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J. Crew: A Name to Know in Retail

October 20, 2015
J. Crew: A Name to Know in Retail

The Rise and Fall (and Rise and Fall) of One of America’s Most Celebrated Retailers

What’s in a name? For a brand like J. Crew, quite a bit. From Mickey Drexler and Jenna Lyons to Jackie Kennedy Onassis and Michelle Obama to Tippi and Tilly, the rise and fall of one of the most celebrated brands in America can be told in part through the names that have helped shape it.

Just a few years ago, everyone was talking about the inspirational story that was J. Crew. The preppy powerhouse seemed to be one of the only retail brands to make it through the recession unscathed. While other stores were going out of business, and 70 percent off sales became the norm, J. Crew was experiencing what Forbes called its “golden era.”

“It’s about product, it’s about quality, it’s about design, it’s about service, it’s about creativity. ”

But that’s not to say J. Crew hadn’t had its ups and downs before that. Once a successful catalog company in the 1980s, the direct-to-consumer retailer hit a wall in the late ’90s. As catalog sales dwindled, Texas Pacific, an investment firm known for turning around struggling companies, bought a stake in J. Crew in 1997. After a string of new CEOs, the investors brought in Millard “Mickey” Drexler, former CEO of the Gap, in 2003.

Mickey Drexler and His Magic

Drexler wasted no time in making big changes at the company. He reinvented the catalog experience, matching it to newly opened brick-and-mortar stores where customers became immersed in a seasonal story that felt seamless. He also famously reviewed the entire line, piece by piece, and then added his own dose of Drexler magic that no one, it seemed, could imitate.

He placed $500 sequin and tulle skirts next to $150 cashmere sweaters and $30 tank tops, all expertly styled to take fashion-savvy and cost-conscious customers from desk to drinks and work to weekend. Every piece seemed like a bargain, and as Forbes magazine put it, everyone was shopping at J. Crew, including the “Birkin Bag–toting soccer moms cutting back on splurges at Neiman Marcus and career-centric women who can’t get enough of the pencil skirts and slim trousers.”

Clothing on Hangers - J. Crew

As J. Crew morphed into a retailer that appealed to both the coveted younger demographic and financially stable career woman, Drexler credited the basics. “It’s about product, it’s about quality, it’s about design, it’s about service, it’s about creativity,” he told investors. “It might sound simple, but in this business sometimes the simplest things are the hardest to achieve.” It was corporate-speak for sure, but investors loved it.

And customers loved the mix of trendy and investment pieces, accessible pricing and reliable sizes. Over time, they came to love all the names that built the brand, like the Tissue T-shirt, the Schoolboy blazer and the Cece flat. And then there was Jenna …

“Jenna’s Picks” Equaled Sales Success 

One of Drexler’s earliest successes was recognizing the talent of then-vice president of women’s design, Jenna Lyons. Drexler quickly promoted her to creative director and later to president. As reported by Fast Company, their close partnership marked “the end of the days when J. Crew’s product design was dictated by corporate strategy.” From then on, the powerful pair would make and sell only what they loved. 

And as the story goes, what Lyons loved, everyone loved … and bought.

“Jenna’s Picks,” updated monthly on JCrew.com, often sold out in weeks, if not days. And Lyons herself became a rising star, headlining feature stories in Vogue and the New York Times, and making (highly photographed) appearances from the red carpet to The Oprah Winfrey Show.

Product desktop view - J. Crew

Lyons was becoming a household name and garnering quite a following. Quotes from Lyons (such as “When something hasn’t been as beautiful as it can be, the reason is always bigger than the thing” and “As far as I’m concerned, leopard is a neutral”) became Pinterest fodder and the voice of more than one generation. With her mix of classic twin sets, winsome prints, colorful cashmere (knitted from the finest Italian yarn and priced at under $200) and lots and lots of extra-special details like glittery flats and chunky statement necklaces, Lyons truly was reinventing cool, and truly dressing America.

J. Crew Gets the First Lady Bump by Michelle

At the height of J. Crew’s success, best-selling pieces like the classic Jackie cardigan became icons. Still sold on the J. Crew website, the Jackie is described as “A cardigan as classic as the style icon we were inspired by. It’s the one we keep over the back of our desk chair and throw in our bag for just-in-case moments.”

And as the story goes, what Lyons loved, everyone loved … and bought.

And what about Michelle? First Lady Michelle Obama was spotted wearing J. Crew on a much-talked-about episode of The Tonight Show with Jay Leno in 2008. And she didn’t just wear it; she plugged it (for free, and apparently with no discount). And then for the inauguration, the first daughters donned Crewcuts, J. Crew’s children’s line.

A year after the Tonight Show appearance, J. Crew reported 14 percent revenue growth for the third quarter of 2009 over 2008 and strong holiday sales. As Forbes wrote, the “retailer had managed to become fashion’s glimmer of hope that women still like to shop, recession be damned.” By 2011, J. Crew had exploded into a $3 billion online, catalog and brick-and-mortar business.

But as they say, nothing in life (or in retail, for that matter) lasts forever.

Along Came Tilly: J. Crew’s Sweater That Flopped

After a number of good years, J. Crew has had a few disappointing months. And it all comes down to Tilly. Who, you may ask, is Tilly? You’ve probably never heard of her. And for good reason. She’s J. Crew’s latest flop. “We like to think of her as the slightly shrunken cousin of our beloved Tippi sweater,” J. Crew said on its site. But the ill-fitting sweater is one that Drexler singled out in a recent conference call with investors as the reason the former powerhouse is failing — again.

Tilly Sweater J. Crew

Second-quarter results were downright discouraging. Sales fell 5 percent compared with the same period in 2014, and same-store sales were down 10 percent. The company announced it would be eliminating 175 jobs and replacing its head of women’s design.

And yes, you can blame it all on Tilly. Drexler did.

 “We made a big mistake in the Tilly,” he recently told investors. “We just made mistakes.”

Fans agreed. The New York Times quoted Rynetta Davis, a University of Kentucky professor and J. Crew “obsessive” who writes a blog about J. Crew, as saying, “The Tilly was a disaster. An absolute disaster. They should not have gone that way.”

Storefront J. Crew

But it’s just one sweater, just one name in the J. Crew lineup, right?

It’s more than that, experts say. It has to do with related purchases, Dale Achabal, the executive director of the Retail Management Institute at Santa Clara University, told Slate’s Jessica Grose in her article about, you guessed it, the Tilly.

“When a company screws up one of its key pieces — and J. Crew’s lightweight sweaters seem to be a key piece for them — a consumer is not only not buying the sweater; she’s not buying the pants that go with the sweater, or the statement necklace that really ties the whole outfit together,” Grose wrote. “The Tilly sweater, which no one bought, is now on sale for $45.99, down from $86, so J. Crew isn’t just losing the money from marking down that sweater — they’re losing the money you didn’t use to buy J. Crew’s ‘favorite pair of high-rise jeans’ that they recommend pairing with the Tilly.”

Achabal explained that if this had been J. Crew's first miss, it could have come back fairly easily: “Let’s say they’re doing some e-marketing, and [they are] on Facebook. They now put another key item up, and ... if that key item resonates, they can recover.”

 “We made a big mistake in the Tilly.”

But sadly, this wasn’t J. Crew’s first miss (just Google the Cece flat), which is why investors — and loyal J. Crew fans everywhere — are worried about the once-beloved brand name.

What Does the Future Hold for J. Crew? 

It seems J. Crew is seeking salvation in a strategy that has saved it before. With its most recent September release, the retailer introduced its “Always List,” as in “the pieces we'll always wear and love,” according to the company’s website.

“When something hasn’t been as beautiful as it can be, the reason is always bigger than the thing.”

The collection of what many are calling “basics” reintroduces the perennial favorites that built the brand: striped T-shirts, broken-in boyfriend jeans, go-to button-downs and lots of sparkling somethings.

And just like before, there are the names. Some old, some new, all strangely captivating to the tried-and-true J. Crew fan. There’s the Matchstick, the Lookout, the Boyfriend jean; the Tissue, the Boatneck, the Painter tees; the Ryder and Martie pants; and the Regent, the Rhodes and the Campbell blazers.

But what’s in a name, anyway? We will soon find out. 

Photos: Shutterstock and jcrew.com

 

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