PRINT THIS STORY:

CHANGE TEXT SIZE:

J. CREW’S MADEWELL CONCEPT MAKES ITS DEBUT IN DALLAS

By Molly Knight

Retail visionary Millard S. Drexler, architect of the hugely successful affordable-apparel chain Old Navy while he was at the helm of Gap Inc., has done it again. This time he has launched a women’s clothing store with prices set below those at his J. Crew chain.

J. Crew Group opened the first unit of Madewell, as the concept is called, at the NorthPark Center, in Dallas. The New York City-based company plans to open a second in Los Angeles and possibly a third at some other location by the end of the year.

But Madewell bears no resemblance to J. Crew stores. J. Crew’s diverse “wedding to weekend” assortment contrasts with Madewell’s more focused offerings of T-shirts, sweatshirts, chinos and jeans, says Margot Brunelle, vice president of marketing and public relations at J. Crew. “It’s a very, very different look and feel,” Brunelle said. “And the price points are 20 to 30 percent lower than J. Crew’s.”

About 80 percent of Madewell’s offerings sell for under $100. The store’s fall line includes hooded fleece sweatshirts at $48, boot-cut jeans at $68 and leather belts at $45, according to Women’s Wear Daily.

Opening a sister store that offers lower-price casuals is a particularly smart move in the company’s quest to gain new customers, says Robert Passikoff, president of Brand Keys, a New York City-based retail consulting firm.

“The J. Crew Group is recognizing that people are extraordinarily price-conscious and that new production techniques have made differences in quality very hard to see,” said Passikoff. “With basic fashion — your chinos, jeans and ‘tees’ — it’s getting harder and harder to tell things apart. Why would a customer pay $50 for a tank top when they can get something of roughly the same quality for half the price?”

The introduction of Madewell comes at a pivotal point for J. Crew. After years of declining same-store sales, J. Crew has rebounded under Drexler, who came on board as CEO in 2003. Same-store sales rose 16 percent in 2004 and 13 percent last year. Total sales last year climbed 16 percent to $670 million. The company expects Madewell to accelerate this turnaround, Brunelle says.

Drexler has been holding Madewell up his sleeve for a while. He bought the name and trademark in January 2003 from a New Bedford, Mass.-based company that specialized in industrial work clothes. And no doubt he has learned a thing or two since launching Old Navy in 1994, which has flourished even as Gap has struggled. Some say Old Navy’s success may be contributing to Gap’s woes, and Drexler no doubt wants to avoid that happening to J. Crew, hence the clear separation of the J. Crew and Madewell brands.

“Right now it seems as if Old Navy and Gap are competitors,” said Passikoff. “To be successful, Madewell and J. Crew need to avoid that relationship. Whenever you introduce a new concept, you always need to avoid brand cannibalization. J. Crew doesn’t need its cheaper cousin taking customers.” So far, he says, J. Crew and Madewell appear to be complementary. “It seems to me that they’re not tripping over each other,” Passikoff said. “There is a little Venn diagram with some overlap of a small group of people, but I think Madewell and J. Crew will attract different folks overall.”

Besides the price points, the two differ in architectural layout. Current plans call for the Madewell units to measure about 3,000 square feet, roughly half the size of the J. Crew stores. The 2,655-square-foot Madewell in NorthPark is on the second level, between Miss Sixty/Energie and Metropark. Neiman Marcus and Nordstrom are anchors.

The J. Crew store is on the other side of the mall, and the company says it will do no cross-marketing. Thus there will be no apparent relationship between the two, Brunelle says. Christine C. Szalay, NorthPark’s director of marketing, says she doubts that customers will make any connection.

Some, however, question whether the market can support yet another store offering preppy basics, given the presence of not just J. Crew but also Abercrombie & Fitch, American Eagle, Gap and Old Navy.

Brunelle declined to define the specific Madewell shopper beyond saying that the store is not targeting teens. “Age doesn’t really define our customer,” Brunelle said. “We don’t want to be limited in that capacity.”

Szalay says Madewell is positioned in a part of the center that caters to a younger demographic that is “not overly edgy or trendsetting.” She says she is particularly optimistic about Madewell because its fabrics, cuts and urban flair give the clothes a younger feel that is particularly appealing to young women.

“Women here in Dallas in their 20s and 30s are very style-conscious,” said Szalay. “They are always looking for the next big thing. The Madewell shopper enjoys comfort, but she also likes to have a little bit of an edge. She knows what’s in, and she likes to dress accordingly.”

And there is plenty to differentiate Madewell, she says. “Their fashions and looks can bridge the gap even between mothers and daughters. How many stores can say that?”

Looking ahead, Passikoff says cheaper clothes will not be enough to hook customers, as it is next to impossible to build brand loyalty through price. “They’ve got to compete on things below price,” he said. “You don’t want to turn yourself into a commodity, because customers aren’t loyal there. You need to resonate and have an identity. To compete, Madewell has got to carve out a defined message and meaning beyond a clean-cut person with a big, white smile.”

The store certainly has the folks at NorthPark smiling, though. “I can already tell it’s going to bring so much to our mall,” said Szalay. “Every mall is interested in having a store that is exclusive to the region. New concepts obviously create a lot of buzz for us.”