather suitcases would more likely go to Vuitton than try out an unknown (and mall-branded) company. J. Crew just hasn't been positioned to swim in those waters.
ReplyDeletePS I only mean that J. Crew is largely unknown for
'"finer" goods. Not to say they don't deserve to be or won't in the future, just that it's niche they haven't been in so far.
The quality on their cashmere is bad, it might be made in some luxurious place but it is thin and does not hold up. The quality on alot of their items is suspect too. That is going to come back and bite in the behind along with their website issues, which btw is still going on. The rich do not have the time or patience to put up with such crap.
ReplyDeleteI hope Jcrew survives the recession...I think they most likely will but it's going to come at a cost to them. I imagine we are going to see a much smaller scale of "collection" items, if they even keep that up. I have ordered quite a few collection items in the past and found them to be exactly the same in terms of quality to the regular priced merch. I think if they want to make this leap to HE they need to do it fully with 2 feet, or stay out of the water completely.
ReplyDeleteSorry to be OT but is the website down for anyone else?!
I hope Jcrew survives the recession...I think they most likely will but it's going to come at a cost to them. I imagine we are going to see a much smaller scale of "collection" items, if they even keep that up. I have ordered quite a few collection items in the past and found them to be exactly the same in terms of quality to the regular priced merch. I think if they want to make this leap to HE they need to do it fully with 2 feet, or stay out of the water completely.
ReplyDeleteSorry to be OT but is the website down for anyone else?!
yep web site down for me too.
ReplyDeleteflaneuse: the website wasn't down for me (I'm in CA). I was able to make an order right now, BUT it took several minutes to load the shopping cart, so I'm sure there is some major traffic on the website.
ReplyDeleteThe sales look fantastic and it was my intention to order more, but I found out that the order I had placed was going to be delayed for another 10 days (not counting weekends).
ReplyDeleteNow I don't feel comfortable buying anything else from JCrew online... not during this time period anyways. Buyers beware! You could receive your order AFTER Christmas :(
In the last few days instock items are shipping out very quickly with 24-48 hrs turnaround, I just found out something happened to the UPS truck that was delivering my parcel this pm and will not be coming! If it is not J Crew screwing up it is UPS!
ReplyDeleteI am not sure JCrew will weather this economic crisis...I just really am not sure...it depends on how long it lasts...lesser issues have put company's out of business...
ReplyDeleteI love that Mickey says that retailers should focus more on the quality of their products. Seriously, Mickey needs to focus on the quality of the cashmere @ JC.
ReplyDeleteJeff- Get over yourself and stop thinking that JC Collection pieces are luxury. Hermes is luxury.
Alexis, I appreciate that you post such thought provoking topics. I have learned so much from this blog and the intelligent people that post on it. Being a "jcrewjunkie" I certainly do hope that they are able to weather this storm, however, I do think that they are going to have to reassess what their core customer is looking for (I believe we even touched on this topic over the summer) and proceed in that direction. Flaneuse, I totally agree with you. I have several "collection" pieces and see no difference in the quality from their regular line.
ReplyDeleteSort of OT, Just got back from 2 B&Ms--the stores are at least half spring merch now!!! Didn't see anything especially interesting except for a giraffe print silk halter that I liked in theory, though the color was not that great. They also had a cotton cami that is kind of a cross between the lydia and the bria, but not esp. exciting IMHO. Everything else is really basic solid pastel cardis, chinos etc. Nice colors but nothing novel design-wise. The other half of the stores are remaining winter markdowns--very picked over, but extra 30% off.
ReplyDeleteI find it amusing that the $88 cami with the sequins down the front that debuted weeks ago is now $19.99--the designers really missed the boat on that one. Women don't want to wear bunched up fabric around their hips!
Does the hammered silk tank run huge? Thanks!
ReplyDeleteCass, I thought the same thing about that sequin-front cami! It may have been better if there were sleeves or something to balance the top half out, but to have the top hanging down, only to bunch up at the hips - yikes!
ReplyDeleteI'm sure this has been addressed but I can't find the answer: How do you know how many of an item are left in your size when ordering?
ReplyDeleteLooking through the "New Arrivals" on the site today, half of the items are discounted already.
ReplyDeleteI agree that the construction of collection items is not different from regular, although the fabric and trimmings are often higher end.
web site down again turkey anyone?
ReplyDeleteFYI: even though the email says the discount is not valid on phone orders, I used it on a phone order, without even realizing that it was not valid on phone orders. The CS rep didn't even hesitate. Seems like it doesn't matter. Since the website is down, try calling in to make your order if you know the item number...
ReplyDeleteHi Everyone! Thanks for sharing your {great} views on the articles. :)
ReplyDeleteI was reading the first one over and the following point caught my eye: "consolidating its direct and retail divisions". I hope this means that online (& catalog) prices will match the retail store prices (and vice versa) when items go on sale. :)
I agree that the Collection pieces don't seem to be higher quality.
ReplyDeleteI agree with much of what people are saying here. I was at my B&M this afternoon, poking around (shorts are now prominently displayed, which I find ridiculous). I can't speak to the cashmere, but the quality of J. Crew's leather goods lately is terrible, including the kitten-heel style boots. They felt like PVC...I couldn't believe it. Also wasn't impressed with the leather gloves or bags. They look so pretty in the catalog but are such a disappointment in person. :(
ReplyDeleteIt seems like J.Crew is floundering on many levels, and they're not positioned to tap into the luxury market's relative stability - they simply aren't a luxury brand. However, I think that they'll survive, but I've lost interest in spending my money there unless it's for something really special.
jeff, the rich & affluent aren't shopping at J.crew. They're at Saks, NM, Nordstroms, Chanel, etc. So bug pin is right, it was a disastrous time to attempt to go more upscale.
ReplyDeleteVM-I have to agree the shoes, purses and leather is sub par at the retail price they are asking. Anyone wealthy that sees for ex. a purse online that they think is gorgeous, with a price that reflects quality, yet turns around and orders it full price--is going to be disappointed. It is not worthy of it's price point and it needs work. The quality doesn't match the price. There are many other areas such as collection items that I agree--quality doesn't meet the price. They need to stay with what they know and what their average long-term customer is used to seeing and paying for.
ReplyDeleteanon 6:01 :Type in 99 in the Quanitity box and the amt left in stock will appear. Keep in mind that there could be alot of phone orders ahead of you, the phone orders system does not mesh up with the on-line until sometime later. When you place an order on-line the inventory count minus 1, while the phone does not always go down right away. Priority is determined by order# and overnight express shipping. You can see I spend too much time on J Crews site.
ReplyDeleteyay i got my starburst ring, lulu flats and isabella paisley dress for my xmas party next week (please everyone pray my dress arrives lol)! btw i also tried on the sequin front tanks and thought it fell even worse around my hips than other tops of similar style. if they had maybe put a wide band as the hem versus that bubble hem i totally would have bought it bc the sequins are so cute and you don't have to wear a strapless with it!
ReplyDeleteNot to be extremely negative, but I am very frustrated with the repeated problems with the J.Crew site. I don't understand how the site can be down so often, especially as I have *never* noticed another site to have problems this frequently-- and I am sure they were *just* as popular as JCrew.
ReplyDeleteIt is very frustrating that this problem is recurring in such a short period of time-- but with enough time in between (TURKEY around 11/24) that they should have been able to improve the site.
Accompanied with inconsistency in CS policies & shipping horror stories, I hope JCrew will really try to improve--if they don't, they will lose a substantial amount of business. I am only saying this because I love JCrew clothes-- I wish JC would show a little more love to its customers ... at the end of the holiday season, a little thank you to frequent customers- in the form of a typed apology, small discount, whatever-- would definitely be appreciated & help to maintain good customer relations.
Interesting. I came home today to a voice mail from a SA at my local store. She started the message by saying I was a top J.Crew client so I should have received the 25% off card. Then she invited me to a private after-hours event for those who got the card (the shopping center this store is in closes early on weeknights in the winter).
ReplyDeleteI was surprised to get this message. I don't consider myself a top client. I may go to the event and drag my husband with me if we can get a sitter. I would not go just me because the store rarely has my size in stock, so I always have to order online.
The SA did say they just got a new collection in and new markdowns were taken.
I was surprised to see J.Crew reach out this way. They must need the business!
Side note: if this had been a message from Anthro I would be there in a heartbeat, bells on.
Anon @ December 9, 2008 2:54 PM: I'm currently taking economy in college. Luxury goods are actually recession proof. They actually maintain the same rate of demand no matter what the price is. Like a said before, the rich & affluent wouldn't care about a $1000 difference in price. Think diamonds & luxury cars. Would an additional $10,000 shake the mind set of a buyer whose about to purchase a $500,000 car? Superficially, this might be different from clothing, but it's the same idea.
ReplyDeleteOne of the reasons Mickey Drexler left GAP was because they wouldn't let him release the "collection worthy" goods he's releasing for J.Crew today. Remember the rut that JC was in before he came along? Think of it this way. Sure a $3000 coat might be too much for us & we all think of it as a bad idea. Most people won't buy it. That however is not the point. Someone out there, will buy that $3000 coat. That one $3000 sale will make up for the 300 $100 coats that didn't sell.
Jeff, keep studying
ReplyDeleteI will. Finals is next week.
ReplyDeleteLOL - great advice anon @ 10:41pm. I have an actual degree in Economics (not just a class I'm currently enrolled in) and I wouldn't think of schooling everyone here. Besides there's various schools of thought on this topic, each one contradicting the other, it's silly to state that there is a right or wrong answer.
ReplyDeleteIn the Dec 8 issue of Newsweek there is an article discussing "Luxury Shame". The downturn in the market is "cutting into sales of high-end retailers and brands like Neiman Marcus and Saks Fifth Avenue, Bentley and BMW, Christie's and Sotheby's." Ads in major luxury magazines have plunged 22 percent from 2007. Nothing is recession-proof, including luxury items.
ReplyDeleteJeff- are you for real? You seriously think in a recession people will drop money for diamonds, pearls, rainbows and unicorns? Maybe in your make belief fantasy world, where Monopoly money is used...but far from the real world situation. Open up your eyes...it's a big bad world out there!
ReplyDeleteMommy, I luv you more than butterflies...I luv you more than unicorns...
ReplyDeleteJeff -- Again, I'm telling you, you aren't using "luxury goods" properly. You are using "luxury" colloquially. Yes of course, diamonds etc are things that are luxuries. But that's not what "luxury good" means in economics. Just look it up, I'm not going to fight with you about it. You're just wrong. simple. as. pie.
ReplyDeleteCass - I also saw some of the new merch. Shorts in Dec? What is going on? I know there is a period of time for selling resort wear but the items they had were way off the mark, imo. Too many basics in lighter colors/fabrics and not showstopping or special resort wear pieces. I saw the new giraffe top and agree -- the color is a bit off. Will get much cuter on a discount. I cannot believe how many times they are going to recycle that cut. And how many graphic tees can they make?
ReplyDeleteJeff: Mickey left the GAP because he had too, he misread the economy and it looks like he is repeating his mistake again. I have one of his so called collection pieces and it is pilling after 5 wearings basically it is crap. So take off the luxury blinders there are really take a good look at the quality of the product JC is trying to sell.
ReplyDeleteOMG...resort wear...someone should have rethought that concept with the economy...JCrew is going down....
ReplyDeleteAlso, how can the fabrics be any lighter than they are now??? and it is winter.
Please leave Jeff alone.
ReplyDeleteCan we please check the rude comments at the door.
Thank you.
gigiofca: My guess is that in this economy JC thought stocking basics would sell more than fashion statement pieces. I agree though selling shorts in December is a little bit much.
ReplyDeleteselling shorts in december is more than just a little bit much.
ReplyDeleteStores have traditionally started stocking spring items in january b/c fashion seasons run a few months ahead and also there was the hope that people would spend their holiday gift cards on new, full-priced merchandise rather than markdowns. Not sure this will work this year--people are expecting markdowns on everything and/or will buy only what they see a present use for.
ReplyDeletere: shoes/leather goods, I agree that the leather is frequently very stiff which adds to the discomfort factor. I have returned several JC shoes for this reason.
I more or less agree with Jeff that a good portion of rich and affluent can be recession proof, although some are probably going bankrupt.
ReplyDeleteHOWEVER, I can NEVER agree that JCrew is a luxury brand for rich and affluent people. I think if you are not rich and affluent, it might be very easy to get sold by JCrew's line and even get brain-washed. But if you ever owned true luxury goods, you will see a huge quality difference.
JCrew cashmere is laughable. Dream yarns are rough as nightmare.
JCrew quality is just right for their sale price. Sorry, but that is just true. I am willing to pay full price only if the full price matches the quality. For me, a lot of JCrew stuff is just fun purchase that won't last very long.
Jeff,
ReplyDeleteYou must know theory well, and I believe what you say is probably well supported.
But please beware that JCrew quality does not match what JCrew claims to be. And I thought Men's JCrew items are even worse than Women's.
For instance, I was horrified when I saw unlined wool sportcoats at the Men's section. (Forgot the exact name of it.)
How can they even think about not lining an wool jacket???? That's so what GAP would do.
I agree still the overall quality of JCrew is better than GAP, and I don't spend a dime at GAP, not even on deep sale. However, the quality of JCrew is much worse than other non-luxury brand with higher price.
For instance, have you ever looked at Brook's Brothers? The quality difference is beyond comparison, even though Brook's Brother's is not that premium luxury brand.
As such, whenever JCrew pretends it aspires to be a luxury brand, it sounds pretty dishonest to me.
anon 4:11 - I agree that J Crew quality matches the sale price and nothing more. This stuff does not last beyond 1 season without showing its wear. I just received 2 sale parcels, when I opened them I said to myself I am glad that I got this stuff cheap, it is not worth it.
ReplyDeleteI have been so disappointed with the JCrew quality recently. I bought a bunch of new clothes a few months ago for a new job and now all my JCrew clothes are falling apart at the seams.
ReplyDeleteI am really angry. JCrew has always fit my style, but I might be giving up. I was even planning to wear a JCrew dress for my wedding next Fall, but I am thinking about returning it because I am so disappointed in their recent quality.
The day after Thanksgiving I purchased 6 cashmere sweaters at JCrew. The buttons on two of the cardigans fell off on the FIRST wearing. The side seam was open on one and the arm seam was open on another. I had such success with JCrew cashmere in the past that I was shocked. I returned three $168 cardigan sweaters. Quality was POOR!!!
ReplyDelete