Madewell is on the way up, J.Crew is not

Discussion
Photo: RetailWire
Apr 10, 2019
Matthew Stern

Having just appointed its first CEO, the Madewell clothing brand may be pulling farther ahead of, if not completely away from, its struggling parent company, J.Crew.

Earlier this month, Madewell announced the appointment of Libby Wadle, formerly the brand’s president, as the company’s first CEO, according to Fortune. Ms. Wadle told the magazine that the brand intends to become a billion-dollar company in short order, doubling its annual revenue. She pointed to a focus on denim as the prime way for Madewell to continue its ascent.

Social responsibility (including a jean recycling program) and a willingness to partner with D2C brands are additional factors that Business Insider pointed to as reasons for Madewell’s success thus far. The brand was launched in 2006.

The news of the plan to make Madewell a standalone force in apparel comes as J.Crew continues to struggle. Throughout 2018, J.Crew posted quarterly losses and pursued a failed rebranding attempt that Fashionista identifies as one of many unsuccessful moves to get the once popular mall brand back on track.

J.Crew has made a few other notable moves that have indicated some confusion about the best path to a turnaround. The company began selling its off-price Mercantile line on Amazon Marketplace, but shortly thereafter decided to phase out the brand entirely. The back-and-forth presumably resulted from conflicting perspectives on how to improve the chain as seen by chairman Mickey Drexler vs. former CEO Jim Brett, who left around the time the line was discontinued.

The jettisoned sub-brand strategy appears to have further pushed J.Crew along a downward spiral, leaving the company with so much excess inventory that it was forced to discount, which led to big losses, according to Fashionista.  

The relationship between J.Crew and Madewell, in which a more popular sub-brand keeps the flagging parent brand afloat, has evoked comparisons with Gap and Old Navy. The latter situation, however, changed earlier in the spring with the announcement that Old Navy would be spun off as a standalone company.

DISCUSSION QUESTIONS: What should the next moves be for both Madewell and J.Crew? Do you see the situation between the two companies as analogous to Old Navy and Gap?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Madewell needs to be a standalone brand if it is ever going to reach its potential. "
"Loosening up the look and feel of the J.Crew brand could possibly save the ship, but that would require new ways of thinking on behalf of leadership."
"Infighting and finger pointing rarely lead to straight answers on dismal performance. J.Crew needs to settle on a brand promise it can execute."

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13 Comments on "Madewell is on the way up, J.Crew is not"


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Dick Seesel
BrainTrust

Madewell has a clear sense of what it stands for — you can see it in the store design, the merchandise content, the pricing strategies and so forth. It should continue to grow its physical footprint, albeit cautiously — picking its mall locations carefully instead of rushing to grow.

J.Crew, on the other hand, continues to suffer from brand confusion. The reported infighting between Mickey Drexler and the recently departed CEO is symptomatic of a lack of direction. What does J.Crew stand for today, in terms of value vs. regular pricing and most of all in terms of merchandise content? As long as Drexler seems to insist on a “turn back the clock” strategy, things aren’t going to improve soon.

Neil Saunders
BrainTrust

If J.Crew wants to grow the Madewell brand to the billion dollar mark, it makes sense to give the division its own management and autonomy. However, it is also possible that J.Crew could be gearing up to sell it off which would help the parent company pay down some of its debt. This would also give Madewell more breathing space to grow and thrive – at present it lives under the shadow of J.Crew’s debt mountain.

Carol Spieckerman
BrainTrust

Introducing complementary, cool-factor brands into the J.Crew environment was a step in the right direction a few years ago but perhaps didn’t go far enough. A name change may be in order. Eponymous brands bear a lot of weight as Gap, Coach, Liz Claiborne and others have learned. Creating a new corporate moniker would allow the company to make strategic acquisitions, operate as a true portfolio company and yes, shed the J. Crew brand if warranted. The impact of Amazon’s own private brand-palooza can’t be underestimated. J.Crew’s attempt to float alternative brands in the Amazon “jumble” proves the point. Light duty won’t work. In the meantime, Mickey Drexler’s heavy hands aren’t helping the situation.

Bethany Allee
BrainTrust

The Madewell/J.Crew brands are not analogous to Old Navy and Gap. There are several reasons I don’t see them as the same, but the biggest is that Madewell and J.Crew both have the extremely wise distribution model of their own retail outlets, and reselling through other outlets. I buy both Madewell and J.Crew, both outside of Madewell or J.Crew sites/stores.

Continued diversification and growth of the brands makes sense. If Madewell makes a move to leave J.Crew behind, I think both brands will struggle – Madewell could potentially struggle more.

Ryan Mathews
BrainTrust

The winds of fashion blow fickle. Michelle Obama helped J.Crew and Madewell has captured the imagination of a vibrant consumer segment — apparently at J.Crew’s expense. Madewell needs to be a standalone brand if it is ever going to reach its potential. While I think the analogy to Gap and Old Navy is a bit strained, there is one area where it applied. When it came to Gap, younger shoppers didn’t want to wear the same jeans their parents wore. Times change and fashion brands come and go, just look at Lacoste or Hush Puppies. It may be time for J.Crew to reinvent itself for a new generation and let Madewell set its own course.

Jeff Sward
BrainTrust

A quick visit to both J.Crew and Madewell websites is telling. At J.Crew “40% Off” filled my screen. And it was online only, which I never understand. At Madewell, it was pure product and story-telling. I’ll echo previous comments about confusion and disarray at J.Crew. They need to pick a lane and execute. I’m not so sure the booted CEO was wrong. J.Crew looked better last Fall and Winter than they had in a while. And I applauded some of the more accessible pricing. Infighting and finger pointing rarely lead to straight answers on dismal performance. J.Crew needs to settle on a brand promise it can execute. In men’s the suitings are terrific. Sportswear is bland and forgettable. In men’s Bonobos seems to have nudged J.Crew to the sidelines. Bonobos is updated and has a point of view. J.Crew looks very yesterday by comparison.

Mohamed Amer
BrainTrust

Jeff has nailed it!

Brandon Rael
BrainTrust

The Madewell brand has made a clear and powerful fashion-first statement and has contributed significantly to keeping J.Crew afloat during the last few challenging years. It’s very clear what Madewell represents, and what they stand for, something that has been sorely lacking with the J.Crew brand. Madewell offers customer-focused, curated merchandise assortments, and all at the right price points.

It’s clear that the J.Crew brand could learn from what has made Madewell successful and resonates with their fans.

The obvious signs lead to J.Crew spinning off the Madewell brand in a crawl, walk, run strategy. If J.Crew goes this route, it should be done delicately, slowly, and strategically, as the days of opening hundreds of storefronts are behind us.

Cynthia Holcomb
BrainTrust

J.Crew turned product “control” into a hall of repetitive, stiff-looking, throwback to the days of preppie yore, apparel offerings. Loosening up the look and feel of the J.Crew brand could possibly save the ship, but that would require new ways of thinking on behalf of leadership. Changing inbred mindsets is an extremely difficult task to execute. Meanwhile J.Crew, has let Madewell evolve with the times. Madewell partnering and receiving strong brand approval via Nordstrom stores reflects the sweet spot of 2019 product merchandising, a fresh, easy to understand brand and product at a mid-range price point.

Jasmine Glasheen
Staff

Madewell is known for quality and innovation, while its parent company no longer is. It would have been hard for J.Crew to avoid going down-market at the time that they did –– joining the race to the bottom by selling cheap merchandise at discount retailers. However, it’s also difficult to see how J.Crew is going to come back from this.

The Navy/Gap situation is quite a bit different since Madewell is an on-trend quality-first brand (as described in its name), while Old Navy is a place for folks to stock up on basics on the cheap. Honestly, I see brands like Madewell having more staying power as consumers evolve how they shop to reflect their growing values of sustainability and eco-consciousness.

Ken Morris
BrainTrust
Madewell is popular and successful due to its hipster appeal to the Millennial generation. The company has found a niche, offering quality denim without the premium price. Denim has been a dominant fashion item for the last 50-plus years and will continue to remain strong. Madewell has a narrow focus offering a great product at good prices and they should stay true to their brand by continuing down that path. They should maintain their focus on denim and all things that go with denim, such as t-shirts, scarves, accessories, etc. Madewell is a great brand, leveraged from its beginnings as a workwear manufacturer, offering a quality product to a demanding clientele. To grow their business, they need to open more stores to get in front of more customers and grow the customer base. Madewell has a great store design with a focus on glass, brick, stone and wood that is very appealing and easy to shop. Similar to Old Navy and Gap, there is a good chance that J.Crew will spin off Madewell. The value… Read more »
Ricardo Belmar
BrainTrust
Perhaps what is happening with Madewell and J.Crew is more a reflection of the specialty apparel segment as a whole. This is a segment that grew out from department stores and into brand specific stores that appealed to a very specific customer demographic. The reality is that this demographic aged out of the brand. Brands in this segment that continued to produce the same style of merchandise by assuming they would always have customers flocking to them are now suffering as they’ve failed to adapt to an incoming generation of shopper. Brands that did adapt, are continuing to find new customers. J.Crew is an example of one of those brands that kept going with the same old product. Madewell started with a fresh perspective, unencumbered by J.Crew’s legacy. Gap is similar in that they’ve refused to adapt their styling for new generations of shoppers but Old Navy is not analogous to Madewell as they serve different purposes in shoppers’ closets. The discussion really should look more at how brands in this segment adapt over time… Read more »
Steve Dennis
BrainTrust

Madewell seems to have a clear idea of who its customer is and executes in a consistent and remarkable way. J. Crew lost its bearing over the last several years, confusing its positioning and becoming overly reliant on promotions. There is no fundamental reason why both brands cannot successfully co-exist under the same corporate ownership. In fact, there should be some synergies. But unless J. Crew can quickly right the ship it risks weighing down Madewell’s potential.

While there are some similarities (beyond the Mickey Drexler connection) between Madewell/J.Crew and Old Navy/Gap, Gap’s problems stem largely from over-expansion, whereas J. Crew’s are more about poor positioning and promotional/inventory management.

wpDiscuz
Braintrust
"Madewell needs to be a standalone brand if it is ever going to reach its potential. "
"Loosening up the look and feel of the J.Crew brand could possibly save the ship, but that would require new ways of thinking on behalf of leadership."
"Infighting and finger pointing rarely lead to straight answers on dismal performance. J.Crew needs to settle on a brand promise it can execute."

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