Wednesday, August 10, 2011

J.Crew Spreads Its Wings Abroad

A big "thanks!" to Jessica who kindly shared the following article from WWD with us (click here to read in its entirety) about J.Crew's expansion plans:
J.Crew Heads Overseas
By David Moin
August 8, 2011

J.Crew, after years of holding back on the international front and watching competitors cross borders, is taking some big steps of its own.

The first J.Crew store in Canada is set to open Aug. 18 in the Yorkdale Shopping Centre in Toronto, and ultimately a fleet of 25 to 30 units is anticipated. The team is scouring upscale malls and street locations in Canada for additional sites, some of which are expected to be unveiled soon, but the company declined to specify any others besides Yorkdale. There are reports that Robson Street, Vancouver’s most famous shopping venue, Toronto’s Eaton Centre and the West Edmonton Mall are high priorities.

Currently, J.Crew does not operate stores outside the U.S., although it used to have licensed J.Crew stores in Japan, which were closed years ago. A return to Japan is likely, as is entry into China for the first time in the near future.

“We are exploring partnerships in China, and we are also exploring some Japanese relationships,” Millard “Mickey” Drexler, chairman and chief executive officer of J.Crew Group, told said in an exclusive interview.

J.Crew is also considering stores in the U.K., with up to nine units in the next several years, though Drexler said getting the desired real estate without paying through-the-roof rents is difficult. “If there is a landlord in the U.K. willing to give us an extremely attractive lease in a very desirable location, we are ready to chat,” Drexler said, half-joking.

J.Crew online will expand internationally faster than J. Crew stores, and will launch in late August in the U.K. Later this fall, J.Crew online will launch in France, Germany, Italy and Ireland, and down the road in Australia. J.Crew already ships to online customers in Canada and Japan.

“Are we late? I don’t know if we are late or not,” said Drexler, addressing the issue of J.Crew as a Johnny-come-lately to global growth. “It’s clear J.Crew is a worldwide demanded brand. Now it’s time to strategically manage the business that way and expand beyond America’s borders.”

When Drexler joined J.Crew in 2003, after heading up Gap Inc., he played down the international potential. Last week he explained why. “There was so much to do in America in terms of building our products, our quality, our culture, the right store designs. Then we had start-ups, Madewell, Crewcuts, online. We had to focus there before we had the time and the people to go beyond our borders. I didn’t want to compromise what we were doing in America. You can’t just be rushing out and distracting the team. We also knew from past experiences [referring to J.Crew in Japan] it’s not just a matter of going out and opening a store. You have to have the right real estate, the right partners and an organization to take on the work. We did not have the critical mass or the team to do that.”

In 2011, it’s a different story. “We are ready to leverage the organization,” Drexler said. “We are ready to leverage our products.…We know there is pent-up demand.” He said that’s evident from J.Crew’s “huge international clientele” in New York, south Florida and California, and from Canadians who shop J.Crew in Buffalo, N.Y. Results from the direct businesses already operating — and from J.Crew selling on Net-a-porter .com since June 2010 and more recently on Mr. Porter, the men’s version of Net-a-porter — are also fueling the optimism. There are no plans yet to take Madewell abroad.

Asked if the international rollout will be aggressive, Drexler replied: “We want to grow profitably and with the right integrity. We are not trying to do it fast or formulaically. We are still in the fashion business. We know we don’t have a logo that people will buy immediately. But now all indications are that customers want us.”

In March, TPG Capital and Leonard Green & Partners took J.Crew private in a $3 billion deal. Yet the decision to accelerate overseas growth was “independent” of the ownership change, Drexler said. “We were planning it before, whether we were private or public,” though he did say it’s better to make these kinds of investments as a private company “so you’re not being second-guessed by Wall Street every day.”

At one point years ago, there were 65 J.Crew stores operating in Japan. As the stores faltered, they were closed, and by spring of 2009, after the licensing agreement expired, the remaining stores were shuttered. “We had a licensed deal that was so poorly managed. The stores were embarrassing, and there was too much else to do in America,” Drexler said.

The Canadian move is more calculated, in a well-trafficked mall and a very affluent area. The 5,000-square-foot unit will sell women’s only since there’s not enough room for men’s. The Canada store, like the U.S. ones, will take the head-to-toe wardrobing approach for weekend, work, day and evening attire that the company has been honing while working to strengthen its key categories and items, such as cashmere, the work wear collection, capri pants and Italian ballet flats. The Collection, the retailer’s limited edition, high-fashion line designed with special details, will also be sold at Yorkdale, and there will be personal shoppers.

“We know the mall. We have friends who have stores there. From all the reports, it was a very easy decision,” Drexler said.
It would be great to see J.Crew stores in international settings. I think their style would do very well among other retailers.

What are your thoughts on this latest news? Do you agree with Mickey Drexler analysis? Any points you found interesting?

34 comments:

  1. Robson Street is good, but probably the most expensive area for retail stores. And parking is the pits there, but we'll take anything we can get. :D

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  2. I am very much looking forward to be able to order from Italy, but I wonder what the pricing will be like. For us, right now the US prices can be very convenient also when the quality is not that great, but it may be a different story if the prices will be raised too much.

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  3. When I went to Tokyo back in 1999, there was a Jcrew store in Shibuya area...nice design just like the Jcrew in the US (back in 1999, Jcrew has more basic collection though). I def. think Jcrew is ready to go to Canada and Europe...just like Anthropologie! Sadly, recent designs from both stores are not as inspiring as before. Jcrew used to make really cute distinguishing shirts/tops but I haven't found anything attractive. I think they now have too many shoes and some shoe design are not that great. Most importantly, please upkeep your quality! Yes all my older jcrew jackets are of better quality!

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  4. Yes, without a European distribution centre, will we still have to pay taxes?
    That takes J Crew to almost designer level for us.
    No one in the company has been able to answer that for me yet.

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  5. I am hoping that JCrew will get a canadian distribution centre lickety split - we pay way too much in duty charges at present - makes no sense and is way more expensive than Lands End or LLBean.

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  6. the shipping probably will be way to much.
    to order from net-aporter i pay nearly 30 euros shipping(to germany),so i it is not really worth it for that price.
    like tabitha said it takes it to designer level

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  7. It's good to hear that the Yorkdale store is going to carry the full women's collection including shoes and the Collection items. I just hope the prices will be on par with the U.S. prices. I also hope they can improve their quality to what it used to be without drastically increasing prices, but I don't know how they will be able to do that if they are expanding so aggressively....something's gotta give.

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  8. from a US resident -- I liked this quote from Millard Drexler: "There was so much to do in America in terms of building our products, our quality, our culture, the right store designs... ." Happy to learn that these issues are now satisfactorily resolved!

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  9. DEE-lighted to hear more Canadian stores are slated to open. The Eaton Centre would be dreamy, as that's my "local" mall. Ditto for the wishes that JC looks to retailers like Coach for their Canadian pricing policy and not, say, Anthro or Abercrombie.

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  10. Bourbon & Pearls- I am afraid that taxes can't be avoided, if there will be a European distribution centre they will be included in the prices together with the shipping cost from the US. The only advantage is that we will not have to guess about Customs duties, the packages won't get stuck forever in Customs, and the shipping will be much faster.
    Look at the prices on the Landsend.co.uk site, sometimes it's more convenient to order from the US site especially for items on sale.
    But...J.Crew has some great sales so at the end it may still be affordable for us.

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  11. Clicquot: New locations in Eaton Centre and/or Yorkville would be awesome! Yorkdale is a nightmare on the weekends. I'm actually hoping for one at Shops at Don Mills as it's not too far for me, and the parking is free ;-)

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  12. WFF-I hope your MD comment is drenched in sarcasm. Considering the online inventory glitches they have now in the US of A, my knees are a knockin' when I consider the tsunami of screw ups possible when the international purveyance of scratchy wool unlined pants begins.

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  13. WFF, lol!

    I hope all of our international JCAs, including our Canadian friends, can soon buy JC without all this tax and duty silliness. It's just insane. Why don't they just tell you flat out not to buy anything, ever? Ugh.

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  14. Louise -- when I first heard JC was coming to Toronto, I thought maybe they'd take over the space left by McNally Robinson bookstore at Shops of Don Mills. I work close by there, so it would have been so excellent to shop at lunch! Totally agree about Yorkdale -- great mall, but waaay too busy and a bit out of the way.

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  15. I got a postcard in the mail today about the new Toronto location and on the bottom it says that they will be offering flat-rate shipping within Canada (USD 9.95) starting August 18th. Yay It also acts as a coupon of 20% off a $150 purchase if presented in store.

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  17. Looking on more news on this topic, I found out that Nordy is also planning an expansion up North, and Vancouver of all places. YAY! Details here.

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  18. Cris,

    Thanks for that, I wonder, is Boden much more expensive for those in the US than it is in the UK?

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  19. Boden's prices are almost the same in the UK and the US!

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  20. No mention of website upgrade/overhaul. That absolutely needs to be considered in future plans.

    just sayin'

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  21. It was pretty much the opposite when I lived in the UK for a few years. The US got their Boden sales BEFORE the UK and better prices! I think though in the past year things have evened out a bit more on Boden's pricing.

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  22. gigi, i banged 'em on it when doing my bizrate survey today. it really is just sad at this point.

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  23. Great news, Everynewday! I hope there's a postcard waiting for me when I get home today!!

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  24. @Clicquot: That would be super convenient for me as well (ditto with Bloor Street), but I'm a little worried that if J.Crew becomes too mainstream and accessible in Canada everyone will be wearing it! Do you know what I mean?

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  25. I shutter at the thought of a Canadian website, J Crew royally screwed up the US upgrade. I hope I will be still able to still order on the US site.

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  26. Everynewday - That is so exciting! I really hope I get one of those cards in the mail...I will definitely be racing home every night to check!

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  27. Yay, I got one of those 20% off postcards in the mail today! I am all set for next week!

    @teeny84 - That is one of my worries too, that J. Crew will no longer feel that special anymore once there's 100+ stores in Canada, and it will become like the Gap. But I have a feeling that J. Crew has some tricks up its sleeve - like making very limited runs of its most covetable items, to keep customers on their toes.

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  28. Just wanted to add - I am SO happy to see they will offer $9.95 flat rate shipping in Canada starting Aug. 18. It's about time!!! I don't know how many hundreds of dollars I've wasted on shipping fees over the years!!

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  29. Yay, the 20% off coupon was in my mailbox when I got home tonight! Oddly, I also had one addressed to someone else who lives somewhat nearby, but not on the same street and not at a house with the same number as ours. I wonder if my mailman is trying to tell me something?

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  30. No postcard for me today :( Hopefully tomorrow!

    Teeny84 -- I am a little bothered to think that my beloved JC will be on everyone in Toronto now. But I remember feeling the same way when Anthro opened a couple of years ago, and yet I haven't seen tons of Anthro-clad women everywhere I go. So hopefully that'll be the case with JC too. I have to remind myself sometimes that not EVERYone in the world has the same obsession as we JCAs -- some people could care less about it :)

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  31. OT...I am not sure if there is a great place to put this but I just did a review on the Jemaa midheel sandals
    HERE

    I am super excited for those that are getting a little Jcrew closer to home. I do worry about the JCrew web site and inventory management and wonder if they will be able to handle a bigger customer base? Only time can tell. I just hope we don't see a classic case of "too much of a good thing"

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  32. Does anyone know if an offer like the one on this postcard can be combined with the student discount? I know they changed the policy a few weeks ago so that the student discount can now be used on sale items and combined with extra % off sale offers, so I'm hoping that it can be combined with this one too.

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  33. Does anyone have information or know of an article that explains exactly why J.Crew failed in Japan? What was the nature of the partnership in Japan that was so volatile and caused the company to ultimately close all of their operations there? I have been looking everywhere and all I find are vague references to the fact that the partnership wasn't ideal and ultimately failed. Nothing detailed, no articles or anything.

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