Millard “Mickey” Drexler earned the nickname of “Merchant Prince” for his ability to market apparel that became a lifestyle look for millions of consumers. First at Gap in the 1990s and at J.Crew since 2003, Drexler was renowned for both anticipating and shaping customer tastes.
But now the prince has been deposed (or has abdicated) following quarter after quarter of poor performance. Comparable sales at J.Crew fell 6.7% in 2016, following an 8.2% decrease the year before. The company, in which Drexler maintains a 10% ownership stake, has more than $2 billion in debt and less than $150 million in cash.
What went wrong? Drexler himself admitted in a recent Wall Street Journal interview that he underestimated the transformative impact of technology — particularly the Internet’s ability to satisfy consumers’ desire for more convenience, greater product selection and lower prices. Retail TouchPoints asked several industry experts for their take on Drexler’s departure, and what advice they would give to his successor James Brett.
Erich Joachimsthaler, Founder/CEO, Vivaldi: In the business of fashion and apparel, CEOs make or break a brand. Look at Domenico de Sole and Tom Ford at Gucci; Angela Ahrendts (then CEO of Burberry) and Christopher Bailey; Dov Charney and American Apparel; Mike Jeffries at Abercrombie & Fitch; Chip Wilson and Christine Day at lululemon; and Jochen Zeitz at Puma. Mickey Drexler had the Midas touch but lost it. [J. Crew has] a great catalog but high prices and disappointing quality in stores. These are points of parity in today’s ultra-high speed world of fashion retailing. You miss out on them and you are done.
Gesina Gudehus Wittern, Engagement Manager, Vivaldi: Drexler has always been hailed as the merchant’s son with his innate intuition for understanding what customers want and predicting best-sellers. That model worked for J.Crew for a long time. But in today’s world, where data and influencers reign supreme, trends without context are obsolete, and the whole system of how creatives and merchants work together has been turned on its head. It was sadly a matter of time before Drexler had to go. And with the departure of his creative counterpart Jenna Lyons last month, this was arguably the logical next move for a brand in need of rebirth.
Paula Rosenblum, Managing Partner, RSR Research: I think what jumps out at me the most isn’t anything that Mickey did “right” or “wrong” or “what he missed.” Generally, he is beyond the demographic of his target market, and perhaps went too far away from it. Consider this: everyone talks about catering to Millennials, yet our research shows that most retailers are run by people from Gen X; their merchandisers are from Gen X; and they believe their client is Gen X. That may work out for the luxury market, but it sure as heck isn’t going to work with office-oriented fashion. Mickey himself is a Boomer, and I suppose it’s not too hard to see one generation down — especially if you’re a smart guy like Mickey — but when you are trying to appeal to Millennials, I think you need to be closer in ethos to them.
In fact, in that same RSR report, retailers reported they need to find fresh talent closer in alignment with their target customers. I certainly don’t want to sound ageist — I’m a Boomer myself. But I do find some really surprising generational differences. I’ve said before that my niece (a Millennial) is both older and younger than I was at her age (23). Older because she’s much more serious about saving money, having a career and generally being a “good girl.” Younger because she has a real dearth of experience versus what I had at that age. She’s very dependent on her parents and not nearly as adventurous as I was at that age (living on the beach in India and all that).
Kelly Stickel, CEO, Remodista: The Wall Street Journal just had an article about how CEOs need to be technologists in order to innovate out of disruption. In addition to lowering the price points, J.Crew should focus on the customer experience and where their stores can bring in IoT, AI and digital in-store innovation. They need to invest in R&D to figure out what is scalable. Another step would be to look at product development around technology — specifically wearables.
Ken Morris, Principal, Boston Retail Partners: There are a lot of factors that are going against J.Crew and they have an uphill battle. They now realize that they need to modernize their technology to provide the shopping experience consumers expect; however, their financial situation makes it difficult to fund the investments needed. J.Crew’s success will hinge on several key areas — and focusing on digital and social media is a must. In addition to infusing the digital personalized experience into the in-store shopping experience, J.Crew needs to update their merchandise strategy to appeal to current customer preferences. Classic styles are not what’s hot in fashion today and retailers need to adapt to the latest trends. J.Crew should also expand its wholesale brand strategy to more retail chains to drive incremental revenues.
Greg Girard, Program Director, Merchandise Strategies, IDC Retail Insights: It’s not just that Mickey Drexler didn’t keep up with the pace of technology change — he also seems to have underestimated its scope. Retail is undergoing a profound digital transformation in decision making, process management and customer management. Technology improves efficiency in design processes, and improves on-trend performance in product development. It also improves return on buying investments and sell-through on localized door-level assortments and allocations. Technology improves inventory visibility — reducing stranded inventory and improving average order retail. Finally, technology improves customer insight — the flywheel by which these benefits can be monetized in sales and margin. Customer insight informs pricing and product decisions just as much as it informs promotions and personalization. Unfortunately, sometimes technology can be the elephant in the room.