J. Crew Group is quietly developing a new format aimed at more budget-conscious shoppers after successfully turning around its core chain with more upscale designs and loftier prices.
According to The Wall Street Journal, the new concept will be called, "J. Crew Mercantile," a name the retailer trademarked in November. The concept will offer merchandise and prices that are similar to its J. Crew Factory outlet selection. Stores will be located in regional malls closer to city centers.
The Journal report states that a few leases have been signed and the retailer continues to scout locations. But a Women's Wear Daily follow-up article implies the company might not move forward. A J. Crew spokesperson told WWD, "It's too preliminary to discuss the subject."
J. Crew might be looking for fresh avenues for growth as it prepares for a possible initial public offering.The retailer's fourth-quarter profits fell 42.0 percent amid gross margin pressures, part of an overall holiday season that Suzanne Kapner, the Journal's retail reporter, said underscored "the difficulty apparel retailers have had in boosting sales without help from discounts."
For J. Crew, opening a lower-priced concept would be both coincidental and ironic.
Mickey Drexler, J. Crew's CEO, made a similar move when he was CEO of Gap Inc. with the launch of Old Navy in 1994. At the same time, Mr. Drexler has been an outspoken critic of the constant promotions at department stores and the quality levels at many of the fast-fashion chains.
"I resent the masses thing," said Mr. Drexler in a speech late January at the Parsons The New School for Design in Manhattan, according to WWD. "I find the world isn't that high-integrity. Maybe I grew up not being able to afford nice things, but it shouldn't be that way. I wanted nice clothes that aren't crazily priced."
Do you see more benefits or risks to J. Crew opening a lower-priced concept?