Executive Briefings

J.Crew's CEO Confesses: I Underestimated How Tech Would Upend Retail

Millard "Mickey" Drexler, the fashion genius whose ability to spot trends reshaped how Americans dress, has a humbling admission. He missed what might be the biggest trend of all - how quickly technology would change the retail industry.

"I've never seen the speed of change as it is today," the 72-year-old chairman and chief executive of J.Crew Group Inc. said in an interview at his New York office. "If I could go back 10 years, I might have done some things earlier."

The retail veteran, who redefined Gap Inc. in the 1990s and then transformed J.Crew into a household name, is now scrambling to keep the company he took private in a leveraged buyout from ending up in bankruptcy.

Sales at J.Crew Group stores open at least a year have fallen for the past 10 quarters — the kind of slump that got Drexler ousted from the Gap in 2002. This time he owns 10 percent of the company, and it is lenders, not the founding family, that are putting on the pressure.

For decades, fashion was essentially a hit or miss business. Merchants like Drexler would make bets on what people would be wearing a year in advance, since that’s how long it took to design and produce items. Hits guaranteed handsome returns until the next season.

Now, competitors with high-tech, data-driven supply chains can copy styles faster and move them into stores in a matter of weeks. Online marketplaces drive down prices, and design details such as nicer buttons and richer colors are less apparent on the internet. Social media adds fuel to the style churn — consumers want a new outfit for every Instagram post.

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"I've never seen the speed of change as it is today," the 72-year-old chairman and chief executive of J.Crew Group Inc. said in an interview at his New York office. "If I could go back 10 years, I might have done some things earlier."

The retail veteran, who redefined Gap Inc. in the 1990s and then transformed J.Crew into a household name, is now scrambling to keep the company he took private in a leveraged buyout from ending up in bankruptcy.

Sales at J.Crew Group stores open at least a year have fallen for the past 10 quarters — the kind of slump that got Drexler ousted from the Gap in 2002. This time he owns 10 percent of the company, and it is lenders, not the founding family, that are putting on the pressure.

For decades, fashion was essentially a hit or miss business. Merchants like Drexler would make bets on what people would be wearing a year in advance, since that’s how long it took to design and produce items. Hits guaranteed handsome returns until the next season.

Now, competitors with high-tech, data-driven supply chains can copy styles faster and move them into stores in a matter of weeks. Online marketplaces drive down prices, and design details such as nicer buttons and richer colors are less apparent on the internet. Social media adds fuel to the style churn — consumers want a new outfit for every Instagram post.

Read Full Article