J.Crew’s Mickey Drexler Confesses: I Underestimated How Tech Would Upend Retail

From The Wall Street Journal:

 Millard “Mickey” Drexler, the fashion genius whose ability to spot trends reshaped how Americans dress, has a humbling admission. He missed what might be the biggest trend of all—how quickly technology would change the retail industry.

“I’ve never seen the speed of change as it is today,” the 72-year-old chairman and chief executive of J.Crew Group Inc. said in an interview at his New York office. “If I could go back 10 years, I might have done some things earlier.”

The retail veteran, who redefined Gap Inc. in the 1990s and then transformed J.Crew into a household name, is now scrambling to keep the company he took private in a leveraged buyout from ending up in bankruptcy.

Sales at J.Crew Group stores open at least a year have fallen for the past 10 quarters—the kind of slump that got Mr. Drexler ousted from the Gap in 2002. This time he owns 10% of the company, and it is lenders, not the founding family, that are putting on the pressure.

For decades, fashion was essentially a hit or miss business. Merchants like Mr. Drexler would make bets on what people would be wearing a year in advance, since that’s how long it took to design and produce items. Hits guaranteed handsome returns until the next season.

Now, competitors with high-tech, data-driven supply chains can copy styles faster and move them into stores in a matter of weeks. Online marketplaces drive down prices, and design details such as nicer buttons and richer colors are less apparent on the internet. Social media adds fuel to the style churn—consumers want a new outfit for every Instagram post.

“The rules of the game have changed,” said Janet Kloppenburg, president of JJK Research, a retail-focused research firm. “It’s not just about product anymore. It’s also about speed and pricing.”

Mr. Drexler’s plan is to emphasize lower prices, pivot toward more digital marketing and adopt a more accessible image. “We became a little too elitist in our attitude,” he said.

Many visionaries focus on doing what they do best, even when the ground shifts beneath them. From newspapers to television, successful companies have been upended by disruptive technologies. Facebook Inc. is now the world’s largest publisher; Netflix Inc. is worth twice as much as CBS Corp.

“The incumbent leaders never see it coming,” said Clayton Christensen, the Harvard Business School professor who introduced the theory of disruptive innovation 20 years ago. “They focus on their best customers and try to provide what they need, but the customers who first defect [to new technology] are usually the least profitable.”

. . . .

The New York City native, who doesn’t have his own Instagram, Facebook or Twitter account, was sharing thoughts with employees on a loudspeaker—hooked up through his phone—before Twitter was launched. He paid attention to firsthand shopper feedback on frequent visits to stores long before Amazon.com Inc. was collecting user data. He was also selling clothes online before many other specialty retailers. Nearly half of J.Crew’s sales now come from the web.

But Mr. Drexler didn’t appreciate how the quality of garments could easily get lost in a sea of options online, where prices drive decisions, or how social media would give rise to disposable fashion. Online, price has more impact than the sensory qualities of clothing. “You go into a store—I love this, I love this, I love this,” he said. “You go online and you just don’t get the same sense and feel of the goods because you’re looking at a picture.”

. . . .

“The days of people wearing head-to-toe J.Crew are over,” said Carla Casella, an analyst at J.P. Morgan Chase & Co.

Zinniah Munoz, a 20-year-old makeup artist in New York City, said she would rather buy a style at a lower price than pay extra money for a brand name. “I’m always vigilant of not posting the same style twice” on Instagram or Facebook, she added.

. . . .

TPG co-founder David Bonderman recently acknowledged J.Crew and its peers are struggling with declining mall traffic and the shift to online shopping. “The internet has proven much more resilient and much more important than most of us thought a decade ago,” he said at a conference earlier this month.

Link to the rest at The Wall Street Journal (Link may expire)

8 thoughts on “J.Crew’s Mickey Drexler Confesses: I Underestimated How Tech Would Upend Retail”

  1. Reading this article reminded me to go check LL Bean & J Crew for my latest quest, something so ordinary that fashionable clothing sites don’t carry it. And besides, my demographic is now a shrinking minority of customers everywhere.

    If you believe in “timeless classics” you are s**t-outta-luck these days.

    Where’s the specialist retailing online I was promised, to serve my micro-niche?

    • Create your own!!!

      Frankly, I’m tired of the shorts and skirts getting shorter and tighter every year.

      So I make my own. For the kids too. I do supplement with store bought clothing but it has to be “classic” and comfortable.

      I don’t have money to buy new stuff every season. I have clothes that are 10+ years old and they still fit.

      • This is coming a lot sooner than retailers realize.

        Imagine an online clothing on demand service where you upload/select a pattern/fabrics combo, provide a set of body specs (probably via camera) and receive the clothes in a day or two.

        Amazon, among others, already has a patent for a mosly robotic back end.

        Easy to see a business model for selling the patterns, including both licensed and unlicensed fashion lookalikes, within days or hours of a show. 🙂

        Costumes, for local theater, indie movies, and halloween are also a target market. We might see fads of retrofashions rolling in and out overnight. Hmmm…

        • Recollections.biz. They have the styles and general patterns, you select the fabric and trim, tell them if you need a special length or sleeve size, wait 6 weeks or so at most, and your dress/blouse/skirt/hat arrives. I get all my work-skirts from them, and some of my work dresses as well. They’ve been around 20+ years and they just keep growing.

          And the quality is quite good. I’ve only had to re-stitch or mend one thing, and that was white lace on white cambric with white stitching. The seamstress didn’t catch an inch or so of the lace, and I stitched it back down before anything happened. I’ve shopped from them since 2002 or so.

          • Good to know.
            Now, imagine them with 2 day turnaround, a 100x catalog, and the ability to handle 100-1000x the volume.
            That would dent retail, wouldn’t it?

            Amazon is “just” a distributor of conventionally manufactured goods. The next revolution (just getting off the ground) is manufacturing.

          • eShakti in India: I’ve bougth several tops and dresses. You can use their standard size and give your height and for most items, you can select customization of sleeve length and neckline and hemline. If you pay a bit more, you can send them your specific measurements (more than b/w/h) and it’s custom-made.

            I’ve been too lazy to do the measurements, but I’ve customized sleeves, neckline, and length and have gotten quite a few compliments on the dresses. Takes about 2 weeks.

            I get most of my clothes at amazon and ebay…I know the brands, sizes, styles I like and look for those.

            • I’ve had some good results with them, and thanks for reminding me to take another look.

              I need specific colors for new author photos — they may be just what I need.

  2. Lots of regular folks design skins and clothing for online avatars and make decent money. I could imagine people uploading real life designs over basic templates provided by Amazon, then the robots measure, cut, stitch, and sell, like POD books.

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