Is J.Crew’s new Amazon relationship already over?
Does nothing good ever last? First, there was the news that Ariana Grande and Pete Davidson split up ;o) and now it appears as though the burgeoning relationship between Amazon.com and J.Crew may soon be over, as well.
In September, the two companies announced the creation of an online storefront on Amazon to sell a curated assortment of clothing from J.Crew’s Mercantile line for men and women. The Mercantile brand was positioned as J.Crew’s discount line, focusing on updated versions of classic styles with prices starting in the teens.
The Wall Street Journal has reported, based on a copy of an internal memo from J.Crew, that the retailer is phasing out the Mercantile brand over the spring and summer as it plans to concentrate its lower price efforts on its own outlet business. “We believe that a ‘good’ price tier opportunity is better served by the J.Crew label,” the memo reads. J.Crew currently operates 175 outlet stores, including 42 under the Mercantile banner.
The Mercantile decision along with another to end J.Crew’s recently launched Nevereven brand comes only two weeks after former CEO Jim Brett stepped down after disagreements with the board over the direction of the company.
Mr. Brett is reported to have clashed with J.Crew chairman Mickey Drexler, who objected to the deal with Amazon. The decision to abandon the Mercantile brand altogether is a bit of a surprise considering that Mr. Drexler was behind its 2015 launch. At the time, the positioning was that Mr. Drexler was looking to catch the same magic in the bottle that he found when he launched Old Navy while running the Gap business.
J.Crew reported an eight percent increase in same-store sales compared to a decline of nine percent in the same period last year. The company lost $5.7 million in the third quarter, an improvement over the $18.4 million loss in 2017.
- J.Crew Mercantile – Amazon.com
- J. Crew Scraps Cheaper Brand, Putting Deal With Amazon in Doubt – The Wall Street Journal
- More trouble at J.Crew: Newest CEO Jim Brett has already stepped down – Fast Company
- J.Crew Group, Inc. Announces Third Quarter Fiscal 2018 Results – J.Crew Group, Inc./PRNewswire
- J.Crew makes the jump to Amazon’s marketplace – RetailWire
- J.Crew tests its own Old Navy – RetailWire
DISCUSSION QUESTIONS: Do you see the departure of Jim Brett and its decision to phase out the Mercantile line as indications that J.Crew is on a better path to success or that it is in danger of losing its way? Should J.Crew continue working with Amazon even as it phases out the Mercantile line?