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?