The Decline of J. Crew. What Happened? 10 Marketing Tips

The Decline of J. Crew. What Happened? 10 Marketing Tips

In early May of this year, J. Crew acquired the unwanted distinction of being the first major retailer to file for bankruptcy due to the restrictions brought about by the coronavirus pandemic, and with it, the floodgates opened with other major retailers following suit soon after as discussed over at runrex.com and guttulus.com. However, it is fair to say that J. Crew was in trouble even before the pandemic, and this article will look to highlight several factors that might have contributed to its decline from being worn by Michele Obama to filing for Chapter 11.

The decline of the mall

As a mall staple, J. Crew was at the height of its powers when the mall was popular in years past when people would go to and spend almost all day in the mall as discussed over at runrex.com. Since then, the popularity of the mall has declined massively, as many people abandon malls for online shopping, leading to a decline in foot traffic into the company’s stores. According to the gurus over at guttulus.com, this decline in foot traffic has led to reduced sales and earnings and has been one of the main reasons for J. Crew’s decline.

Growth of online retail

J. Crew has also come under heavy pressure as a result of the growth of online retail, with people increasingly looking to shop online, even for clothes, due to the convenience and the affordability that comes with the same as covered over at runrex.com. This has damaged the mainly brick-and-mortar business that is J. Crew, which has seen a reduction in foot traffic to its stores as a result, as a significant portion of its customers gravitates towards online stores. The growth of Amazon in the apparel space has also been a big factor as far as their decline is concerned.

Competition from big-box

Another factor that has contributed to J. Crew’s decline is a result of heavy pressure from big-box giants like Walmart. According to the subject matter experts over at guttulus.com, big-box retailers have also taken a big chunk out of J. Crew’s customer base, mostly because they offer extremely competitive prices that have left the company in the dust. This is yet another factor that contributed to the company finally filing for bankruptcy this year.

Competition from direct-to-consumer brands

In recent years, retailers have come under heavy pressure from direct-to-consumer brands that can market directly to consumers, building loyalty and trust, siphoning customers from traditional retail players, as explained over at runrex.com. This is a challenge that J. Crew also experienced, as it came under pressure from direct-to-consumer brands like M.M. LaFleur and Bonobos, which have taken a significant portion of its customer base leading to dwindling sales and precipitating the company’s decline.

Poor leadership

Industry experts, including those over at guttulus.com, also agree that J. Crew’s decline also has something to do with poor leadership from the former CEO, Mickey Drexler, and the former fashion director and president, Jenna Lyons. Before departing the company in 2017, the two made decisions that handicapped J. Crew and set it on the path to decline, leading to the company losing relevance and most of its loyal customers with it. Poor leadership is, therefore, another factor that contributed to the company’s decline.

Debt after the leveraged takeover by a private-equity firm

As is discussed over at runrex.com, there has been a growing list of companies that have gone bankrupt after being taken over by a private-equity firm, and this is the same fate that befell J. Crew. When the company was taken over by the private equity groups TPG and Leonard Green & Partners in 2011, the deal also loaded the company with debt repayments that have burdened the company for years and is a major factor behind its decline.

Prices

Over the years, the brand also became more and more expensive which put off customers who left for better deals elsewhere. As the experts over at guttulus.com will tell you, the apparel industry has become extremely reliant on discounts, and customers now almost expect to be given discounts, which has damaged J. Crew’s margins over the years, leading to dwindling earnings that go to explain the company’s decline. The company has been caught between a rock and a hard place where it knows that it has to offer discounted prices to compete, but also can’t offer such prices and remain viable.

Poor quality of clothes

Customers also began to complain about the poor quality and fit of J. Crew’s clothing, which also damaged its reputation and led to many of its customers leaving, as covered over at runrex.com. Issues with quality control are the bane of any company out there, as consumers want you to give them a guarantee of quality. J. Crew had major issues with quality control which eroded confidence and trust between the company and its customers, most of whom left, leading to dwindling sales and eventual decline and filing for bankruptcy.

Brand dilution

J. Crew also launched a more affordable and casual line called Madewell in 2006 as a diffusion brand, as an attempt to reach out to a younger and hipper consumer. However, rather than serving as a diffusion brand, Madewell ended up diluting J. Crew, leading to the company losing relevance among its customers. According to the subject matter experts over at guttulus.com, the idea of a diffusion brand isn’t a bad one and doesn’t threaten the status of the parent brand, as long as each of the brands is positioned, something J. Crew failed to do.

Changes in consumer spending

Experts, including those over at runrex.com, also point out that in the last couple of years, we have seen a shift in consumer spending, with people spending less on their closets, preferring to spend their money improving their homes as well as spending on tech, buying gadgets such as smartphones and so forth. This has also been a problem for J. Crew, which has already lost most of its customers to online retailers as well as to other cheaper and more fashionable competitors such as big-box retailers and fast-fashion retailers among others. This created a perfect storm that led to the company’s decline and eventual filing of bankruptcy.

Hopefully, the above discussion will give you marketing tips that will enable you and your company to avoid J. Crew’s fate, with more information on this and other related topics to be found over at runrex.com and guttulus.com.