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It’s not a great time for J. Crew. The iconic brand is grappling with declining sales and has recently been forced to lay off 10 percent of its corporate staff. Under the leadership of CEO Mickey Drexler, the company is trying to orchestrate a turnaround, but all signs suggests that its efforts aren’t working.

In an attempt to reinvigorate sales, the retailer recently announced plans to introduce a bargain chain called J.Crew Mercantile. Positioning it as “brand new way to shop,” the company said on its website that the new chain will feature “a collection of original styles once only found at J.Crew Factory,” its outlet brand.

The new brand won’t be replacing the company’s outlet stores. An internal memo obtained by BuzzFeed News reveals that the company plans to use the Mercantile brand to sell the same products as its factory stores, but in retail stores that are located in malls and other retail areas where customers won’t find outlet stores. The company plans to open 10 Mercantile stores in 2015, with “future expansion plans into 2016,” according to the memo.

At first glance, launching a budget-friendly label seems to show that J.Crew is finally listening to its customers, many of whom complain about the brand’s high prices. The move is an acknowledgement that there’s a bigger demand for the company’s more affordable outlet brand than its full-price chain. But a deeper look shows that the move reeks of desperation—and it’s a move that’s likely to further alienate shoppers.

For one, budget-conscious customers already have a way of buying the company’s products: through J.Crew Factory. As BuzzFeed News points out, Mercantile will be a more attractive brand to many mall owners who are starting to reject stores with “factory” and “outlet” in their name for fear of cheapening their mall’s image and turning off affluent shoppers. But the reality is that this new chain is no different from the company’s namesake outlet brand. “Mercantile will carry current J.Crew Factory merchandise — prices will be the same,” admitted a company spokesperson to BuzzFeed.

More importantly, price is really only one of the big issues facing J.Crew. The company is turning off its best customers by abandoning the classic style it was once known for. Shoppers have blamed J.Crew creative director Jenna Lyons for the brand’s increasingly fashion-forward-but-impractical-and-expensive style.

“As I look at the catalogs now, I just don’t get it,” says Tricia Louvar, an Oregon-based illustrator and long-time J.Crew customer who recently posted a comic titled “An Open Letter to Jenna Lyons” on her blog The Hairpin. “Back when I was in college, it represented a classic look that was seamless.” Talking to The New York Post, Louvar says she admires Lyons’ chic style but it’s not something she can relate to—a sentiment that many customers seem to also hold.

Shoppers are also raising concerns about the quality of J.Crew products. Abra Belke, another long-time customer, lamented in her blog Capitol Hill Style about the company’s “rapidly decreasing quality,” saying, “J.Crew long-ago stopped producing the quality basics that were once the brand’s signature.” This decrease in quality was apparent too when a Business Insider reporter recently visited a J.Crew location and found shirts that were “dowdy and wrinkled.”

Perhaps the biggest risk with the launch of Mercantile is its impact to the J.Crew brand. By launching another budget-friendly chain, J.Crew is essentially training customers to expect discounted products. The company is on its way to becoming the new Gap, a brand that’s now struggling after descending down the discount rabbit hole for years. As the Business Insider points out, “once consumers are accustomed to lower priced versions of their favorite brands, it's difficult to convince them to pay for the higher priced option ever again.”

So while appealing to the budget-conscious shopper might look like a good idea for J.Crew, it’s not the best course of action in the long term. The company is turning off loyal customers and replacing them with price-sensitive shoppers—people who will likely switch again when another retailer offers something cheaper. The move tarnishes the company’s long-established brand without addressing customer concerns about the company’s clothes and their quality.

Tweet this!To stop floundering, J.Crew needs to start engaging with its vocal customer base. (CLICK TO TWEET)

If J.Crew wants to improve its products’ design and reverse its fortunes, it needs to get closer to its customers. The good news is that J.Crew customers want to be heard—many of them are already voicing their concerns through blogs and social media. To stop floundering, J.Crew needs to start engaging with its vocal customer base and get a holistic view of all the issues it needs to address, which include price and style.

In short, J.Crew must learn how to become a shopper-centric brand once again. Failing that, the company’s turnaround effort is unlikely to improve its fortunes anytime soon—no matter how low prices go.

Photo credit: Mike Mozart (via Flickr)

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Kelvin Claveria

Kelvin Claveria was the former Content Marketing Manager and was responsible for Vision Critical's blog and social media marketing program. Before joining Vision Critical's global marketing team, Kelvin worked at Dunn PR, a Vancouver-based public relations firm. His experience includes working with lifestyle, real estate, and non-profit clients to develop social media marketing and PR strategies. Kelvin has a Bachelor of Business Administration from SFU's Beedie School of Business.
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