J.Crew in the News: Prices & Luxe Products

The following is from the Daily (click here to read in its entirety, there are a lot of good stuff to read but too long for me to repaste):

Of khakis and cashmere Will J.Crew’s increasingly pricey, luxe goods leave customers behind?
By Michelle Ruiz
March 8, 2012

...Historically preppy catalog clothier JCrew, on the other hand, “is doing pretty much the opposite,” company president, executive creative director and somewhat self-anointed brand muse Jenna Lyons declared on a recent evening in her colorfully cluttered New York office.

While many designers are selling down in an attempt to appeal to the mass market, J.Crew is aiming up, introducing high-end “collection” items. The prices associated with such a brand elevation could come at a cost much steeper than a $1,398 turtleneck or $500 capris: core customers.

“[J.Crew is] having a hard time remembering that the rollneck sweater customer is what drives their revenue. The Fashion Week stuff is all fluff. Think about Ralph Lauren. Sure, he shows at Fashion Week and dresses some celebs and whatnot. However, his money comes from selling polo shirts at Belk’s in Arkansas,” said one J.Crew consultant, speaking on condition of anonymity, citing the company’s “crazy non-disclosure agreement.”

“The sort of ‘celeb factor’ of Jenna Lyons is a large part of what’s driving their rise in credibility. However, they’re in danger of alienating their loyal customers who think it’s audacious to charge $750 for a sequined skirt.”

The company has so far worked their Lyons-perfected high/low style — sequins with chambray, ski sweaters with stilettos — bringing in an estimated $1.7 billion in revenue last year, up 10 percent from 2010, the year the company went private during weak sales.

Mixing the brand’s newfound high-fashion profile with its tees-and-jeans heritage is a balancing act for J.Crew and Lyons, who signs off on children’s chinos for J.Crew’s May catalog in one breath (“Cute. Great. Yay!”) as she pores over a still-secret “special project” with Vogue/CFDA fashion fund winners Pamela Love, Creatures of the Wind and Joseph Altuzarra, Lyons’ personal friend.

...And J.Crew is almost certainly on the inside, having spread from shopping center to Lincoln Center, and phased out the whale-printed “critter pants” of yore, in favor of $325 “neon azalea”-colored cashmere sweatshirts.

Last month brought news of a collaboration with shoe deity Manolo Blahnik, who will do his signature “BB” pump a la J.Crew this fall, at his regular price of $595. Blahnik, however, told Vogue U.K. he had “no idea” he’d agreed to the much-blogged-about partnership, despite having sent 45 pairs of shoes to the company.

“ Everyone was very surprised, Manolo included,” Lyons joked under her breath, with wide eyes and a grin, adding, “Just kidding. We are in a good place with them now. Everything’s OK.”

...But some of the company’s core customers aren’t drinking the high-fashion “Crew-lade,” as one commenter recently quipped on one of at least 13 blogs devoted to J.Crew.

 Alexis, the 30-something blogger behind J.Crew Aficionada, where superfans reference items by their catalog names, said her readers are growing increasingly heated over price hikes on staples like denim and cashmere (which another fan site claims has “been pilling”).

“There has been kind of a feeling that they’re turning away their existing customers for these new customers. Some of this stuff is astronomically priced and not very practical,” Alexis said. “Like, who are you creating those sequin pants for?”


Alexis’ coupon code-collecting customers, whom she described as a mix of urban professionals, moms and students, are miffed at so much as their favorite footwear topping the $100 mark.

Mike Vaccaro, an assistant vice president at Moody’s Investment Service who covers J.Crew, said prices have crept up, simply put, because, “They want to be a higher-quality, higher-end brand.”

That goal is mentioned in J.Crew’s latest annual report, which states that the company has “introduced limited edition ‘collection’ items such as hand-beaded skirts, which we believe elevates the overall perception of our brand.”

Lyons seems stung at mention of core customer backlash, explaining, hand over heart, that J.Crew doesn’t “just raise the prices arbitrarily.”

“We sort of, over time, tested the waters and I think when [customers] understand and believe in what we’re doing and can see the value, there’s no resistance,” she said, citing the more expensive Italian cashmere that she and J.Crew CEO Mickey Drexler introduced during the rebranding.

“We had to raise the price a little bit because we were offering a much different product than we’d offered before. We did that and we explained to the customer that this is a different level of quality and that’s why we’re charging more,” Lyons recalled. “We had a wonderful response from people.”

She may be seeing some of the customer response through neon azalea-colored glasses, though, as others complain that the queen of the high/low mix is losing touch with the “low” end. 

As an editor at a prominent fashion magazine put it, “My only gripe is that sometimes the clothes are so well styled in the catalog and online that it’s often a disappointment when you get in store — the quality doesn’t quite live up to how they made it look.”

The copy in J.Crew’s catalog and on their website focuses heavily on luxury imports like Italian leather, “Prince of Wales” wool and prints by Liberty of London, although only 9 percent of merchandise is sourced in Europe, compared to 87 percent in Asia, according to the company’s most recent annual report. J.Crew says the 9 percent figure doesn’t account for the sourcing of “raw materials,” a much higher number, they say, but that they do not disclose.

...“It’s nice to be able to say to somebody, ‘OK yes, that is a $2,000 snakeskin skirt but right next to it is a $180 cashmere sweater that you can buy. That skirt may be a little out of reach, but most of the stuff on the [Fashion Week] stage, is something that most people can buy,” she said.

...Lyons said the changes have only just begun at J.Crew. She said she’ll do anything except become “too predictable.”

“I don’t know, maybe we’ll sell cameras. Maybe we’ll sell cars,” she said, jovially. “Who knows?”

There are a lot of great conversation starters in this article! I will tackle a few, but feel free to chime in with your own observations.

First, I want to say "thank you!" to Daily reporter Michelle Ruiz for including this one JCAs opinion on J.Crew. I had a lovely time chatting with her about J.Crew & their pricing.

Second, "a still-secret “special project” with Vogue/CFDA fashion fund winners Pamela Love, Creatures of the Wind and Joseph Altuzarra"? Tell me more J.Crew!

Third, I do have an issue with how J.Crew is portraying some of their price increases. In particular, Jenna's quote of "that J.Crew doesn’t 'just raise the prices arbitrarily.'" Perhaps a quick read of the "Price Increases {are you catching them all?}" post from this February would help her see, what we are seeing in some cases. Raising the price of the linen polka dot pullover from $75 in the store to $85 with the personal shopper seems kind of arbitrary to me.

The other related quote that made me think, "um, okay..." is the following: "We had to raise the price a little bit because we were offering a much different product than we’d offered before. We did that and we explained to the customer that this is a different level of quality and that’s why we’re charging more,” Lyons recalled. "We had a wonderful response from people.'" That could easily be true for some cases (like their ballet shoes which I think have gotten better), but not in all cases. For example, I personally do not understand how the same pair of Toothpick Jeans in Garment Dyed Twill are priced at $108 on one day, and hiked up to $125 the very next day. (That increase is more than "a little bit". About a 15% price increase there.) It would be better if J.Crew was just honest and said, "Hey guys, they are top-sellers and we clearly priced these wrong. The market is willing to pay more for them." I actually understand that argument.

Fourth, I would like to add my own two cents on J.Crew's strategy which is cited here: "Mike Vaccaro, an assistant vice president at Moody’s Investment Service who covers J.Crew, said prices have crept up, simply put, because, “They want to be a higher-quality, higher-end brand.”" I really do believe that this is J.Crew's strategy and so far I think that it is really working for them. J.Crew has high starting points and that does lend to the belief that they are offering superior products.

But what I mentioned to Michelle Ruiz in our conversation is that I am not sure if their merchandise is actually selling at those full-retail price points. When I visit the J.Crew stores in my area (which include some up-scale retail locations like Greenwich, CT), I do not often see customers buying at full price. Yet, when there is a sale, I can barely find parking outside or a dressing room to try stuff on. (I am looking at you shoppers in Greenwich, CT!) ;)

I know that if I wait a few weeks, I can get the item I am coveting on sale (and before the season I am suppose to wear it in starts). I think most customers at J.Crew know this. I think J.Crew knows this. So there is "no-harm" in pricing pieces at higher points if they will eventually bring it down to points where it does sell. And if there are those items that sell out quickly (like the Tillary Tote or the Heart Throb Blouse), then all the better for them.

Fifth, I want to restate that I love the brand. I mentioned that point several times in the interview (even referring it to the "bad boyfriend" analogy we use so often here!) They just keep making {pretty} things that I want. I walked into my local J.Crew yesterday to return an item and saw no fewer than five items that I immediately fell in love with. There is a reason I am obsessed with the brand. ;)

Lastly, this post seems kind of heavy for a Friday afternoon. So I want to end it with saying that I hope you all enjoy a lovely weekend! :)

What are your thoughts on the article? Any points or quotes that you found particularly intriguing? Anything you overly disagreed or agreed with? If so, please share! :)