Is Bankruptcy Looming for J.Crew?

J. Crew’s Financials Aren’t Good

A Reuters article, dated 11/16/16 is speculating that J.Crew is considering a spin-off of their successful Madewell division, in a likely attempt to raise cash. According to the 3rd quarter 2016 results, J.Crew stores had a 7% sales decline and including Madewell, had roughly $1.5 billion in debt and just $38 million in cash. This is not a healthy place to be.

What happened to one of the best specialty retailers in America? It’s easy to blame mall traffic, but those shoppers are shopping elsewhere and online. By the way, J.Crew has had an exceptional e-commerce site for many years.

They got caught in a maelstrom of changing trends and self-inflicted wounds.

The 4 Biggest Reasons J.Crew is Struggling

Millennial shoppers are the most strapped generation in decades. This largest demographic in the history of the US, is now 16-33. They are the most diverse American generation ever, with a wide range of tastes. Their shallow pockets have given rise to fast-fashion, consignment, rental and vintage apparel sales. I don’t think they aren’t interested in fashion, but clothing is discretionary after rent, school debt, healthcare, transportation and food costs. 

J. Crew had been dogged by inconsistent quality and styling.

J. Crew had been dogged by inconsistent quality and styling.

J.Crew seemed to target this growing base with lower quality materials in an attempt to decrease or hold prices. They also dabbled in trendier silhouettes, adding to the brand confusion. In the classic business you walk a fine line, to offer the expected, with a touch of newness to excite the customer.

Seemingly, in an attempt to be all things to all customers, they alienated fans that saw them as the quality, hip “American” lifestyle brand in the mall. They should have embraced their monopoly as a reliable, premium brand and let the rest of the generic tenants duke it out.

J.Crew had what they thought was a winning formula, cotton/spandex Capri pants, cashmere sweaters and cotton tees. They rested on formulaic laurels while customers were discovering more comfortable, durable and flattering fabrics in athletic apparel from the likes of Lululemon and many others. The rapid adoption of athleisure was lost on J.Crew. They didn’t see that customers were embracing a new casual. They should have evolved some of their assortment to address the exodus, in new fabrications or styling with a J.Crew spin. They just launched, in fall 2016, a “brand-right” athletic apparel collaboration with New Balance, maybe too little, too late. The athletic apparel market has much less elbow room at this point.

There are new kids on the block. At one time, J.Crew was the epitome of the modern prepster. They blended an urbane twist with classic American looks, to define an eclectic, cool state of prep. This wearable market position had a wide audience with fashion and traditional customers.

This late summer 2016 product is what they are know for, classic with a twist.

This late summer 2016 product is what they are known for, classic with a twist.

In recent years, they veered off course with poor quality or trendy items, overly eclectic pairings and strange colors, a road too far for their loyal customer.

As J.Crew confused its customer, they created a vacuum for other rapidly growing, consistent brands to fill. Kate Spade has taken away legions of suburban and urban women of all ages with their whimsical, colorful vibe. Vineyard Vines offers the traditional country club and aspiring wanna-bees,  preppy classics, that really resonate with Millennials. J. McLaughlin attracts the hard-core suburban prepster with uber-traditional, quality clothes. Tory Burch skims off the East Side, preppy customer. Club Monaco speaks to the contemporary, classic customer. These five brands are growing and nibbling at J.Crew’s forgotten following. The pie is only so big and their slice is getting smaller.

There continues to be significant markdowns across categories.

There continues to be significant markdowns across categories.

The stores need a facelift. The above brands have bright, organized new store formats. J.Crew’s shops are cluttered, chaotic and dark and the wood paneling feels very Brooks Brother’s 1992. They don’t highlight their best categories in a focused, shoppable layout. The brand experience needs a serious intervention, a difficult task, with mountains of debt.

None of these opinions are probably news to J.Crew. This is a formidable company with tremendous talent. Maybe they became too insular or content?

This product is a bright spot in the Fall 2016 assortment.

This product is a bright spot in the Fall 2016 assortment.

Amidst the clutter this fall, I’ve seen glimpses of the best of J.Crew. Time will tell, if it’s enough to save them from a painful bankruptcy. It’s not looking good based on 3rd quarter results.

Most retailers never achieve the iconic consumer and fashion industry respect of J.Crew. I’m rooting for them to turn this ship around.

 

Some other posts you might enjoy:

Decoding Millennial Shopping Traits & Habits

Are Sporting Goods & Outdoor in a Death Spiral?

7 Common Fashion Brand Management Mistakes

 

The Dix & Pond Blog, by Stephanie Bernier is the blog of  Dix & Pond Consulting, a Boston-based, company that consults on business strategy, creative direction, brand experience, trends, product development and merchandising. Clients include retailers, apparel, footwear & consumer companies.  CONTACT US TODAY! 

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7 Common Fashion Brand Management Mistakes

Great Fashion Brands Sell A Promise, Much More Than Products

It’s easy to think of fashion, consumer or retail brands that have lost substantial brand value over the decades. A great example is Talbot’s, once a venerable specialty retail force that sold customers a promise of the well-bred New England costal life. They also happened to sell preppy clothes and accessories. Over decades and several owners, the brand has been diluted to a unremarkable chain of apparel stores, a mere shadow of it’s storied past.

Great brands sell a relatable promise, values and even fantasies at an accepted value/price relationship. Products are number one, but it so much more than product. If you can’t identify and express this “magic quotient” in your fashion or retail brand, you have a serious problem. This is a big part of the “why me?” of a brand.

The “magic” is often so intangible that owners, managers, finance, merchandisers and even creative staff don’t get it. They find themselves stewards of a brand without the know-how to take it forward, without losing it’s soul. They collectively tinker with the recipe, ending up with a thin soup. Their individual actions are often random and lack a singular vision.

7 Common Fashion Brand Management Mistakes

Consumer goods, especially apparel, home and footwear markets are brutally competitive today. Brand relevance and management has never been more critical in these fashion businesses. Here are 7 common fashion brand management mistakes:

  • The brand doesn’t have a clearly understood brand promise that the whole organization works from.
  • The company targets the wrong persona for the brand.
  • The products aren’t compelling and/or full of mixed messages. They extend the brand into new categories without a shepherd with a consistent vision.
  • Companies have the wrong people in key positions. Creative directors are often the brand visionary and steward for brand integrity across the organization. Hiring a poor creative leader can have disastrous results. A great creative director can get the best out of an average design and marketing team. They have to be clear , motivational leaders and able to stand up to equally senior employees in the company.
  • Companies sometimes overly-empower newly-minted designers, assuming they innately know what customers want. Experience does matter.
  • Design, merchandising and sales teams continue to repeat the same products without evolving the products for modern needs and relevance. They may be blind to demographic and fashion trends that affect the brand. Some insiders resist change.
  • Sometimes management outsources brand reinvention to branding and marketing agencies without the experience or market knowledge to make sense of the real path to growth.

Sorel,  A Perfect Case Study in Brand Evolution

Whether a brand is two, five years or many decades old, it’s value and brand promise has to be continually monitored for current relevance. It’s difficult to turn around a flagging brand, not impossible, when things have gone too far. I perfect case study is Sorel of Ontario, Canada.

Sorel was a men’s and women’s winter boot brand owned by Kaufman Rubber Company started in 1962 in Canada. At one point, they were one of the largest suppliers of waterproof “outdoor” boots in the world.

In 2000, the brand was bought out of bankruptcy for $8 million by Columbia Sportswear, of Beaverton, OR. The line plodded along until 2008, when they decided to revamp the brand. Sorel is now a big growth story at Columbia and was projected to do $200M in 2015 sales. (sales were $60M in 2009).

Sorel president Mark Nenow is quoted as saying to Bloomberg… “We’re going to make it about style, we’re going to make it about premium, we’re going to make it about design, we’re going to make it impossible to ignore.” He also said it is going to be about women, women, women.”  They started to make more feminine boot styles aimed at urban, fashion conscious women. The strategy upped the fashion ante, within the framework of brand heritage. Design and marketing delivered a consistent message. Sales grew rapidly.

They tried a pop-up shop in Manhattan in December of 2014 and it was a hit. It became their first permanent store. They recently opened a store in Burlington, MA.

This store stopped me in my tracks. It put Sorel in a whole new light for me, from “that boot brand” to “I gotta have it”.  They didn’t take the expected route of an “outdoor” store with winter and mountain references. It has a nod to heritage with their polar bear logo in a fun wall patchwork, but the brand experience is a hip, fashion store with rustic contemporary displays and lighting.

They now design a complementary  collection of innovative, “active, boot-inspired” sandals and booties that would make any fashion lover swoon, whatever the season. The newborns have the DNA of the traditional classic boots. They’re sexy, edgy and rugged.

I think about the marketing journey I travelled to see the brand as fashion, instead of functional winter boots. Fashion credibility started by seeing the boots at Nordstrom, but experiencing their store and the unique shoe collection changed my perception entirely. I can’t say I saw anything on social or other media. It was the store and the shoes that changed everything.

Sorel is the perfect example of a heritage fashion brand with a modern evolution. Genius!

 

Some other posts you might enjoy:

Are The Sporting Goods & Outdoor Industries in a Death Spiral

The New Definition of Athletic Apparel

Decoding Millennial Shopping Traits & Habits

The Dix & Pond Blog, by Stephanie Bernier is the blog of  Dix & Pond Consulting, a Boston-based, company that consults on trends, creative direction, brand experience, business strategy, product development and merchandising. Clients include retailers, apparel, footwear & consumer companies.  CONTACT US TODAY! 

Thank you for liking and sharing this, if you enjoyed the post! 

A “Dear John” Letter to J. Crew

To Mickey Drexler

Dear Mickey,

I write you with a heavy heart. You promised me that things were going to get better between us, but you still seem to be lost. The news around town is your sales are down and your debt rating isn’t great.

For years, I have been faithful to you, buying into your ideas, filling my closet and heart with tees, shirts, pants, dresses and even suits. You were my reliable love, a high-quality guy consistently offering the expected, with enough fashion surprises, that I kept coming back for more. I could always count on you. You made my life easy.

Mark down tee shirts at J Crew.

Markdown tee shirts at J. Crew.

No one could do it better. I never missed a chance to stop by in the mall. I toss most catalogs, but always save J. Crew for my next cup of coffee. Inevitably, I would grab my cell and buy into your fantastic stories once again. You were my Svengali.

When I wrote you months ago, you promised to change, go back to the old Mickey. I think you forgot who you are, the quality, pedigreed guy with colorful new ideas. You were the diamond-in-the-rough, in a sea of mall stores with similarly dismal apparel offerings. You don’t understand the unique place you had in my mind or the mall.

Did you hang with the wrong crowd? Do you think you should play with the fast-fashion girls to be cool? You played their cheap tricks and confused me with your reckless behavior.

As casual apparel got more athletic, you missed putting a J. Crew spin on it. This revolution was about sportiness, comfort and new materials, not the same old fits and fabrics.

Your career team is on a losing streak too, poor fabrics and skimpy fits. They clearly need a new coach.

J Crew career dress.

J. Crew career dress.

Sadly, you are addicted to cropped pants, cashmere cardis and slubby tees. You don’t recognize that even classic girls evolve. Your not thinking clearly. I know you have good genes. Your kid-sister Madewell, is on track to become a star. She has a clear brand direction and a bright future.

I’m sorry to say there is someone else, named Club Monaco. I get contemporary classic fashion-with-a-twist again. I’m willing to pay higher prices for quality in a hipper environment. I’m tired of the dark-paneled woodiness and your chaotic behavior. My current love is handsome, sexy and takes me to new places. He “gets” me.

Club Monaco spring trench.

Club Monaco spring trench.

Maybe someday we will be together again? Good brand management and design is about evolution and reinvention. You need an intervention and to hang with a better crowd. Your loving family hasn’t forgotten the good man you are.

 

You may enjoy these previous posts:

7 Common Fashion Brand Management Mistakes

Color Trends 2016/2017 Going Green

The Dix & Pond Blog, by Stephanie Bernier is the blog of  Dix & Pond Consulting, a Boston-based, company that consults on brand experience, business strategy, trends, creative direction, product development and merchandising. Clients include retailers, apparel, footwear & consumer companies.  CONTACT US TODAY! 

Thank you for liking and sharing this, if you enjoyed the post! 

 

 

 

 

Primark’s Boston Store- a Retail Force to Be Reckoned With

Primark, the UK-based discount retailer opened their first US store in Boston this month. The low-cost, low margin, fast fashion retailer, is located in the 70,000 square foot, historic Filene’s department store building in Boston’s Downtown Crossing section. They have plans to open 10 more locations on the East Coast by Easter 2016.

Well designed floor sets at Primark

Well-designed floor sets at Primark

I visited the store on Saturday the 26th and found it mobbed with urban shoppers. The location is a tour-de-force for a company that targets 18-35 year old, cash-strapped Millennial demographic. The Washington Street site, of recent decades has been a decaying, retail wasteland. Surrounded by the Financial, entertainment districts and Chinatown. It is far from other residential neighborhoods, but directly across from the highly central Park Street subway stop. The daytime walkable population swells dramatically, from the Financial District and other nearby employers.

Boston is home to three major upscale shopping areas, Copley Place, Newbury and Charles Streets. Many of the world’s best retailers open test stores here, because of the many universities, large population of wealthy international students and tourists, as well as a cosmopolitan, well-heeled population. The mass customer has been grossly underserved in Boston proper, so Primark, H+M and Macy’s in Downtown Crossing offer a strong trifecta for budget-conscious customers.

Seventies items at Primark

Seventies fashion items at Primark

I’m blown away by Primark’s well-merchandised assortment, attractive floor sets, and incredibly low prices, e.g. cotton tees for five dollars, jackets for thirty-five, seven dollar jeans, trendy shoes for ten…The assortment is compelling with strong key item basics and on-trend pieces like Bohemian, seventies-inspired items. It is wearable and stylish, including men’s,women’s, children’s and home.

The offer is more “adult”, less “teenage” than Forever 21 and Old Navy, less contemporary than Zara and less trendy than H+M. They also have a particularly strong intimate apparel department, which could eventually take a bite out of Victoria’s Secret. I couldn’t help thinking, why a frugal customer would scour discounters like TJX, when they can find such depth of selection at Primark?

Sometimes foreign-based retailer’s brand aesthetic doesn’t fit with American styling, color and taste levels. (I think this will hamper Uniglo’s future US expansion.) Primark’s Dublin-designed products feel comfortably appropriate in the US market.

A well done athletic assortment

A well done athletic assortment

Primark is another game changing player in the seismic shift of the Teutonic plates under US retail. The Millennial customer’s high debt levels, surging rent, transportation, entertainment expenses and the cost of staying connected, have had a deflationary effect on apparel pricing. To a great extent this customer is brand agnostic and sees apparel as a commodity. Fast-fashion, discount stores, consignment and apparel rental retailers, have been the beneficiaries of this mega-trend.

I spoke to an eagerly observing Primark executive. He was leaving in a few days to open the King of Prussia store in PA. I said, “Forever 21, Zara, H+M, Kohl’s, Target and J.C.Penney have a lot to worry about with Primark“. He wryly replied “That’s what we hope for.”

Men's clothing is wearable and compelling.

Men’s clothing is wearable and compelling.

Dix&Pond is the blog of Dix & Pond Consulting, Boston-based, product development, creative, branding, business consulting and executive coaching for apparel, footwear & consumer products companies and retail analysts. Follow me to get the latest posts

Thank you for liking and sharing this, if you enjoyed the post!

6 Five-Star Specialty Retailers in a Lackluster Field

I was shopping in New York recently and feeling rather uninspired. I usually have an agenda, a new store or retailer, I am particularly excited about. Most large retailers make their own apparel and accessory products, so the watery soup is often spoiled by too many cooks, adding their managerial spice. It’s increasingly hard to find good retail theater, a strong brand identity and exciting, well-designed product, that hasn’t been tainted by levels of bureaucrats.

I challenged myself to come up with 6 “five-star” retailers that are doing an outstanding job, with a consistent brand experience and compelling fashion in a lackluster field:

1. Madewell, 2. Athleta, 3. Club Monaco, 4. Michael Kors, 5. Zara, 6. Lou & Grey

1. Madewell, 2. Athleta, 3. Club Monaco, 4. Michael Kors, 5. Zara, 6. Lou & Grey

Madewell – is the baby sister of J. Crew. I have been a long-time J. Crew proponent, even though the mothership has stumbled lately. Madewell is coming into its own with American casual classics, based around core denim pieces. You know to expect great jeans, chambray shirts, denim jackets, hip tees and knits, funky socks, rustic leather bags and shoes and slightly bohemian jewelry. The colors are simple and lean to the neutral side. The collection is totally wearable and much better-than-average quality for the price, a winning combination. This high-growth chain has little competition in the mall and will now be sold in Nordstrom as well.

Athleta – I was not a fan of fan of Athleta when Gap purchased it in 2008 for a mere $150 million. At the time their “zen-like” yoga prints and mass-market color sense paled against activewear, fashion pioneer Lululemon. Gap was betting on the powerful athleisure trend in apparel and has put their considerable product development muscle and resources behind the chain. They now have over 100 stores and have shed those expected “new-age” prints for a powerful collection of more urbane, sexy, forward clothing. They get that the athletic trend is worn as much out of the gym, as in, with their deep collection of cosmopolitan casual dresses, knit tops, bottoms and huge assortment of mix and match swimwear. I actually bought a $500 leather jacket at this formerly “perky” yoga chain and have never even done a downward dog.

Club Monaco – is a Canadian-based acquisition, part of the Ralph Lauren Corporation. Certainly not a household word, they only have approximately 140 stores worldwide. Club Monaco offers women’s and men’s collections of modern, urbane classics at affordable luxury prices points. Tasteful, upscale and contemporary, they are especially strong in knit tops, dresses, jackets, skirts and accessories for work and play. The quality of design and materials, far exceeds the price points to make Club Monaco a fairly hidden gem.

Michael Kors – Wandering through Macy’s first floor flagship the other day, I was blown away by the crowd of at least 40 people in the Michael Kors shop. The Coach concession across the hall had 2 visitors. it wasn’t a special event, it was business as usual for this hot-shot, brand-of-the-moment.

Michael Kors is a text-book example of consistent branding. The uber-glam handbags, watches, shoes and “bit of an after note”, clothing are precisely on the same urbane plane. Their stores, website, marketing collateral and product are as in sync as an Argentine tango. Chock it up as a real designer with one eye for everything. Even if you are getting tired of his ubiquitous bags, this brand is fashion branding royalty.

Zara – is fast-fashion at it’s finest. Owned by Spanish parent Inditex, in my book it blows away competitors H&M and Forever 21. They consistently put out easy-to-shop collections of fashion forward apparel and accessories, that defy their puny price points. Taken out of context the styling and quality could be mistaken for some of the best. There is no doubt what to expect at Zara, the best fashion trends in real-time, at really low prices. Zara brand profile as fashion leader, is crystal clear.

Lou & Grey – is a new free-standing store concept brand from parent Ann, Inc. It was born from the success of loungy apparel in their Loft chain. When I stumbled upon the Natick, Ma concept store, I was pleasantly surprised by the small sophisticated, upscale environment and compelling collection of lifestyle casual apparel and earthy accessories. This is the best thing Ann Inc. has done in a while. It is easier to do something new than reinvent history. Ann Taylor and Loft have become sterilized versions of their glory days with poor quality, dull offerings and banal stores. Currently only 7 stores,  Lou & Grey is one to watch.

Dix&Pond is the blog of Dix & Pond Consulting Creative and strategic consulting for retail, wholesale apparel, footwear, consumer products and branding agencies. Follow me to get the latest posts

Wrong Prescription for Coach’s Ills

Coach continues its downward slide. Sales in 3rd quarter 2015, dropped 15%. Some blame currency issues and the over-proliferation of outlet stores. Note to leadership, it’s the merchandise. Stuart Vevers strategy is stodgy, European and not much fun. The sleepy handbags are more matron than Millennial. Note to pundits, Millennials love outlet shopping. I still contend that their turnaround strategy is seriously flawed and too dependent on overly competitive apparel. I wrote this post in 2014 and not much has changed except Michael Kors and Kate Spade are hitting some headwinds, as well.

Coach’s 2014 first quarter profit fell 20%, while aspirational fashion rivals such as Michael Kors and Kate Spade continue to ratchet impressive gains. Coach experienced a steep drop in North American accessories sales. Coach’s strategy for slumping sales is a planned full lifestyle assortment, to include apparel and a greater emphasis on higher priced bags over $400, the volume sweet spot.  They recently hired a new creative director Stuart Vevers, to take over for Reed Krakoff (who is resigning); his first product introductions will be in Fall 2014.

Coach spring 2014 styles

Coach spring 2014 styles

As a Coach watcher and stock holder, this strategy goes down like bad medicine. Instead of aiming to win in the sweet spot, they are abdicating to the competition. Michael Kors’ apparel is a footnote to his successful handbags, watches and shoes. Kate Spade offers some of the most whimsical, colorful, bags, shoes and accessories and apparel is secondary. Tory Burch is a shoe and bag story with apparel paling in comparison.

Accessories are the democratic categories in which women of all ages and sizes can play, women’s apparel is stuck in a highly competitive funk.

Coach was riding high, in the early 2000’s. Their then colorful, fresh, “C” logoed bags were the “it” bags for the aspirational designer masses. Over time, they became ubiquitous, as every hairdresser and soccer mom carried them. As they down-trended, they didn’t follow with renewed  innovation, instead made the critical mistake of looking back and doing a rehash of the sturdy, vintage Legacy styles. These unrefined bags, although colorful, looked like a clunky 1980’s LeBaron instead of a chic 2013 Audi. The competition was forging ahead with exciting materials, color and patterns, like Michael Kors’ glam styles, Kate Spade’s playful totes and tech cases, the silicone Furla Candy bag and styles by Rebecca Minkoff, Marc Jacobs, Ted Baker and Longchamp.

The current assortment is sleepy at best. It feels like a lightly-veiled nod to Salvatore Ferragamo. They played it safe and sexless. There is no emotional must-have draw. Even with 25% off coupons, one is hard pressed to spend the deal. The prospect of a larger selection in the $600 plus range is a miscalculation of opportunity. They need to focus on modern, forward  materials, shapes and details in the $400 range sweet spot; then offer additional showstoppers in the $600 plus range.

Coach went too safe.

Coach went too safe.

A  key asset for Coach is their well-priced, quality shoe line. They offer slightly more wearable shoe heights than Kors and at prices lower than Kate Spade. I hope they don’t think they need to raise prices and heel heights to get a new customer. Maintain the $198 average price point and expand the selection to include more options of fashion-forward sandals, pumps, wedges, loafers and boots.

This great American brand has had a small stumble. When you take fashion risks as good brands do, you will trip-up sometimes. This brand has a cold, but certainly isn’t terminal. They just need the right prescription for renewed health.

Dix&Pond is the blog of Dix & Pond Consulting Creative and strategic consulting for retail, wholesale apparel, footwear, consumer products and branding agencies. Follow me to get the latest posts

Reality Check for Abercrombie

Abercrombie and Fitch has negotiated a new contact with long-time CEO Michael Jefferies after an activist investor had called for his replacement. After years of lagging return on investment the controversial CEO has lived to see another day.

Hollister men's and women's

Hollister men’s and women’s

Jefferies is among a small cadre of visionary retail executives and a known micro-manager. He remade a tiny travel and sporting goods retailer in the ’80’s into a teen retail powerhouse. It has been a rocky road laced with discrimination lawsuits and boycotts over policies and racy marketing.

When a customer choses to shop a specialty store they already relate to the brand on some level. Most customers visiting an Abercrombie & Fitch, Hollister or Gilly Hicks store aren’t discovering the store for the first time. They already identify with the upscale, American, traditional style, with a big dose of teenage sexual tension.

The appeal of the brand experience is the “maybe I’m too young to be here” rich decor, dim lighting, loud music and strong fragrance wafting through the air. It is retail theater at its best, even if it is a tad annoying for the credit card-carrying accomplice. I actually love to visit Gilly Hicks. (Too bad they are closing them down to focus on their core business.)

Things have changed in teen retail since the boom times post-Recession. The last few years have seen the explosion of fast fashion emporiums of Forever 21, H&M and Zara.

Abercrombie Holiday 2013

Abercrombie Holiday 2013

Forever 21 operates very large stores that carry complete looks… apparel, accessories and shoes merchandised throughout the store. A budget conscious Millennial can walk out with an armload of cheap chic clothing and accessories for $50. They serve up a huge range of fashion and uber-edgy looks in less than stellar quality, but most of their customers don’t care. They sell them in women’s, Love 21 sizes which area a bit bigger and plus sizes as well. No girl leaves Forever 21 without finding something that fits.

Abercrombie is stuck in the flip phone era of teen fashion. It is not the appeal of their clubby stores. It was their original calculation not to promote during the height of the Recession and their unwillingness to face the reality that today kids are bigger, than their cultural vision of a preppy, blonde waif. The narrow-minded intention to cut everything close to the bone has cost them significant sales. What store today can afford to lose a motivated customer segment over 1-2”?

 I can personally attest to this. My 13-year-old niece (who proclaims Gilly Hicks her favorite store) has been slightly bigger than the Gilly Hicks size large since she was 11 1/2. She relates to their clean, lounge lifestyle and sporty looks. Unfortunately, 90% of what she tries on doesn’t fit because they don’t carry an extra-large. She can only buy their most oversized pieces. We usually walk out empty-handed, in spite of Gilly Hicks great promotional prices.

We don’t bother to shop Abercrombie, even though we both like the traditional aesthetic and quality of their merchandise. We know the styles are cut too small and she’ll end up discouraged. In fact, Abercrombie’s key competitive advantage over Forever 21 is their more traditional looks. There are plenty of girls in America that relate to A+F’s classics with a modern twist, over fast fashion; and there aren’t any other national retail brands for kids that offer modern, traditional looks. (Except American Eagle and Gap, which are quite different overall.)

Therefore, we end up at Forever 21. As an industry veteran I hate the quality, but we can always find something acceptable and reasonably tasteful in their giant assortment. My niece always leaves Forever 21 feeling good about herself.

If Jefferies wants to make his bonus performance targets in his last act (He’s 69) He is going to have to see the teen market as it is today. It’s not 2007.

Dix&Pond is the blog of Dix & Pond Consulting Creative and strategic consulting for retail, wholesale apparel,  footwear, consumer products and branding agencies. Follow me to get the latest posts

 

 

 

 

 

Restoration Hardware’s New Boston Home

RH's Boston store is a branding tour-de-force.

RH’s Boston store is a branding tour-de-force.

Expect to be awestruck, breathless, converted to a quiet, monastic, simple life. The Restoration Hardware (now called RH ) has completed their renovation of one of Boston’s most iconic Back Bay buildings into one of the most moving retail brand experiences I ever had.  In my career as a trend watcher, I have been in countless thousands of them, but haven’t been this moved by a retail experience since the first time I stepped into the Food Halls at Harrod’s.

RH has recently completed their renovation of the former retail location of the venerable Louis of Boston, at the corner of Berkeley and Newbury Streets in Boston. The grand, free-standing building was built in 1864 for The New England Museum of Natural History. (which later became the Museum of Science and moved to The Charles River). It was vacant for several years when Louis moved to the South Boston waterfront. I wondered what retail tenant could do justice to this uniquely beautiful property. Ralph Lauren topped my short list for companies with the capital and vision to pull it off. RH was not on my list.

The floral area on the first floor.

The floral area on the first floor.

The store is a triumph.  It is the essence of modern, traditional home furnishings… spare, classic, oversized and dressed with buttery leathers and neutral linen. It is masculine and quiet, but emotionally rich on every level. It is palatial and clubby. RH has hit exactly the right note blending contemporary touches like the commanding glass elevator and slick concrete stairwell, while paying homage to the sheer beauty of the original architecture of this edifice. It is a textural, neutral symphony, with a hip background track. It is like experiencing their products through vintage sepia photos.

This tour-de-force brand experience is not to be missed. Expect to be converted to an RH disciple. It may have you shopping for a larger home to fit their enormous furnishings.

Dix&Pond is the blog of www.dixandpond.com Creative and strategic consulting for retail, wholesale apparel,  footwear, consumer products and branding agencies. Follow me to get the latest posts

This commanding stone bar is for in-store events.

This commanding stone bar is for in-store events.

Hubris Maximus – Ron Johnson and JCP

Unsurprisingly, Ron Johnson, the former Apple retail executive, has finally been dumped by the J.C. Penney board after 17 disastrous months, as CEO at the mid-tier department store. He took the Texas-based company from a profit in 2011 to a staggering loss in 2012.

William Ackman the activist hedge fund manager (who owns an 18% stake in the ailing JCP), pushed for Ron Johnson to take over the plodding retail behemoth and got his wish to huge fanfare. He touted Johnson, because of his success at Apple and stint at Target as the divine solution to turnaround JCP. No one doubted the need for an overhaul and Johnson provided a compelling sales pitch of a reimagined JCP.

Entrance to the Joe Fresh Department at JCP

Entrance to the Joe Fresh Department at JCP

Johnson was given free rein to continue living in California and play chess with the lives of thousands of employees, vendors and shareholders while disappointing loyal customers. He laid off thousands, stopped sales promotions and created slick Target-esque marketing before changing lack-luster product lines.

This was a classic case of  big-city-smarty-pants going to show those country bumpkins, how to run a better company. Johnson’s attitude was arrogance unchained and a sense of self-infallibility. This is a perfect case study in “Hubris Maximus” for the B-schools. Ackman imparted and granted supernatural powers on a big coastal ego that had no clue how to create and sell apparel and home products. Let face it, anyone can be a genius (pardon the pun he invented the “Genius Bar” in Apple stores) when you are selling the world’s most coveted products. Apple products will sell out of a shack, peddled on the street or at any ordinary retailer. He didn’t create the magic of Apple, he ran their stores.

A JCP turnaround requires more than making physically appealing stores (he succeeded with better visual merchandising); it is a product issue, reinvention of many private label brands and establishing meaningful creative partnerships that would inspire existing customers and attract new ones. There are a few bright lights, but for the most part the new products, like the revamped Liz Claiborne department, is nothing more than make-up on a very big corpse.

William Ackman isn’t the only guy to hire someone who breathes his same rarefied air. So many companies, only want to hire from their social circles, élite schools or MBA’s without regard to their actual credentials and cultural sensitivities to get the job done. They like smelling their own and like-minded perfume.

Better visual merchandising didn't substitute for the traffic driven by promotions.

Better visual merchandising didn’t substitute for the traffic driven by promotions.

The key to the JCP turnaround was respecting the desires of their loyal customers, a willingness to listen and learn before you shoot, testing before your roll out, building meaningful brands and inspiring and empowering your employees. Success was never going to happen with the blind ego of a mere mortal. Ackman made a fool’s bet and lost his shirt.

Dix&Pond is the blog of www.dixandpond.com Creative and strategic consulting for retail and wholesale apparel, shoe and consumer product companies. Follow me to get the latest posts

Coach – Stellar to Stumble

On the short-list of first-class American fashion brands, Coach certainly makes the top ten. The nature of market leaders is their willingness to take chances. No one becomes an Olympic skater holding the rail.

Coach fourth quarter 2012 North American sales were down 2% over last year, which sent the stock tumbling this week, in spite of increased international sales. North America accounts for two-thirds of the company’s business.

I have great respect for the aspirational luxury bag and accessory seller. They have turned a 72-year-old leathery dowager into a fashion powerhouse with their risk taking market leadership. There are far too many lackluster brands, that stand for nothing. I give them credit for ground breaking newness and willingness to take bold moves.

As an avid Coach watcher, the answer for the poor results is obvious. For many successful years, they addicted their logo-adoring masses to fresh shapes and colors of their iconic fabric “C” patterns. These signature looks fulfilled the fantasies of mainstream wanna-be social climbers. Unfortunately, the patterned bags have become, all too common on the arms of every stroller pusher and tweeny bopper in the mall.

Fall 2012 Coach Legacy bags

Fall 2012 Coach Legacy bags

They saw this coming. In second half of 2012, they took a radical step and introduced the Legacy collection. I never warmed up to this collection of vintage leather Coach styles in bold colors. They bet the ranch on Legacy and it dominated the second half assortment. I awaited its pending arrival and wanted to love it. Somehow, it didn’t feel modern, and the traditional leathers seemed a bit dowdy in a digital world. Perhaps it is the sea of wristlets and cross-body bags, aimed at an over-indulged teen? It doesn’t have the freshness of their more innovative styling. The only thing it had going for it was color. I give them an A+ for trying. This is the fashion business and leaders sometimes stumble.

CEO, Lew Frankfort is blaming the lack of demand on “competition.” Some say Michael Kors is taking a bigger share. I think the iconic Kors bags with the MK charm, are getting a tad stale, too. Kors does a larger shoe collection and dominates in uber-hot fashion watches. Kors stores have a consistent mix of accessories, apparel and shoes and isn’t reaching for an entry-level teen. I think Marc Jacobs, Kate Spade, Tory Burch and others are sucking the aspirational luxury winds in bags.

Coach won’t stay on the rails for long. This champion will bounce back. In bags, I think they need to explore more luxe leathers, modern materials like colorful patent leather and even silicone, as well as bold new shapes. They are talking about relaunching their shoe collection. I think their shoes offer tremendous value in terms of fashion quality to price. Expanding fashion jewelry and watches is an opportunity as well. Stay tuned. See Coach.com

Fall 2012 Coach loafers - A modern twist on a classic

Fall 2012 Coach loafers – A modern twist on a classic

Dix&Pond is the blog of www.dixandpond.com Creative and strategic consulting for retail and wholesale apparel, shoe and consumer product companies. Follow me to get the latest posts

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