#4 – American Retailers Face New Reality

Zara, H&M, Uniqlo and others investment in vertical integration means designs turn into clothing on racks in stores, in your hands in a matter of weeks. Left in the wake of these super fast fashion producers are J-Crew and The Gap. New announcements that stores are closing and figure heads canned, we take a look at the fast business of dressing.

In this NY Times piece we learn of the details of J-Crews super awful season:

Same-store sales for its flagship chain fell 10 percent from a year ago. Profit margins are shrinking. Because of more than $1 billion of various charges and write-downs in recent months, losses are swelling and executives are warning that things are not expected to improve anytime soon.”

“J. Crew has lots of company. Abercrombie & Fitch has been hit by slumping sales and its stock is trading at six-year lows. Same-store sales are down at Gap Inc. Aéropostale is fighting for its survival.”

“Behind the downswing in fashion retailing are two trends that analysts say J. Crew either missed or is playing catch-up on.”

“The retailer has completely lost out on the growth in so-called athleisure wear. Retailers including Lululemon, Ann Taylor and Old Navy have introduced yoga-pants-as-weekend-wear lines. But not J. Crew.”

The Gap faces similar problems:

“To address that imbalance, Gap said on Monday that it planned to close 175 North American Gap stores over the next few years, with the bulk—140 stores—to be closed by early 2016. That will leave Gap with 500 stores in North America, down from more than 700 in 2013. The company will continue to operate 300 Gap outlet stores, which aren’t slated for cuts.”

The problems may not be exclusively the physical footprint. While many claim that the Americana brands simily need to catch up by closing physical stores, since most shoppers are online now, it seems there may be a deeper problem. The Abercrombie, Gap, J. Crew -preppy, expensive staples are outdated. People don’t want what they’re selling. The designs are dated. That All American look fits best in a movie about the 90s, rather than a representation of the fashions of today.

Zara and, to some extent, Everlane have been reinventing ‘new basics’ and appealing to their customers with designer-like clothes at retail prices. Target and H&M’s designer collaborations are sold out within hours—proving that both retailers are savvy at creating shopping crazes. The Japanese retailer Uniqlo, which has made its founder Tadashi Yanai the richest man in Japan, has thrived by appealing to men and charging low prices for high-quality basics. Compared with its competitors, the Gap seems to be stuck in the past: It’s the opposite of high fashion, and too bland to be priced so high. Some say that Gap style identity problem is more serious than the threat of e-commerce. And for whatever reason, Gap hasn’t enjoyed the fruits of normcore the way Birkenstock has.”

Tom Ashbrook’s NPR show On Point offers a good round up on the issue.

The other side of fast fashion is summed up beautifully here, we don’t dare compete with Mr. Oliver:

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