Why J. Crew and Madewell could part ways

When Gap CEO Art Peck announced last week that Old Navy was splitting off from the rest of Gap to become an independent company, the reasoning given was that Old Navy was outshining the rest of the brands in the Gap family to such a degree that it didn't make sense for it to be part of the same company anymore.

The situation calls to mind the discrepancy between J. Crew's and Madewell's success. It’s not out of the realm of possibility that the two may experience a similar fate.

“Madewell, as of now, has the momentum: a well-defined identity, a brand that is resonating with consumers, a distinct customer segment and products people are in love with,” said Mike Stevens, executive director of strategic planning and account services at marketing agency GYK Antler.

For a while now, J. Crew has been struggling. The last four years have seen declining sales for the brand, with only a small upswing of about 4 percent at the end of 2018. Internal upheavals, like the loss of creative director Jenna Lyons and two CEOs, Mickey Drexler and James Brett in quick succession, have only exacerbated the brand’s issues.

Meanwhile, sister brand Madewell has been thriving. The brand’s recently launched men’s line is the latest example of Madewell’s ability to expand and grow, launching online and with wholesale partner Nordstrom late last year. In February, Madewell began selling men’s clothes in-store as well, starting with the Madewell store in the Meatpacking District of New York City.

“Madewell has a very clear target they go after, and they have created a brand that’s aspirational and brings you to a place you want to be,” said Jenifer Ekstein, senior consultant at strategy firm Vivaldi. “While J.Crew has tried to grasp onto what they were back in their heyday, without considering their customer, Madewell has been consistent and focused on who their customer is and what they want.”

Madewell did not respond to a request for comment. J. Crew declined to comment. 

Retail strategy
What is more interesting than Madewell’s retail strategy is how J. Crew is capitalizing on the success of its sister brand. For one, J. Crew has rebranded and redesigned much of the interior of its stores to eschew some of its traditional preppy aesthetic in favor of something more modern and intentionally Madewell-inspired.

Additionally, a number of J. Crew stores have begun selling Madewell clothes in-store. In New York, J. Crew stores in SoHo and on Columbus Circle both sell Madewell jeans in-store.

This is as much a marketing move for J. Crew as a retail one. By selling Madewell clothes in a J. Crew store, J. Crew could potentially get customers who come in looking for Madewell jeans to stick around to shop J. Crew, as well.

Madewell’s surging sales, which have seen double-digit growth in consecutive quarters over the last few years, with a 26 percent rise in sales in the third quarter of 2018, have been a major boon to the J. Crew company. But J. Crew as a brand has increasingly seemed superfluous as Madewell’s success grows.

When Madewell began branching into men’s, it took away one of the major delineators between the two brands; as Madewell men’s expands into more Madewell stores and Madewell as a whole begins inching into J. Crew stores, J. Crew as a brand is increasingly losing any sort of distinguishing features that justify its own existence.

“J. Crew has seen declining sales and is trying to do what it can to revive itself,” said Stevens. “For so long, their identity was tied to a preppy, look and that tight focus is now gone. They have decided to revamp the brand and make it appeal to a larger group of consumers. While the brand did need to make a move in terms of fashion, its shift to a broad customer segment seems to be leaving consumers wondering who this brand is for and its point of focus.”

While J. Crew and Madewell have made no indication that they will split anytime soon -- Stevens said it’s possible, but not imminent -- there are clear similarities between them and Old Navy and Gap. If J. Crew cannot figure out a way to make a case of its own existence, a split may look more and more appealing for Madewell.

“J.Crew will continue to flounder while Madewell flourishes, for a few reasons,” said Ekstein. “J. Crew has lost sight of its target customer and seemingly does not have a high-level strategy in place, but it's trying to make design decisions that are one-off and may only help in the short term. They’ve lost their brand. If someone asked me what J. Crew stood for. I would have no idea what to say. And that is their downfall in the ever-evolving, ever-saturated world of fashion and retail.” -- Danny Parisi


How a small brand launched at Hudson Yards
ICYMI, The Shops & Restaurants at Hudson Yards, NYC’s West Side residential and commercial development, will open its doors on March 15. Among standout features of the project, which took five years to complete, is the second-floor “Floor of Discovery,” housing the first permanent physical locations of several digitally native brands (Mack Weldon and Rhone, to name a couple) and experiential store offerings from more established global players, like Muji. Positioned in an 1,800-square-foot space across from Uniqlo and a stone’s throw from greeting-card company Lovepop’s store is Batch, a concept shop that launched in San Francisco in 2017. Batch’s signature is a retail floor that reads much like a staged home. The included items, which are all by DTC brands, and the theme -- which have ranged from Batchelor, with items for the modern man, to Homemade Holiday, starting in November -- flip every six weeks.

On Tuesday, I got a private viewing of Batch’s Hudson Yards store, which marks its second-ever location. Founder and CEO Lindsay Meyer shared the pros and cons of making the leap to New York and a mall-style setting.

The store concept:
The first NYC Batch is called Batch Hello, so it will be kind of a welcoming home environment -- the idea is this neighborly gesture of just introducing ourselves to New York. We’re featuring 20 bands, including 15 or 16 we’ve hosted in San Francisco -- Kristi Kohut, Foggy Dog -- and five or so New York-based brands, including Maiden Home, to give it a local feel. Outside of home, there will be some women’s apparel and accessories, and select beauty items.

Choosing Hudson Yards for a second store location:
I was fortunate to get introduced to Related [the real estate development firm behind Hudson Yards] in December of last year at the International Council of Shopping Centers (ICSC) meeting here in New York. At the time, I had no intention of opening a store in New York, but they told me about Hudson Yards and the Floor of Discovery concept, and the brands that were involved, and asked if I was interested. We signed on in the second week of February, and I was here the week after.

Related built out the whole space for us. I didn't have to be here, I didn’t have to hire a crew, I didn't have to worry about permits -- and they footed the bill for it, too. That was incredible, and that’s the reason we decided to do it. In December, I think they were … I'm not sure if struggling is the right word, but it was [crunch] time. There are still some empty spots on this floor. They're putting up murals today where there are empty units. I think it's around 80 percent occupied. We are one of a very few home concepts.

The shopping center setting:
Our other space is much smaller -- it’s a 103-year-old firehouse. The architecture is different, the types of things we can do in the space are also very different. This is more like a store-in-the-mall footprint and concept for us. And the operating hours are longer: 12-hour days, as opposed to eight. When we turn over Batches in SF, we close the space for a week at a time. Here, we’ll have to do it overnight. But, we also have 40 feet of window frontage here, which is also something we don't have in San Francisco. And they're projected to have 65,000 visitors a day here.

Right now, we're working on designing fun window installations to draw people's attention. No one in New York really knows Batch, unless they've been to San Francisco or know someone who's talked about it. Frankly, it's a bit of a gamble, but we're expecting that people, out of curiosity, will come in. What they’ll find is we have great digital brands that aren't quite ready for their own storefront.

We're used to calling our own shots. Now that we're part of this huge infrastructure, we have a lot of resources, but also a lot of rules. Everything we do here requires multiple levels of approval or authorizations -- even getting somebody to hang something for us. It adds a lot of extra stress, but we're figuring out.

Future opportunities:
They’re building all these residential units on site, so there's great opportunity for us to integrate here. The other side of our business is shoppable home staging, so we'll take these products and put them in model homes and power the purchase experience around that. We're excited to get more involved in that activity here in NYC and in this new, up-and-coming neighborhood. There will be a lot of new home buyers here, and eventually, there are going to be schools here. It's crazy. --Jill Manoff


Why Bolt Threads is launching a beauty brand
Biotech company Bolt Threads is venturing into beauty with its first direct-to-consumer brand, Eighteen B, which launched this week.

Bolt Threads is known for creating its proprietary artificial spider silk, dubbed Microsilk, which has been used to create a $314 men’s tie and a $200 beanie. Its newest material, a B-Silk Protein, is the signature ingredient in Eighteen B's lineup. The new beauty brand only features two products: a cream moisturizer and a hydrogel moisturizer, which retail for $75 and $95, respectively, and are sold exclusively on EighteenB.com. Like many science-backed beauty brands including True Botanicals, Eighteen B rides the current customer and industry preoccupation with clean beauty.

“Our mission is about creating better and more sustainable materials, those that can be produced more sustainably and those that are better for consumers. We’ve been thinking about how to use our silk in skin care for a long time,” said Eighteen B CEO Sue Levin.

Prior to Eighteen B, much of Bolt Threads’ sales were made through its acquisition of Brooklyn fashion line Best Made Co. In 2018 company retail sales exceeded $10 million. As Bolt Threads, which has raised $213 million in venture capital funding, goes DTC-first with its beauty line, that’s clearly subject to change.

Ahead, Levin and Bolt Threads chief scientific officer Lindsay Wray detail the insight behind Eighteen B.

What was the draw to the beauty space?
Levin: We really look at how our silks can be used or implemented in any or all products, and we look at ways nature can be used as inspiration. We don’t think of our Microsilk tie as a fashion piece or an accessory, or that now we are entering beauty; it’s not that category-specific for us. Here, instead of spinning the silk protein into a fiber for a tie, we are blending it into a skin-care formulation for Eighteen B.

Did the rising interest in clean beauty at all factor into the launch of Eighteen B?
Levin: There is a movement toward clean skin care, and this ingredient is biocompatible, which makes it super clean. We wouldn’t have done this, though, if it wasn’t efficacious or didn’t provide real results for women.

Wray: We wanted to prove that this protein really is the best option for moisturizing and healing the skin. Our B-Silk Protein provides replenishing properties and firming qualities to the skin, which gets the biggest beating by the environment every day.

As a company, you engaged in several consumer focus groups for this launch. What was noteworthy about that R&D process?
Wray: We’re very science-oriented, so we created prototypes of product and tested them on a small group of beta testers. Our silk formulations performed better than products without silk, so then it was time to hit the clinical tests, which were eight weeks long. We tested the products on 33 people and took a myriad of quantitative measurements. We saw improvement in hydration, skin texture, elasticity and firming on nearly all of our testers.

You are only launching two products now -- why?
Wray: We’re dedicated to scientific rigor. We went in with many more products when we were testing the products, but these two were the best and had the best quality for customers. We weren’t interested in launching something that wasn’t ready or the best it could be. --Priya Rao