Michelle Obama helped put New York-based J. Crew (JCG-N33.650.160.48%)on the international retail map by sporting its fashions in her public appearances. Now Canada may one day get some of that preppy Obama style in its shopping malls.
J. Crew has hired one of this country's top retail-real estate consultancies to hunt down store locations and already it's talking to major landlords.
The Obama tie-in gives the chain of about 300 stores an extra lift when entering new territory, industry insiders said.
“What an amazing endorsement,” said Glenn Featherstone, vice-president of retail leasing at Morguard Investments Ltd., which manages 48 shopping centres in Canada. “As a landlord, our objective is to put in our shopping centres the best combination of the most popular retailers. J. Crew is a popular brand. It's well received by the Canadian market. I look forward to working with them.”
Ms. Obama gave J. Crew her first big sign of support last October when, still on the campaign trail, she appeared on The Tonight Show with Jay Leno wearing a yellow cardigan ($118 U.S.), yellow and brown tank top ($148) and pencil skirt ($148) – all from J. Crew.
The retailer quickly capitalized on what it says was unexpected publicity. Marketers purchased “Michelle Obama” keywords on Google, Microsoft and Yahoo, created a page on the jcrew.com site that pitched her outfit and advised call-centre employees about how to deal with questions about her style. The online message: “Shop J. Crew for the Michelle Obama Look.”
In January, Ms. Obama and her daughters put J. Crew in the spotlight when they wore the retailer's items at the inauguration of President Barack Obama, briefly prompting J. Crew's website to crash from the huge traffic.
The brand got exposure again in April when the first lady chose the J. Crew crystal constellation cardigan ($298) and dazzling dots pencil skirt in mint green ($158) for a visit to 10 Downing St. in London. The sweater sold out by 10 a.m. East Coast time.
Known as an accessible label that, unlike higher-priced designer brands, doesn't break the bank, J. Crew delivers a chic but casual style. Men tend to like it for its dressy casual look that generally can be difficult for them to put together.
“Laser focused” is how retail analyst Jennifer Black, president of Jennifer Black & Associates in Lake Oswego, Ore., describes J. Crew.
“A company that beats the Street based on revenue growth in this retail environment is surely doing something right,” Ms. Black said in a report last week. “We attribute the company's success to a number of things, but most importantly to having unique, authentic merchandise that offers good value.”
J. Crew's efforts to lower some of its prices during the economic downturn – offering more merchandise for less than $100 – will serve it well this fall, she said. And its attentive customer service has probably helped it grab business from upscale boutiques.
Still, even with the Obama glow, the retailer is feeling the pinch of the economic slump. In its latest quarter, while it exceeded analysts' targets, its same-store sales at outlets open a year or more – an important measure in retail – fell by 5 per cent.
A move to Canada would be attractive for J. Crew because retailers here haven't been squeezed nearly as severely as their U.S. counterparts by the recession, Ms. Black said.
However, it could take years before J. Crew finds the right locations in Canada, said Sam Winberg, principal at Northwest Atlantic (Canada) Inc., which is advising J. Crew on sites here. “It's about waiting for the right opportunities, not about a particular set time.”
Many U.S. retailers, such as clothier Abercrombie & Fitch, have used Canada as a testing ground for international expansion. They like that it's close by, but they can take a few years to scout out the right locations; home fashion chain Crate & Barrel waited more than five years before opening stores here.
Other U.S. retailers have ultimately come here by acquiring existing Canadian retailers and converting the stores to their own banners. For example, American Eagle Outfitters came in 2000 after acquiring stores from the now defunct Dylex.
J. Crew officials did not reply to messages yesterday.
J. Crew may benefit from snooping around for retail space during tough times, said retail specialist Wendy Evans of Evans & Co. Consultants Inc.
The economic slump has forced many landlords to offer retailers good deals to lure them to their malls, she said.
“They are making concessions they would never have made a year ago or more,” she said. “Rates are dropping by 30 to 40 per cent.”
She predicted that J. Crew would be a big draw for malls. Already its name is established among many Canadians who shop at its U.S. stores and through its catalogues, said Ms. Evans, who has J. Crew fashions in her closet. “Most people I know would have something from J. Crew. Its reputation precedes it in this market.”
It also has the advantage of having what many consider a retail whiz as its chairman and chief executive officer. Millard (Mickey) Drexler was credited as having built the Gap retailer in its heyday before moving to J. Crew in 2003 to rejuvenate that chain. At Gap, he was familiar with Canada, having set up stores here more than a decade ago.
Heather Reisman, CEO of Toronto-based Indigo Books & Music, sits on the board of directors of J. Crew and is a big fan of Mr. Drexler. “What I learned from Mickey is: You have to have a point of difference and you have to have a real passion for what you're trying to do,” she said recently. “Second, you're not going to get it all right, which I knew from experience.”
