J Crew Strategic Management Case Study

J.Crew in 2014: Will Its Turnaround Strategy Improve Its Competitiveness?

1. How strong are the competitive forces confronting J. Crew in the market for specialty retail? Do a five-forces analysis to support your answer.

• Industry Rivalry: High; Demand in the apparel industry is based on brand name and fashion trends, leaving industry leaders the job of deciding what the next trends will be.
• Bargaining Power of Buyers: When the economy is down, people don’t buy high end clothes. Also, if a buyer doesn’t like what they see in a store, they can just leave and go to another (low switching costs).
• Bargaining Power of Suppliers: High; Cotton prices jumped 62.75 cents per pound to 103.55 cents per pound in 2010
• Threat of New Entrants: High; The number of stores is expected to grow 2.3 percent a year until 2018, resulting in 61,200 new stores. Also, as the economy gets stronger, more people will enter.
• Threat of Substitutes: High; The women’s apparel industry is a $42 billion industry made of over 29,000 businesses.

2. What does your strategic group map of the specialty retail industry look like? Is J. Crew well positioned? Why or why not?

The recession made big box stores like Walmart and Costco popular because of their low prices and convenience.

J. Crew has four main competitors: Ascena, Ann Inc (Ann Taylor), Forever 21, and H&M.

• Ascena

• 7.1% of market share
• Owns Justice, Dress Barn, Lane Bryant
• Trendy at moderate prices
• Marketed towards women aged 7 to 50 in both regular and plus sizes

• Ann Inc.

• 5.6% market share
• Ann Taylot, Ann Taylor Loft
• For women aged 25-55, more fashionable and trendy
• Higher priced

• Forever 21

• 4% of market share
• Women aged 15-30
• Global brand for the budget conscious and trendy
• Cheaper price points and releases new products every week

• H&M

• 4% market share
• Global
• Affordable with new product lines weekly
• Clothing and accessories for men, women, and kids

In my strategic group map, I compare price points and trendiness of fashions. J. Crew has a higher price point, and customers have been rejecting the fashions they have put out, which puts J. Crew in a very dangerous position compared to their competition.

3. What do you see as the key success factors in the market for specialty retailers?  

In the women’s apparel industry, marketing, product availability, designs, price, quality, service, shipping prices, and brand image are all necessary to compete.