J. Crew History Case Study

J. Crew’s history is one filled with various successes and challenges. J Crew Group, Inc. is an American fashion multi-brand. It offers a variety of women’s, men’s, and children’s apparel and accessories. J. Crew Group, Inc. Markets several lines of men’s and women’s clothing through distinctive catalogues, a chain of retail stores, and online through the company’s website. This article will chronologically explore the history of J. Crew from when it was founded until the present, mentioning notable dates.

J. Crew History – The Beginning 

The J Crew brand we know today was initially named Popular Merchandise, Inc., founded by Mitchell Cinader and Saul Charles. Popular Merchandise Inc. was founded in 1947 and did business as Popular Club Plan. The company was first geared towards selling low-priced women’s clothing through in-home demonstrations. Mitchell’s son, Arthur Cinader, was the overseer of Popular Club Plan operations. 

J. Crew History – The Creation Of A Famous Brand

Early into the 1980s, Cinader and Charles observed that catalogue retailers such as Talbots, Land’s End, and L.L. Bean reported an increase in sales and revenue. Intending to boost sales, increase revenue, and create a strong brand image like these well-known companies, Popular Club Plan began implementing the creation of catalogues into their growth strategy. 

In 1983, Popular Merchandise shifted from creating low-priced women’s clothing to luxury ones at a much lower price. They also shifted their marketing strategy to accommodate making use of catalogues. 

Popular Merchandise focused on a niche market for luxury leisurewear, whose target audience was upper-middle-class customers who wanted to achieve the Ralph Lauren look at a much lower price. Their brand focused on providing high-end luxury for upper-middle-class customers who didn’t have an exorbitant budget.

J. Crew History – The Launch Of The First Catalog

In January 1983, J. Crew mailed its first catalogue to its customers. Arthur Cinader’s daughter, Emily Cinader (later Emily Woods), was instrumental in orchestrating the J. Crew’s look for the first catalogue. She joined the company after graduating from college. 

The catalogues were more than 100 glossy pages with handpicked pictures from 8000 rolls of film shot each year. These catalogues were mailed to customers 14 times a year. The photographs were images of models wearing J. Crew outfits in fun and appealing settings. The photographs also used high-quality photography with close-up shots that clearly showed the quality of fabrics used to make the clothes. This validated J. Crew’s claims of quality.

J. Crew catalogues often showed the same dress worn by different models and paired with other products. This made customers know exactly how the garment hung and draped on the body and how they could pair it with various clothing items. The catalogue copy and design of the products were done in-house to maintain control over the manufacturing process.

Throughout the mid-1980s, J. Crew’s catalogue operations grew rapidly and experienced explosive growth. The growth percentage was about 25-30 percent per year, and annual sales grew from $3 million to $100 million in 5 years.

Following the success of the first catalogue operation, a second catalogue operation was launched in 1985, which was dubbed “Clifford and Wills”. This operation sold more affordable women’s clothing that was cheaper than the J. Crew line. Emily Cinader was promoted to be the president of J. Crew in 1986.

J. Crew History – The Beginning Of Expansion

In 1989, the company changed its name from Popular Merchandise, Inc. To J. Crew Group, Inc. The company announced that the Popular Club would be sold to International Empire in February 1989. J. Crew planned to use the proceeds from the sale to finance retail expansion and compensate for their lack of stable funding compared to many of their competitors. 

J. Crew set up its new retail branch as a separate unit to avoid compromising its catalogue collection. With 22 new staff members and 4000 square feet of selling space, J. Crew’s new retail outlet targeted New Yorkers who frequently visited the seaport. After five months of opening the first retail store, J. Crew added two new catalogue lines called “classics” and “collections”. The “classics” featured clothes that could be worn to work and leisure, while the “collections” featured more expensive clothes with more complicated designs and refined fabrics.

In the fall of 1989, J. Crew opened three new stores in Chestnut Hill, San Francisco, and Costa Mesa because these locations were historically proven to support catalogue sales strongly. J. Crew also featured print ads in local newspapers and magazines to support the opening. However, only $10 million was raised in retail sales at the end of the year. Despite a revenue estimate of $320 million in 1989, J. Crew still suffered a setback when its agreement to sell Popular Club fell through. Also, rumours circulated that J. Crew’s Clifford and wills collection, which was low-priced, was doing poorly. Soon after, J. Crew began to delay payment to suppliers and lay off staff.

J. Crew History – International Expansion In The Early 1990s

In the year 1990, J. Crew decided to refine its customer base. Its target customers were the young, educated, and affluent. To ensure success, J. Crew broadened its line of merchandise, adding sleepwear, loungewear, outerwear, workwear, and versatile jackets. The company hoped to support its sales of low-ticket items with high-ticket purchases. J. Crew’s revenue for 1990 was about $400 million, but they reported that four of their retail stores weren’t producing enough revenue to cover their overheads. So, they cut the number of retail stores they initially intended to open from 45 to 30 or 35.

Intending to expand into Canada in early 1991, J. Crew hired a new marketing director and adopted the Canadian tax and customs law for their catalogues. The company mailed catalogues to potential customers in Ontario. Although the response rate was slightly lower than the U.S, the average order was higher. Also, the relative scarcity of catalogue retailers in Canada made the J. Crew brochure stand out better.

After conducting a marketing feasibility study in 1992, J. Crew had an agreement with two Japanese retailers to open 46 stores in Japan, with an estimated annual sales of $68 million, in 1993. When annual retail sales hit $70 million in 1992, J. Crew discovered that retail sales didn’t hurt its catalogue operation. Instead, it increased it. However, things got tough when the climate became unfavourable to sales and the company’s president, the chief proponent of the retail push, resigned. J. Crew‘s head of retail division also resigned the following year.

J. Crew History – Texas Pacific Group

In 1994, there was an increase in postal rates, and paper costs increased sharply by 40 percent—this hurt catalogue operations. Thus, J. Crew increased efforts in retail expansion and its profitability. In May 1995, David DeMattei was hired to head J. Crew retail operations from the Banana Republic. Retail outlets in the U.S increased from fewer than 30 to about 40. However, there was a continued turnover among the company’s most senior managers, as Robert Bernard, who took the place of Cohen in 1994, also resigned in 1996.

With 47 retail stores in mid-1997, J. Crew negotiated with Texas Pacific Group (TPG) for a leveraged buyout that gave TPG an 85 percent stake, leaving Emily woods with the remaining 15 percent. TPG paid about $560 million, increasing J. Crew’s debt from $86.8 million to $283.9 million. TPG planned to boost J. Crew’s retail operations and eventually publicize the company. Meanwhile, catalogue operations were hurt when customers curtailed their catalogue purchasing during the strike of United Parcel Service of America.

J. Crew History – The 2000s

J. Crew had expanded into e-commerce, backed by the company’s first network television advertisements in December 1999. The company increased the number of retail stores in the United States to 82 in the early 2000s. 

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J. Crew hired retail star Millard “Mickey” Drexler in 2003, who teamed up with Jenna Lyons, the company’s Vice President of women’s design. The pair focused on the brand’s authenticity, changed where they were sourcing their fabrics, and gave creative control to the designers. 

Drexler took J. Crew public in 2006 and raised nearly $400 million at $20 per share. J. Crew made a revenue of $1.3 billion in 2007 as customers and celebrities gravitated towards J. Crew’s combination of formal and informal clothing.

In 2008, Michelle Obama, Taylor Swift, Jennifer Love Hewitt, and Brooke Shields became customers of the brand. Despite the recession of 2008, J. Crew made gains. 

Jenna Lyons, who had already become an icon in the fashion industry, was made president of J. Crew in 2010. She was responsible for the brand’s look and acted as a pseudo model for her clothes. In 2011, TPG Capital and Leonard Green & Partners bought out J. Crew. 

However, when the recession struck again, it negatively affected customer behavior and In 2014, J. Crew suffered losses. Moreover, no one could predict the on-coming crises when the coronavirus pandemic struck in 2019. And no one knew how long the pandemic and its devastating effects would last. Despite these challenges, the brand is still up and fighting to bring to market its vision for fashion.

Conclusion

It is clear from the article that J. Crew’s history has a great story not devoid of challenges, which still makes the brand one of the most known in their market.

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J. Crew History Case Study Check out this article to learn about J. Crew’s history and how J. Crew got to its present state.
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