J. Crew recently made waves when it announced a lower-priced counterpart store, J. Crew Mercantile.
J. Crew Mercantile is slated to open this July in Dallas, Texas. While it is a clear bid to boost declining sales, it may be detrimental to the brand.
Doug Stephens, retail expert and founder of the website Retail Prophet, not only called the plan a "suicide pill" on Twitter, but also explained to Business Insider how the low-price tactic could damage the brand. He pointed to luxury brands as proof.
"One only has to look as far as brands like Coach or Michael Kors to see the dangerous opiate that off-price distribution can become," Stephens told Business Insider. "The volume outlet malls promise is compelling but the collateral damage to the brand — particularly among loyal full-price customers — is often next to irreparable."
Cheapening high-quality brands makes luxury brands become the opposite of luxury.
"Coach — a once exclusive brand became ubiquitous, common, and tarnished, resulting in plummeting sales at both outlet and full-line stores," Stephens explained.
Should J. Crew adopt this outlet mentality, it could hurt the brand, too. "I see this move by J. Crew as a first step in heading down the same slippery slope into brand oblivion," Stephens said.
J. Crew has already fallen on hard times.
The once-beloved brand has had its core customer base complaining about garish designs and diminishing quality.
The company ostensibly showed signs of wear and tear when it laid of 10% of its corporate employees and sacked Tom Mora, the head of Women's Design. The new design chief for the Women's Division is Somsack Sikhounmuong, of J. Crew's highly profitable younger sister brand, Madewell.
Some might view the new Mercantile store as away to appease those who think the price tag is too high. After all, there is a market for lower-priced retailers; look no further than how Old Navy is usurping its older and pricier sibling, Gap.
J. Crew already owns one outlet store, J. Crew Factory.
Outlet stores are a questionable value because they often sell merchandise that wouldn't have been in stores to begin with.
"J.Crew, like many other retailers, notes in filings that it sells 'a specific line of merchandise' through J.Crew Factory that’s 'based on (full-price) products sold in previous seasons'," Sapna Maheshwari of Buzzfeed wrote last year, "in other words, it’s kind of a knockoff of itself."
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