Wednesday, August 24, 2011

J.Crew in the News: International Price Wars

"Thanks!" to laura (in this post) who let us know about the following article from the Toronto Sun (click here to read it in its entirety):
J.Crew's Canadian price war spreads to Europe
By Stefania Moretti
August 24, 2011

The cross-border price war that's erupted over sticker shock at J.Crew's new Canadian outlets has reached as far as Europe, QMI Agency has learned.

U.S.-based J. Crew ...opened the doors to its first Canadian location in Toronto last week with throngs of shoppers and media in tow. The retail honeymoon didn't last long, however, as complaints poured in over the company's Canadian pricing strategy, and now that of its U.K. stores.

Like many J.Crew loyals, Laura Fraser, 26, of Toronto, was excited to visit the new Yorkdale Mall location. When the store sold out of two items she liked - a set of pumps and a blazer - she went online to make her purchases instead.

After the initial sticker shock subsided, she did a little comparison shopping. Buying the goods from the U.S. website and shipping them to her granny's home stateside would have cost her $419.

The same items bought off J.Crew's new Canadian online store and shipped to her downtown Toronto address would have cost $623. That's a difference of 48%. But what really got fashionistas like Fraser rioting on Twitter and in other forums is that until a week ago, many Canadians shopped on J. Crew's U.S. website, where they were used to paying up to 25% more to cover duties, taxes and shipping.

As of last week, however, Canadians must now order from the new Canadian website, which charges duty, tax and shipping on top of already higher base prices. Before duties, taxes and shipping fees, Fraser's bag of goodies cost 16% more on the Canadian website (US$230 for each the jacket and the shoes, as opposed to US$198).

"It makes me feel like they think Canadians are lesser than Americans, because they are charging us a significant amount more," Fraser said. "I think as Canadians we are used to being charged more for things, but this is a significant increase in price."

Fraser, along with other disgruntled Canadian shoppers, received a letter from J.Crew president Jenna Lyons. "The change in cost for merchandise purchased in our stores and online was necessary to keep pricing consistent with our new - and expanding - retail operations in Canada," Lyons wrote, adding that duties, taxes and shipping are separate.

The letter infuriated Fraser even more because, she said, it backs up her theory that the price increases have nothing to do with exchange rates, duties, taxes and shipping. "I think they've priced me out is what they've really done."

Stories like Fraser's made waves as far Europe. Cristiana Senni has been following the price saga from Italy and is concerned since J.Crew is expected to launch more European websites this fall. The new U.K. online store opened the same day as Canada's with even more inflated prices, Senni said.

J. Crew's No. 2 pencil skirt in double serge wool comes with a price tag of 110,17 pounds, or US$181.80, before duties, taxes and shipping. On the American website the same skirt sells for US$120.

"This increase has no justification whatsoever. There are no J.Crew stores in Europe and none of the U.S. retailers shipping to Europe have ever increased their prices to this level," Senni wrote in an e-mail to QMI Agency. "I can't say how the sales will go in Canada, but if they keep the current prices for Europe I am quite sure that they will sell very little, as we can find much better quality clothing for less and J.Crew is almost totally unknown in Europe," she said.

QMI Agency is awaiting comment from J.Crew on its European pricing.

RETAIL RIPPLE EFFECT
The backlash has raised questions about how other U.S. retailers headed north will tackle their Canadian pricing strategies.

"Price is key no matter where we are," Target spokeswoman Amy Reilly said. "We're still working out the overall pricing strategy for the Canada market, but we are definitely aware that it is a critical part of our guests' shopping decision and we intend to have very competitively priced products in Canada," she said.
First, it is clear that the media is taking notice of J.Crew's international pricing strategy. Second, this article does a good job explaining the double charge for online shopping. Third, I am happy attention is being given to the U.K. shoppers and their high prices. J.Crew's U.K. site even removed the sale section! :(

Lastly, a big "thanks!" to laura who did a great job in her interview! :) She clearly articulated the issue with J.Crew's new pricing policy.

What are your thoughts on the article? Any points you found interesting?

56 comments:

  1. Prices should be the same across the board. Shame on JC for hiking up the rates. (this coming from someone who has been shopping there for 18 years!)

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  3. Okay, *finally* an article that underlines the big problem - being hit with 25% duties on top of an already increased price! And it's great that the article discusses the pricing for UK residents (which is even higher than for Canada). I'm off to retweet this one. Great interview, Laura!

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  4. I'm very impressed with the exposure J.Crew's pricing is getting. Fingers crossed that very soon retail prices will be back in line.

    Great article, thanks again for sharing.

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  5. Great job Laura! I am really impressed that the Toronto Sun article was more articulate and captured the essence of the argument than the Globe and Mail, Toronto Star, Global TV, etc. For those not in Toronto, the Sun is often considered a "second rate" newspaper although still a very popular read. So, kudos to them for the great coverage!

    I am also so impressed by the power of social media and how quickly and widely are voices are being heard. This completely validates the theory that as a group, we can bring about more change.

    For those who may be dismissing this as a bunch of whiney and shallow females concerned about shoes and skirts? It is NOT. Looking at the bigger picture, this is a huge concern for Canadian consumers. Not just J.Crew, but other brands, too. I hope other US retailers take note that the Canadian market IS willing to pay MORE if it is fair but NOT willing to accept arbitrary price increases just because they think we can just "take it".

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  6. Totally OT (but probably useful for a lucky size 0 out there):

    Outlet Grey Bella in a size 0, bin for $89. I love my outlet bellas and think they are softer than the retail ones.

    http://www.ebay.com/itm/J-CREW-Gray-Wool-TWEED-FITTED-BLAZER-JACKET-COAT-XS-0-/150653778724?pt=US_CSA_WC_Suits&hash=item2313aa3b24

    And in re: over-pricing...redonkulous. Glad to see that people are questioning these tactics in the media outlets!

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  7. Excellent article with a really good breakdown of the price increases.
    I'm waiting every day to hear some good news on this. I am hopeful that JCrew will act fast before they permanently alienate their very loyal customer base here in Canada.

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  8. And the UK/Europe as well! Lots of JCA's across the pond were really looking forward to this launch only to be bitterly disappointed!

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  9. Hi Alexis,

    I'm posting scans of Jenna's 6 page interview in Vogue tomorrow, I've linked to this post.

    The fight continues!

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  10. B&P - wait a sec, She Who Must Be Praised needed 6 pages to "explain" the pricing policy? Is it another aspect of "high-low" styling? awaiting your next post with interest!

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  11. Thanks Alexis and thanks to Sudu for pointing me to them to share my side of things! I tried to emphasize that we're not just being cranky internationals about the cost of duty/shipping. It's the base price increase (after years of offering the same price to all) PLUS those fees that's really at the heart of what makes this feel so insulting.

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  12. Love it! Great piece. I am cautiously optimistic that JC will make some changes to this recent pricing nonsense!

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  13. Good afternoon, JCAs. I know it has been posted recently,I looked around through over-the-weekend posts and came up empty handed, but what is Jenna's email address? Yesterday I received my pre-ordered Darby calf hair penny loafers and I opened them this morning. They are beautiful and comfy, however there is a huge glue smudge larger than my thumb near the right heel. If there was any quality control at all these should not have made it through. There was also a postcard sized card inside the UPS box, along with the packing slip. I almost threw it away, thinking it was the usual a$$ ki$$ from MD, but lo and behold, it was not. It was however a nicely worded note from Ms Lyons, thanking me for my pre-order, and as a token of appreciation, a tube of Poppy King lipstick was enclosed. No lipstick was to be found. Whilst the kind sentiments are quite flattering, JCrew please do not add to my glue induced gloom by saying you appreciate my order so much that not only do you send me marred shoes, but also a nonexistent lipstick. I truly am beginning to believe that all the logic defying international pricing, the hallucinatory inventory(now you see it, now its backordered) and gaping quality issues are due to the fact that quite a few people at many different levels in this company think the customer doesn't deserve a fair shake.

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  14. Awh it's a shame for those that live in Canada. J.Crew is not going to do as well if they don't decrease their prices.

    Hopefully they will see this and make adjustments.

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  15. I'm fascinated by how this furor is spreading- and so thankful that the message about the online prices is starting to become a bigger part of the story (stories about prices being higher in Canada get shuffled out regularly- it's really hardly a story anymore)

    I suppose my closet and wallet can handle a break from my crew sale sprees anyhow. It's the lack of Jackies that's going to hurt- I still don't have that cerise colour...

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  16. While I understand that we in Canada have stricter controls around duties, at max duties on clothing/apparel tend to be 18% , there really is no justification for a 40% surcharge.

    My 2 cents....

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  17. Way to go, J Crew. You've really dug yourself a hole on this one.

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  18. You know dinster I was just thinking the same thing!

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  19. The Yorkdale store has to be supported or else it will disappear. I am not surprised about the prices in Toronto however the problems is the on-line prices should not have been jacked up.

    I just opened up my parcel from last week before the big changeover and the belt loop is black and had 2 tears in the fabric, where the hell is quality control?

    You cannot peddle lower quality clothes with a high price tag J Crew?

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  20. Laura, you were great! We know JCrew has been listening, but surely by now they must be actually hearing as well? I would certainly like to think that they are.

    If they are, they will have heard two things very clearly by now: first, the only way to make this all go away is to take down the Canadian website and let us go back to shopping on the U.S. site exactly as we were before, and, second, we very much want to go back to shopping with them and giving them all of our money the way we did before. But we won’t as long as the unfair pricing situation continues.

    So, JCrew, in case you're listening: I will go back to giving you all of my spending money, just as soon as you let me and my fellow Canadians shop the way we did before there was a store here.

    Otherwise, you’ve lost me for good.

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  21. Who cares! When we shop in Canada it is twice as expensive as the US. What did they think that they were going to receive US prices? As a business owner, they are probably having to hike up the prices due to other costs for having a retail location in Canada. I don't think that J.Crew would intend to overprice merchandise to make more money.

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  22. Did you hear? Success! http://www.moneyville.ca/article/1044370--j-crew-drops-duty-on-canadian-website?bn=1

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  23. I understand some differences in pricing - and most Canadian JCA's seem to accept a slight variance. However, the whopping 40% surcharge seems to speak of nothing but greed. I don't like negative thoughts about my favortie store, but this seems plain wrong. J Crew should treat customers better than this.

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  24. I do not see any difference, when is this supposed to go into effect?

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  25. Whooo hooooo!!!!!!!
    I am so impressed that we were actually heard!!!
    Good Work everyone, and thanks so much Alexis for giving us this invaluable forum :)

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  26. Notepad79, thanks for this interesting news! I hope there is some validity in the article.

    I wonder how they are (if they are) removing the extra cost... whether it is on the base purchase or by removing automatic duty and leaving it up to customs to charge or not to charge.

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  27. I've also found a Toronto Star article that claims they're dropping duty too.

    http://mobile.thestar.com/mobile/business/article/1044370

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  28. This cost of doing international business is sounding more ludicrous with each passing day! These are big boys and girls getting paid big salaries and if they think they can finance their increased "cost of doing business" with their customers bank accounts, I think it will not work well for them. I wish that they would concentrate on fixing all the many things that need work within the company. I am convinced that if they would do that, their fan base would grow and their finances would improve. The only reason I can imagine that a company would institute such a disastrous pricing model is that they must be truly desperate for the green stuff and looking for a quick way to get it.

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  29. I just did a mock check out and they were not simply adding the 13% HST - it is still more.

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  30. I meant to say - $300 on a $900 order....

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  31. Great job Canadian JCAs! Looks like, starting tomorrow, they will be keeping the duty in the new base price but then not charging you again on top of that base price.

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  33. The base price is still higher than the US website,I will not order until I see the US price. It looks like JC PR dept is in overdrive to make JC look good.

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  34. Thank you Cass - I will wait till tomorrow with baited breath and then send a note of thanks! I sincerely want to thank all of the JCas who want to bat on this, and Alexis, and the other blog world - Dani BP, wellfedfred, Tabitha, and so on - who so eloquently fought for all of us! THIS is the power of social media and it is very inspiring to me as a consumer!

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  35. I e-mailed Stefania Moretti, the author of this article to thank her for her accuracy and she sent me back this link:
    http://money.canoe.ca/money/business/canada/archives/2011/08/20110824-105959.html
    Looks like we may have won the battle! Alexis, I didn't know how to get this to you any other way.
    Woo hoo!

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  36. The price online will still be the price as in Yorkdale. But it seems they are keeping the flat-rate shipping, so that will definitely help balance things out. It will be hard to tell for sure until the changes go live on the site. From the looks of things I don't think they have yet.

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  37. Re: Toronto Star article - well, that is good news, I am cautiously optimistic that they will remove the duty charge. I just tried a mock checkout now and the website is still charging the additional 25% duty. Hopefully they will update the system tomorrow morning - I will check it again tomorrow.

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  38. And HUGE thanks and kudos to Alexis, Sudu, Laura, and all the JCAs who pushed this issue! I'm glad we were heard!

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  39. JCAs, I'm sorry, but this is not what success looks like.

    I paid $260 all in for a Jackie cardigan, two Jackie shells and pair of Cafe Capris earlier this year that would have cost me $385 after the Yorkdale store opened and, based on what JCrew is now saying, $330 with the additional duty charges dropped.

    That is still an unacceptable increase as far as I'm concerned, and is, I expect, for many of you as well.

    I don't accept it and won't shop there if they don't take further action.

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  40. It looks like they are correcting it?! Yes!
    Can't wait for tomorrow.

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  41. Let's wait and see. I am noting the base prices today and will be looking to see if they increase tomorrow, when the duty is "dropped". We are watching you, and sharing with each other, J Crew, so don't try to hide the increase somewhere else - you need to truly stop overcharging us.

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  42. And someone needs to let me know when I can release all these Geese from Express Yourself Through Your Personal Habits training. Merci.

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  43. OT I have a 20% J Crew Cardholder code that I won't be using. Its deadline is tomorrow Thursday.
    Will email the code to the first person who posts their email in this comment section. Thanks.
    cuckoo4crew

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  44. cuckoo, I'll take it if it's available.

    silver.lining.jca at gmail

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  45. Would love it if it's available laurasfraser at gmail dot com

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  46. cuckoo4crew, I'd love one. slastena at hotmail dot com

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  47. Oh! Silver_Lining too fast for me. Enjoy!

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  48. My question is: who's going to pay the d&t now? If it's just that J. Crew's not charging it but it will still be collected when the good arrive, then all they have done is shift the blame away from them and the pricing issue. The Cdn gov is going to want to make sure that they get their taxes from us (don't they always), are we going to get charged the taxes anyways upon the goods arrival? And JC can just say "well it's a government issue now"...

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  49. Globe and Mail just posted a new article for Thursday's print edition quoting the ever-helpful @Sudu as well:
    http://www.theglobeandmail.com/globe-investor/j-crew-backtracks-on-higher-canadian-prices/article2140955/
    Is it enough?

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  50. Thanks for letting me know about the new articles, just created another post about it. CONGRATS EVERYONE ON THE POSITIVE CHANGES THAT AWAIT US!!!

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  51. I'm also impressed this news is getting more exposure. I can only imagine this past week must have been hell for JC trying to get all this act together.

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  52. OT: The Sequin-Stripe Tank (black/white) was on What not to Wear last Night (Noel). They had it on one of mannequins.

    http://www.jcrew.com/AST/Navigation/Sale/AllProducts/PRDOVR~44184/99102380256/ENE~1+2+3+22+4294967294+20~~~17~90~all~mode+matchallany~~~~~sequin/44184.jsp

    Just thought I would mention it. What is said, is that I could identify it.

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  53. Canadian pricing on the website is still out of whack. Not certain why folks are giving the "hi 5". Before the Canada Post strike, I purchased a suit jacket from the website. It was priced at $395 US. Now the same jacket is priced at $510 Canadian. The pricing is still in left field.

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