J Crew Marketing Final

J. Crew: MARKETING PLAN

Jessica T. Merrick Marketing 1 Marcie Cooper Fall 2018

1

J. Crew: MARKETING PLAN J. Crew’s Current State of Affairs Brand Description J. Crew Group, Inc., (“J. Crew) is an American multi-brand, multi-channel, specialty retailer. Established in 1947 as a door-to-door women’s outfitter then-named, “Popular Sale Club” the line focused on leisurewear for upper-middle class customers (Lepore, 2011).

Catalogue retailers at the time such as, Lands’ End and L.L. Bean were met with success and soon thereafter, the Popular Sale Club rebranded itself to be called, “J. Crew” in 1983 and were featured in the catalogues (Lepore, 2011). Six years later, J. Crew opened its first flagship store in New York.

Overview of Situational Analysis: J. Crew After barely coming out the other end from the economic recession of 2008, J. Crew strategically made the decision to appeal to the increasingly budget-conscious consumer by lowering overall prices (Haunns and DiNapoli, 2016). This marketing strategy did not pay off.

As a result, the new strategy worked against loyal customers and replaced them with the pricesensitive customer who was already shopping at other retailers with cheaper, more affordable options (Claveria, 2015). J. Crew began to receive criticism related to fit and quality issues with staple garments of J. Crew’s line (Claveria, 2015). By lowering overall prices, the quality of J. Crew’s apparel dropped as well (Claveria, 2015). In 2015, J. Crew started struggled with sales decreasing by 18% and gross margins falling 34.5% (J. Crew Group, 2016)

2

J. Crew: MARKETING PLAN

By June 2017, J. Crew announced that CEO Mickey Drexler was stepping aside and turning over the CEO position to James Brett, former West Elm president. Through the third quarter, J. Crew sales were down 10% and comp store sales declined 11%, following a 9% drop in the first nine months the year before (Danzinger, 2017). That J. Crew’s net loss for the third quarter widened to $17.6 million compared to $7.9 million, further revealed the need to close several stores. By the end of January 2018, J. Crew eliminated about 50 stores, double what it projected a few months prior to the announcement (McCoy, 2017).

Internal Situational Analysis

Brand Identity J. Crew is a brand that is known for its classic, timeless style. According to the J. Crew website the mission statement of the company is “… built on a commitment to provide quality in everything we do paired with exceptional service. We continuously dedicate ourselves to bringing inspiration, creativity and unparalleled expertise to J. Crew –making growth opportunities under our roof endless” (J. Crew Website, 2018). Through consistent creative messaging in store environments, websites, catalogues and social media, J. Crew maintains brand identity by exercising control over design, production, presentation and pricing of merchandize and by selling products. While J. Crew offers a complete assortment of women’s, men’s and

3

J. Crew: MARKETING PLAN children’s “crewcuts” apparel, the brand also offers a curated selection of other brands that they have partnered with offering unique items consistent with the brand’s identity. J. Crew’s catalogue provides a branding and traffic-driving vehicle that supports all channels of distribution.

Existing Marketing Mix

Examining J. Crew’s current marketing mix will help assess the ways in which J. Crew currently allocates their existing products and resources and will provide the foundation for recommendations in these four areas. Analyzing their existing marketing mix will help inform how J. Crew currently positions itself to the target market and will offer ways for improvement.

Place J. Crew stores and factories can be found in upscale regional malls, lifestyle centers and street locations in urban and suburban locations. The atmosphere of the storefronts across the United States pride themselves on being laidback, casual-cool and personal with the goal of creating a distinctive, sophisticated and inviting atmosphere. Each store averages 6,200 total

4

J. Crew: MARKETING PLAN square feet (J. Crew Group, 2015). J. Crew factories are found in large outlet malls. J. Crew products can also be purchased on their website.

Product J. Crew seeks to appeal to customers by creating high quality products that reflect the target customer’s affluent and active lifestyle. An assortment of men’s, women’s and children’s apparel and accessories include outerwear, suiting, casual attire, wedding and bridesmaids’ dresses, swimwear, shoes, handbags, belts, socks, jewelry and more. The products also range from casual t-shirts and denim to limited edition “collection items.”

Price J. Crew offers their customers with a mix of select designer-quality products and more casual items across various price points. According to an annual report, J. Crew believes that “offering a broad range of price points maintains a more accessible, less intimidating atmosphere” (J. Crew Group, 2015). When Brett took over J. Crew, prices were slashed such that classic T-shirts went from $29.50 to $14.50. Jeans carried prices as low as $39.50.

Promotion J. Crew offers marketing promotional strategies through its Instagram by regularly posting high-quality pictures of new products to its feed. It has amassed 1.9 million followers on the platform and the brand does the same on Facebook. The brand also comments and engages with customers and fans on its social media pages and is quick to reply to comments, questions and concerns.

New Marketing Plan

5

J. Crew: MARKETING PLAN Three Marketing Objectives 1. Product Strategy J. Crew needs to restructure their product strategy by fine-tuning quality, value, features, and functions to meet the perceived needs of their specific customer and market. J. Crew should refocus on core product lines. Customer experience surveys would be helpful to capture if/how the customer likes their J. Crew products which would address customers having issues with style and fit. One way to incentivize customers to fill out these surveys is by offering discounts in return. The quality of their core product line has really suffered in recently years and so capturing this feedback directly from the customer would be a win-win. If, as a result of the feedback, J. Crew needs to release new / discontinue previous collections than that is exactly what J. Crew will need to do to remain relevant and competitive in the fashion industry.

2. Service Strategy J. Crew has ample opportunities for improving the quality of service that they provide and the customer experience. When they recently made adjustments with prices, their products suffered and as a result their customers were left frustrating and confused. The recommendations that would be fulfilling for J. Crew to improve value position with their customers include: offer frequent promotions and exclusive events for loyal and future customers; increase online advertising via website and social platforms and offer in-store networking/exclusive product launch events.

Additionally, J. Crew must provide thorough employee training programs that are superior to that of other competitors with perks and packages. This would ensure that all future, and existing employees are well-versed in the brand itself, the products and services.

Personalized follow-up calls or thank you notes via mail or e-mail would go a long way to show the customer that J. Crew appreciates their services. Lastly, J. Crew should employ a return

6

J. Crew: MARKETING PLAN policy to that of Nordstrom which is a no questions asked return policy, and also void things that are “final sale” and cannot be returned. At present, other brands are engaging with customers on social media platforms and it would be in J. Crew’s best interest to have innovative hashtags, promotions and sales for those that engage frequently with these platforms.

3. Pricing Strategy J. Crew experienced three consecutive years of declines in “same-store sales, these stores have seen growing sales, luring customers in with cheap prices and constant turnover of fashionable clothing and accessories” (Hanbury, 2017). The high-costs associated with the products J. Crew offers to its customers is a weakness for the company. A recent interview with Wall Street Journal, outgoing CEO Mickey Drexler shared that the retailer’s downfall in recent years was that “it had raised prices at a time when customers were increasingly cost-conscious” (Hanbury, 2017). J. Crew’s new leadership should lower prices and ensure that these new prices reflect the quality of the products that they are selling.

7

J. Crew: MARKETING PLAN Marketing Strategies to Accomplish Objectives In order for J. Crew to accomplish the listed objectives they will need to follow SMART objectives. SMART objectives for J. Crew will capture the “specific” which will answer the questions “What is to be done, how will you know it is done” and describes the overall results.

Secondly, J. Crew’s new marketing strategy will have a “measurable” component that answers the question of “how will you know it meets the expectation?” Using assessable terms such as quantity of products, quality assessments of products, frequency of shoppers/repeated customers, costs, and deadlines will ensure measurability in order to capture the listed objectives. Next, the answer of “Can J. Crew do it” will addressed by “achievability” given time frames, resources and opportunities. It will be important to consider “relevancy” and answers to questions such as “Why, and what will the impact be” and Will this impact have long-term or short-term gains?”

Finally, the strategies will include “time-oriented” answers to questions such as “When will this be done?” and will be a guiding tool for reaching check points across the calendar and fashion cycles.

Below is a list of marketing strategies that will successfully accomplish the objectives: 1. Run a promotion during holidays • This will increase sales and capture attention when buyers are more likely to spend money 2. Create style guides to show J. Crew women/men/children how to wear items in everyday lift • This will also help inform brand awareness and increase visibility • Additionally, customers will be more likely to buy additional items if they see them in a full-package guide 3. Work with influencers to promote giveaways on Instagram and Facebook to reach audiences and increase brand awareness • The result will be increased engagement among Instagram followers and sales 4. Create gift guides year-round for the customer’s lifestyle • Think guides for Mother’s Day, Father’s Day, Graduation, Wedding, Baby Showers, Anniversaries, and Valentine’s Day

8

J. Crew: MARKETING PLAN 5. Remember and show love to customers on their birthday • Send customers a birthday present with a coupon code and relevant hashtag such

Future Marketing Mix The four P’s relevant to J. Crew will be the backbone for informing new strategies to reinvigorate J. Crew as a brand. The following recommendations are part of the marketing mix and are suggests for how J. Crew should (re)position itself to the target audience.

Place J. Crew’s customers are well-informed, young, and part of the upper-middle class (Lepore, 2011). Now more than ever are companies embracing shopping online and across digital channels in order to reach more customers and make shopping an effortless experience.

Millennials, an important target consumer of J. Crew, are embracing the digital age and it is important that J. Crew engage with its customers via social media platforms such as Instagram, Facebook, Twitter and of course, their e-commerce site. One thing that is missing is a mobile J. Crew app. If J. Crew were to create a shopping apple, it would keep the customer on the J. Crew shopping app instead of being lured by other advertisements. Additionally, an app would provide information in a central location. Finally, it would improve brand recognition and would

9

J. Crew: MARKETING PLAN encourage customers to purchase their favorite products in a fast, convenient way anywhere and at any time.

Product J. Crew’s quality of their products has had its ups and down as evidence to sizing issues, quality issues, customer complaints and undesirable sales (J. Crew Group, 2016). This aspect of the marketing plan will need to be seamless and indeed might take the longest amount of time.

This part of the marketing mix proposes that J. Crew redesign their product to reflect their core values. J. Crew can still stick to their high-quality timeless pieces with a preppy flair, since their customer seeks out J. Crew for their specific aesthetic. However, J. Crew will need to add an edge to their existing lines for women, men and children and differentiate itself as a brand from its current competition.

One way that J. Crew can re-invent their designs is to follow with what other successful brands are doing: become transparent with the supply chain. While J. Crew does not necessarily have to transform their entire label, it would be beneficial if the brand took part in slowfashion/sustainable movement and encouraged efforts to promote best practice related to human rights, and the environment in the fashion industry. It has been suggested that 87 percent of consumers said that they had purchased a product because a company advocated for an issue that they cared about (MacCarthy, 2017). Perhaps J. Crew should revise their products and offer a commitment that benefits their consumers and raises their socially conscious/environmentally values. Brands such as Reformation are seen as a current trailblazer in the sustainable/human rights movement and it would be wise if J. Crew integrated these practices into their company and were transparent with their customers. (Hendriksz, 2017).

10

J. Crew: MARKETING PLAN Price For years J. Crew has struggled with their prices. The Business Insider article revealed that same-store J.Crew sales “have been down for the past three years, dropping by 8% in 2016 following a 10% decrease the year before. In its most recent quarter, sales dropped by 12%” (Hanbury, 2018). As a result, Mickey Drexler has pushed to lower prices and still there was pushback from customers that the brand was unaffordable and that the quality had plummeted. J. Crew should instill a mid-price point to be competitive with brands such as L. L. Bean and Land’s End. It is priority that J. Crew revamp their products and ensure up-to-par quality so that the price accurately reflects their products.

Promotion J. Crew’s new marketing strategy will focus on acquiring new customers, gaining more consumer awareness for the brand, and keeping new and existing customers loyal. With this marketing strategy, the majority of J. Crew’s efforts for promotion will be on social media.

Instagram is a great way for brands to collect relevant statistics such as engagement, visits, likes, and demographic information about who is interacting with their accounts and at what frequency.

Fashion brands are also interacting with customers on Facebook and Pinterest. It would boost J.

11

J. Crew: MARKETING PLAN Crew’s recognition and credibility if they were to partner with relevant celebrities or high-profile individuals and feature these people on their Instagram to showcase their brand, image and overall values.

Relevant External Factors There are undoubtedly several relevant external factors that must be taken into consideration in order to lay the foundation for a successful marketing strategy. These factors include, but are not limited to, the economy, technology/lifestyle and the environment.

Economic The political upheaval in the western world dictates all economic factors such as currency value, falling GDP, trade agreements, protectionism and tariffs. While the U.S. economy is reported to be high (Booth, 2018) steadily consumer spending increases. This incline in consumer purchases, indicated as the economy growsm has the potential to permeate the retail environment. Globally, countries like China are experiencing increasing prices and rising pay level can lead to serious pressure on profitability for J. Crew (CNBC, 2017).

12

J. Crew: MARKETING PLAN J. Crew is subject to taxes in the U.S. and with international expansion it has become subject to taxes in foreign jurisdictions where their international subsidiaries are organized (J. Crew Group, 2015). Due to political and economic conditions, tax rates in various jurisdictions may be subject to significant changes. Future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, valuation of deferred tax assets and liabilities or changes in tax laws, including the U.S. According to an annual report, J. Crew is subject to the examination of tax returns and other tax matters by the Internal Revenue Service and other governmental bodies (J. Crew Group, 2015). There can be no assurance related to the outcome of these examinations.

Technology and Lifestyle As new technologies are developed by other competing companies and brands, J. Crew could experience threats and loss of customers. The modern consumer is connected through an omnichannel network on social media and can move instantly from desktop, to laptop, to tablet to their mobile devices anywhere. For J. Crew to meet the needs of the modern tech-savvy consumer, J. Crew must stay abreast on social-media channels. Currently, J. Crew does not have a mobile app. Additionally, their emails do not include suggestions based on the items the customer has previously purchased. J. Crew needs to be more socially conscious as a way to become more accessible in their marketing efforts to ensure they keep their loyal clients happy as well as bring in new ones.

Consumers are smarter than ever, and we have technology to thank. The modern American consumer spends around 10 hours of their day looking at a screen (Howard, 2016). J. Crew needs to strategically position themselves by developing a shopping or mobile app in order to engage with tech savvy customers. Additionally, several brands currently have features on their Instagram which allows users to shop directly from their feed. Influencers and bloggers are

13

J. Crew: MARKETING PLAN also a great technological resource as a way for existing and future customers to shop the latest trends and be the first to purchase featured products.

Environment The environment and social justice movement in the fashion industry has becoming more of a focal point for consumers. Consumer reports suggest that “76 percent of consumers would refuse to purchase a product if they found out a company supported an issue contrary to their beliefs� (Cone, 2017). J. Crew should update the CSR politics to bring in these sustainably aware consumers. Additionally, they should reflect on their current fibers, dyes, and overall construction process and revisit if any of these factors negatively impact the environment and people who come into contact with them.

Conclusion J. Crew has undoubtedly had successes and failures as a retailer company focusing on apparel and accessories for women, men and children. With its unique preppy styles, brand identity and competitive prices, J. Crew positions itself apart from other brands in today’s retailer market. By analyzing the current marketing strategy, J. Crew should focus its efforts on

14

J. Crew: MARKETING PLAN expanding their target customers, promote the brand across several platforms and channels, and improve the quality of the clothing and style identity while keeping their prices competitive.

Using the research gained in this report, J. Crew has the ability to create a new marketing strategy in order to be successful and keep up in the competitive marketplace. This report analyzed J. Crew’s current position and offered a variety of marketing suggestions in order for the brand to be successful. This marketing plan urges for promotion to and engaging with a larger target consumer, reviving the product, as well as making the brand more accessible to current and future consumers.

15

J. Crew: MARKETING PLAN

References All Images Acquired from J. Crew’s Website Booth, D. D. (2018). “The U. S. Economy Is On A Sugar High.” Bloomberg. Retrieved from https://www.bloomberg.com/view/articles/2018-10-04/gdp-growth-gets-a-brief-boostfrom-fear-of-trade-war Claveria, K. (2015). “J. Crews Latest Move Damages its Brand and Its Relationship With Customers.” Vision Critical. Retrieved from https://www.visioncritical.com/jcrewmercantile/ Cone Communications. (2017). “Americans Willing to Buy or Boycott Companies Based on Corporate Values, According to New Research by Cone Communications. Retrieved from http://www.conecomm.com/news-blog/2017/5/15/americans-willing-to-buy-orboycott-companies-based-on-corporate-values-according-to-new-research-by-conecommunications CNBC. (2017). “Made in China Isn’t So Cheap Anymore, and That Could Spell Headache for Beijing.” CNBC. Retrieved from https://www.cnbc.com/2017/02/27/chinese-wages-risemade-in-china-isnt-so-cheap-anymore.html Danziger, P. N. (2017). “J. Crew’s Boat Is Sinking: Can James Brett Bail It Out Fast Enough?”

Forbes. Retrieved from: https://www.forbes.com/sites/pamdanziger/2017/06/12/j-crews-boat-is-sinking-canjames-brett-bail-it-out-fast-enough/#7831c38c1f06 Hanbury, M. (2017). “We Visited J. Crew’s Flagship Store and Saw Why The Brand is in Trouble.” Business Insider. Retrieved from https://www.businessinsider.com/why-jcrew-is-struggling-photos-2017-6 Hanbury, M. (2018). “J. Crew’s Customers Have One Major Complaint—and It Reveals Why The Company is Falling Apart.” Business Insider. Retrieved from https://www.businessinsider.com/j-crew-customers-complain-about-quality-2018-1 Haunss, K., & DiNapoli, J. (2016). “J. Crew Makes Preparations for Possible Debt Restructuring: Sources.” Reuters. Retrieved from https://www.reuters.com/article/usjcrew-debtrestructuring-idUSKBN13Y2KA Hendriksz, V. (2017). “How Reformation Aims to Bring Sustainable Fashion to Everyone.”

Retrieved from https://fashionunited.uk/news/fashion/how-reformation-aims-to-bringsustainable-fashion-to-everyone/2017110126553 Howard, J. (2016). “Americans devote more than 10 hours a day to screen time and growing.”

CNN. Retrieved from https://www.cnn.com/2016/06/30/health/americans-screen-timenielsen/index.html J. Crew Group. (2015). “Annual Report”. Retrieved from http://www.annualreports.com/HostedData/AnnualReportArchive/j/NYSE_JCG_2015.pd f J. Crew Group. (2016). “Annual Report”. Retrieved from http://www.annualreports.com/HostedData/AnnualReportArchive/j/NYSE_JCG_2016.pd f J. Crew Website. (2018). Retrieved from www.jcrew.com

16

J. Crew: MARKETING PLAN Lepore, M. (2011). “The Story of How J. Crew Became the $3 Billion Dollar Company Everyone Was Fighting Over.” Business Insider. Retrieved from https://www.businessinsider.com/the-story-of-how-jcrew-became-the-3-billion-dollarcompany-everyone-was-fighting-over-2011-3 MacCarthy, L. (2017). “New Report Reveals 86% of US Consumers Expect Companies to Act on Social, Environmental Issues.” Sustainable Brands. Retrieved from https://www.sustainablebrands.com/news_and_views/marketing_comms/libby_maccarth y/new_report_reveals_86_americans_expect_companies_take

17